Agricultural law in Japan: overview

A Q&A guide to agriculture law in Japan.

The Q&A gives a high level overview of agricultural law, including acquiring agricultural companies and co-operatives, competition law, land ownership and usage rights, pricing and tender processes, tax and financing, crop seed business, importing crop seeds, commercial crop production and distribution, plant variety right protection, GM crops, GM foods, importing animals, gene patents, and product liability.

To compare answers across multiple jurisdictions, visit the Agriculture Country Q&A tool.

This Q&A is part of the Agricultural Law Global Guide. For a full list of jurisdictional Q&As visit www.practicallaw.com/agriculture-guide.

Takashi Hirano, Taketo Nasu and Daisuke Beppu, Blakemore & Mitsuki Japan*
Contents

Agricultural policy

1. State whether and when your jurisdiction has joined the following:
  • The World Trade Organization.

  • The Food and Agriculture Organization of the United Nations.

  • The International Plant Protection Convention.

  • The Office International des Epizooties, also known as the World Animal Health Organisation.

World Trade Organization (WTO)

Japan joined the World Trade Organization on 1 January 1995 (Japan joined the predecessor of WTO, the General Agreement on Tariffs and Trade (GATT), in 1955).

Food and Agriculture Organization of the United Nations (FAO)

Japan joined the Food and Agriculture Organization of the United Nations on 21 November 1951.

International Plant Protection Convention (IPPC)

Japan signed the International Plant Protection Convention on 6 December 1951. Japan ratified it on 11 August 1952.

Office International des Epizooties (IOE)/World Animal Health Organisation

Japan joined the Office International des Espizooties (IOE) in 1930.

 
2. Describe the most recent national agricultural policy of your jurisdiction, in particular with respect to biotech crops and new crop growing technologies.

According to strategic plans and other publicly available materials prepared by the Ministry of Agriculture, Forestry and Fisheries (MAFF), Japan has adopted a policy of encouraging, protecting, supporting, and promoting the development of information and technology regarding new plant varieties, breeding methods, industrial technology, and high-value, low-cost, and competitive agricultural products that meet marketplace demands (including recognising the importance of protections based on intellectual property rights).

Japan supports the development of technologies for the improvement or modification of agriculture (for example, development of new plant varieties and selective breeding methods based on knowledge of genome information), and the gathering and maintaining of information on genetic and environmental resources. However, Japan, as a major soybean and corn importer, ordinarily has a passive and conservative stance regarding genetically modified agricultural products.

MAFF has a policy of encouraging and supporting household farming and enterprise farming (including encouraging development of farming technologies). However, although the Japanese government supports activities by Japanese private parties to invest overseas, there appears not to be any governmental policy at present that actively seeks to encourage foreign investment into Japanese agriculture.

 

Acquisition of agricultural companies

3. Is the acquisition of domestic agricultural companies by foreign investors subject to special prior government approval(s)? Set out the approval procedures and the authorities involved.

A "foreign investor" investing in a domestic agricultural company must make a prior written notification to the relevant competent authorities (Foreign Exchange and Foreign Trade Act (Foreign Exchange Act)). A domestic agricultural company means one that carries out agricultural matters (including seed-level processing, research and development (R&D), breeding, production and trading, but excluding companies involved only in wholesale and retail trade of seed). It does not include a company that merely carries out only management and ancillary activities.

A "foreign investor" means any of the following:

  • Non-resident individuals.

  • Entities established under foreign laws or regulations, and entities whose principal place of business is in a foreign country.

  • Companies in which a non-resident individual or a foreign entity (that is, established under foreign laws or regulations or an entity with a principal place of business in a foreign country) directly or indirectly holds 50% or more of voting rights.

  • Domestic entities where a majority of its officers are non-resident individuals.

  • An individual or entity making the acquisition for, or otherwise having discretionary investment authority on behalf of any of the parties above.

A foreign investor investing in an agricultural company, in a manner like one of the following common examples, must submit a prior written notification:

  • Acquiring shares, and so on, of an unlisted agricultural company from a person or entity other than a foreign investor (including the case where a new unlisted agricultural company is established).

  • Becoming a holder of 10% or more of the total issued stock of a listed agricultural company (including the case where the reporting party's shares already held and joint holders' shares already held are 10% or more when combined).

Notification must be made within the period of six months before the date of the investment action, addressed to MAFF and to the Minister of Finance, and sent by way of the Bank of Japan (Foreign Exchange Act).

The investment act cannot be made, in principle, during the period of 30 days after the date that the Bank of Japan receives the notification (although that period is usually shortened to two weeks). However, if the Minister of Finance and MAFF Minister examine the notification and recognise some hindrance to Japanese economic activity, they can:

  • Give guidance to change the details of, or suspend, such investment.

  • For the purposes of such government inquiry, the period where no investment action can be made may be extended to up to five months.

Failure to make timely notification, false notification, and investment action before lapse of the designated period or violating the guidance or order are subject to either or both:

  • Imprisonment for up to three years.

  • Fines in the amount of no more than JPY3 million or no more than three times the price of the target product for violation if such price is over JPY1 million.

Both entities and individuals that are in violation can be punished.

There is no prior review by any government department of Japan other than the previously mentioned prior review.

 
4. Describe if specific legal forms (such as co-operatives) are regulated or used in the agricultural sector and whether they are open to foreign investment.

See Question 3 regarding notifications pertaining to domestic agricultural companies.

Further, any such company or any individual carrying out agricultural matters can (but are not required to) come together to form an "agricultural co-operative", which is established under the Agricultural Co-operatives Act, and is granted juridical personality (not to be confused with an "agricultural production corporation", discussed in Question 8). These co-operatives carry out agricultural matters, in order to improve the agricultural performance and the economic and social positions of agricultural parties. Co-operatives have articles of association concerning the qualifications of members and investments, and co-operatives, based on such articles, determine whether or not to allow membership.

Depending on the provisions of its articles of association or based on its operations, a co-operative may not necessarily allow a foreign investor to be a member. However, foreign investment into agricultural companies is not prohibited generally (see Question 3 regarding foreign investors).

 
5. To what extent does competition (anti-trust) law apply to agriculture?

The Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade (Antimonopoly Act) generally applies to agriculture but there are special provisions regarding agricultural co-operative activities. The Antimonopoly Act does not apply to agricultural co-operative activities that have all the following elements:

  • The co-operative's purpose (determined based on its activities) is mutual support among small-scale entrepreneurs or consumers.

  • The co-operative is voluntarily formed, with partners able to voluntarily participate in and withdraw from the co-operative.

  • Each partner possesses equal voting rights.

  • If distribution of profits among partners is contemplated, the distributions are limited by law, regulation or the articles of the co-operative.

Generally, agricultural co-operatives in Japan are set up for the purpose of mutual support among small-scale entrepreneurs or consumers. As a result, the Antimonopoly Act is likely not to apply (unless, of course, where Unfair Trading Practices are used).

However, the Antimonopoly Act is likely to apply where a large-scale entrepreneur (for example, one with more than 100 employees) is a member of an agricultural co-operative.

 

Acquisition of agricultural land

Sale and transfer of usage rights and ownership

6. Set out the domestic laws that apply to the acquisition of:
  • Usage rights to agricultural land.

  • Ownership of agricultural land.

The main laws applicable to acquisition of usage rights and ownership of agricultural land are:

  • The Civil Code.

  • The Agricultural Land Act (see Question 7).

  • The Act on Promotion of Improvement of Agricultural Management Foundation (Agricultural Promotion Act).

 
7. Are there any legal restrictions on the acquisition of agricultural land (or usage rights) by a foreign (or foreign invested) party?

No special rules exist regarding the acquisition of agricultural land (or usage rights) by a foreign (or foreign invested) party. As is the case with Japanese parties, a foreign party can acquire agricultural land (or usage rights) if it obtains a relevant approval under the Agricultural Land Act.

If a non-resident acquires real property in Japan (including agricultural land) or rights relating to it, an ex post facto report must be made under the Foreign Exchange Act.

 
8. Are there any compulsory tendering or prior approval procedures required for a sale and purchase of agricultural land? Briefly describe these procedures and the approval authorities (if any).

General rule

If an individual or entity sells, purchases, or leases agricultural land, in principle an approval must be acquired from the relevant government agricultural affairs committee (established by the relevant municipal government), under the Agricultural Land Act.

General rule for entities

Generally, an entity cannot own agricultural land, but can only lease land, if all of the following requirements are met:

  • All the agricultural land must be effectively used.

  • Operations must be of a certain geometric area (in principle at least 50 ares; in Hokkaido, at least 200 ares).

    There must be no hindrance to any neighbouring agriculture.

  • The lease agreement includes a provision allowing for lease termination if the agricultural land is not being used appropriately.

  • The agricultural business is being carried out under appropriate distribution of responsibilities in the locality.

  • At least one officer is regularly engaged in the agriculture business.

Special rule for entities: agricultural production corporation

If an entity wishes to own or lease agricultural land, it can do so as an "agricultural production corporation" (not to be confused with "agricultural co-operative" discussed in Question 3) if all the following requirements are met:

  • All the agricultural land must be effectively used.

  • Operations must be of a certain geometric area (in principle at least 50 ares).

  • There must be no hindrance to any neighbouring agriculture.

  • The entity's corporate structure is a:

    • joint-stock company (kabushiki kaisha) (not a publicly held corporation);

    • general partnership company (gomei kaisha);

    • limited partnership company (goshi kaisha); or

    • limited liability company (godo kaisha).

  • The entity's main business is agricultural business.

  • In principle at least three-quarters of voting rights belong to agriculture-related persons (including local public bodies, and agricultural co-operatives).

  • A majority of officers are regularly engaged in the agriculture business.

If an agricultural production corporation loses such status, in principle the government will purchase the agricultural land (Agricultural Land Act). However, the inability to meet one or more of the requirements for such status does not immediately lead to the loss of such status. If the requirements can be re-achieved within a certain prescribed period (usually a few months), then the status is maintained and the land is not sold to the government. Also, during a certain prescribed period, the land can be sold to a third party other than the government.

Special exception

As an alternative to the general rule, an individual or entity can sell, purchase, or lease agricultural land by establishing or transferring rights under an "agricultural land use accumulation plan" prescribed by the municipal government (Agricultural Promotion Act). This plan contains the various relevant rights transfers in one document for the purpose of collectively carrying out the transfers or leases between parties to agricultural land transactions.

When the national government sells or leases government-owned agricultural land, in principle a compulsory tendering is conducted. To participate, a party must be one that is qualified to obtain approval under the Agricultural Land Act.

 
9. Does the law and/or regulations prescribe minimum land purchase prices if the (local) government sells agricultural land?

If the national government conducts a compulsory tendering (where the government sells or leases its land), the party making the highest bid above the estimated price provided by the government in advance is to be the successful bidder.

 
10. Is there a maximum term applicable to the lease (or use) of agricultural land?

The maximum lease term for agricultural land is 50 years (Agricultural Land Act).

If, before the expiration of the relevant lease agreement for agricultural land, no notice is provided that states that such lease is not to be renewed, then the lease is to be deemed renewed (legal renewal) under the same terms and conditions as the currently existing lease. However, legal renewal is not available for leasehold rights established based on an "agricultural land use accumulation plan".

According to the Agricultural Land Act, in principle, the relevant prefectural governor's approval is needed for termination or cancellation of the relevant lease agreement. The approval is usually granted in cases limited to where, for example, the lessee has committed a bad faith act. In practice, approval is not needed where, for example, the agreement (clearly set out in writing) is mutually terminated within six months before the end of the lease term.

 
11. In which circumstances can the government authorities expropriate agricultural land?

The expropriation of agricultural land (like that of ordinary land) is carried out under the Compulsory Purchase of Land Act. The main requirements for the expropriation of agricultural land are:

  • The business to be carried out pursuant to expropriation is an expropriation-qualified business (that is, a business relating to, for example, roads, dikes, and railroad facilities).

  • The business operator (that is, one that carries out an expropriation-qualified business) possesses the ability to perform the business.

  • The business plan contributes to the appropriate and reasonable land use.

  • A public interest need exists for expropriation.

Other than the above, there are no other special laws for agricultural land except for the Agricultural Land Act.

 

Tax and financing

12. Which taxes apply with respect to the sale and transfer of land ownership (or usage rights)?

In an agricultural land transfer, if, on calculating the transfer price against the relevant acquisition costs and other necessary costs, a net transfer profit income is yielded, then taxes are to be levied.

Individuals

If the transferor is an individual, the taxes are income tax and the residents' tax (local tax) on capital gains.

If an individual transfers land, the tax on capital gains is not calculated together with other income, it is treated separately, with the tax rate depending on how long the individual held the land. Specifically, if, before 1 January of the year of the transfer (if the individual acquires through inheritance or gift, the period that the decedent or the donor held the subject matter is deemed to be the period such individual held the subject matter), the individual held the land for a period described below, the income tax rate (national tax) and residents' tax rate (local tax) are as follows:

  • More than five years: the income tax rate is 15%, and the residents' tax rate is 5%.

  • Five years or less: the income tax rate is 30%, and the residents' tax rate is 9%.

However, for the transfer of agricultural land to the state, the income tax rate is 15%, and the residents' tax rate is 5%, irrespective of the holding period (even if the holding period is five years or less).

If an individual acquires land through inheritance or gift, the value that the decedent or donor acquires is deemed to be the individual's acquisition costs.

Agricultural production corporation

If the transferor is an agricultural production corporation, corporation tax and corporate inhabitants' tax are levied based on an amount including all other income.

The tax rate is usually 25.5%. However it is 19% for a corporation whose total amount of capital is less than JPY100 million and the amount of total profit is less than JPY8 million, or for a mutual corporate entity. The rate of the corporate inhabitant tax is different depending on the amount of capital and the number of employees.

Special exemption

A special exemption of JPY8 million from the transfer profit is recognised for an individual or agricultural production corporation if the land is sold either:

  • To a certified farmer under a mediation by a government agricultural affairs committee.

  • Through "promotion business activity such as the establishment of exploitation rights", under the Agricultural Promotion Act.

  • To an "intermediate institution that manages agricultural land".

However, if land is sold (for example, to an intermediate institution that manages agricultural land) under a "sale and purchase consultation", an exemption of JPY15 million instead is recognised.

 
13. Does your jurisdiction have special regulated agri/green-parks and is (foreign) investment in such parks incentivised? If so, what incentives apply in general?

Enacted in December 2013, the National Strategic Special Regions Act mainly provides the following regulatory easing in special "agri-park" regions:

  • Easing of requirements for officers of agricultural production corporations.

  • Application of a credit guarantee programme to agricultural businesses.

  • The relevant municipality being responsible for a part of the agricultural affairs committee approval matters.

Examples of these special "agri-park" regions are in Niigata City, Niigata Prefecture, and in Yabu City, Hyogo Prefecture.

However, there are no special incentives regarding foreign investors.

 
14. Briefly describe the procedures to mortgage/pledge agricultural land rights in order to acquire domestic financing.

To place a mortgage on agricultural land rights, a mortgage agreement under the Civil Code must be executed, and registration must be made with the relevant legal affairs bureau.

It is possible to separate a mortgage placed on agricultural land from the land itself, and to transfer that mortgage (together with the secured claim) to a third party. It is also possible to separate off the secured claim from the mortgage and transfer only such mortgage (that is, without the secured claim) to another creditor of the same debtor. Approval of the relevant local governmental agricultural affairs committee is not needed regarding the transfer of a mortgage placed on agricultural land.

To place a pledge on agricultural land rights the following steps must be taken:

  • Approval of the agricultural affairs committee under the Agricultural Land Act must be acquired.

  • A pledge agreement under the Agricultural Land Act must be executed.

  • Possession of the land must be transferred to the pledgee.

  • Registration must be made with the relevant legal affairs bureau.

It is possible to separate a pledge placed on agricultural land from the land itself, and to transfer that pledge (together with the secured claim) to a third party. It is also possible to separate off the secured claim from the pledge and transfer only the pledge (that is, without the secured claim) to another creditor of the same debtor. Approval of the relevant local governmental agricultural affairs committee is needed regarding the transfer of a pledge placed on agricultural land.

A foreign investor can also carry out the above matters.

 

Crop seed business

15. Which domestic laws and regulations regulate the crop seed industry and which domestic authorities/agencies supervise this sector?

In accordance with the UPOV Convention, the Plant Variety Protection and Seed Act (Plant Variety Protection Act) promotes the breeding of new plant varieties by granting a breeder's right, as intellectual property, to persons breeding new varieties of agricultural, forestry or aquatic plants. A foreign national who has neither domicile nor residence in Japan may not enjoy a breeder's right or any other rights relating to a breeder's right, unless that national's nation is a party to the UPOV Convention and reciprocal treatment is enjoyed in that nation (Article 10, Plant Variety Protection Act).

The Act also provides for a "designated seed" system with rules regarding labelling of designated seeds and standards relating to production and for promoting fairness in seed distribution.

The Plant Protection Act (which is different from the Plant Variety Protection Act) provides for quarantine of exported and imported plants and domestic plants and for controls regarding animals and plants injurious to plants, in order to prevent them from spreading and thereby ensure the safety and promotion of agriculture.

The Food Labelling Act also provides controls regarding labelling of agricultural products for sale, residual agricultural chemicals, and food additives.

For details on rules regarding GMO seeds, see Questions 25 to 31.

The central authorities are:

  • The Ministry of Agriculture, Forestry and Fisheries (MAFF), Crop Production Department, Cereal Crop Division (regarding crops, distribution, consumption and so on).

  • MAFF, Food Safety and Consumer Affairs Bureau, Plant Protection Division (regarding quarantine).

  • Consumer Affairs Agency.

Japan is a WTO member, and a party to the IPPC (see Question 1). Japan has a policy of adopting and adhering to the IPPC standards.

Import controls

A request for inspection must be made to the relevant MAFF plant quarantine station at the time of import, and a "certificate of plant quarantine" must be issued by the quarantine conducting body of the exporting country, indicating that there are no pests on such plants (Plant Protection Act). If the result at the relevant Japan quarantine station is that there are pests discovered on such plants, then measures are imposed regarding disinfection, extermination, and disposal.

Plant imports are classified under the following three types (Plant Protection Act):

  • Items where import is prohibited:

    • plants listed in Exhibits 1, 1-1, 2 and 2-2 of the Order of Enforcement of the Plant Protection Act (because there are differences depending on the country and region where the pests originate, there are countries and regions where import is prohibited and where import is not prohibited, even for the same plants);

    • living pests subject to plant quarantine;

    • soil or plants to which soil is attached;

    • packaging or containers of the above-mentioned items.

    See the relevant website regarding a database for importing conditions relating to plant quarantine (in Japanese): www.pps.go.jp/eximlist/Pages/exp/conditionE.xhtml.

    Even if an item is prohibited from import, there are cases where import may be possible where the item is to be subjected to research and development or exhibition at a research and development institution or museum, and prior approval of MAFF is acquired. To receive such approval, it usually takes at least one month from applying. If a complete disinfection method is established in the exporting country, then the import ban may, with conditions, be lifted.

  • Items where inspection is necessary at the time of import. In principle, all other items fall into this category. An inspection certificate issued by the exporting country's government must be submitted at the time of import inspection. Import of such items is allowed so long as no pests are detected, but if pests are detected, then measures are imposed for the return or destruction of such items. Where disinfection is possible, import might be allowed if such disinfection is carried out.

  • Items where inspection is not necessary at the time of import. This includes bottled or canned goods, manufactured tea, and processed products like furniture, where their condition is such that there is no risk of contamination of pests.

If import controls are applicable under classifications under the appendices of the Washington Convention, a certificate of export approval from the exporting country and an import approval from the Minister of Economy, Trade and Industry are required.

Import of "invasive species" as defined by the Invasive Alien Species Act is prohibited in principle (see www.env.go.jp/nature/intro/1outline/list/index.html#sho (link is in Japanese)).

Prior notification must be made to the Ministry of the Environment (MOE) regarding items that are deemed by MOE to be "uncategorised alien species". MOE decides whether or not there is any risk to the ecosystem, and so on, and makes a determination whether to designate the species as a new "invasive alien species". If such designation is made, import becomes prohibited in principle, but if no such designation is made, import becomes permissible.

For import of seeds as food products, procedures must be carried out under the laws relating to food products: the Food Sanitation Act and the Food Labelling Act.

Export from Japan

Quarantine conditions differ depending on the country that is to receive the export. For a list of export conditions regarding plant protection stations, see the following link (in Japanese): www.maff.go.jp/pps/j/search/e_hayami_kamotu.pdf If a plant quarantine certificate needs to be issued, the exporter must apply for an export inspection and, if such inspection is passed, must obtain a plant quarantine certificate for export.

Japan is a member country of the International Plant Protection Convention (IPPC) and carries out plant quarantine based on international standards.

 
16. State the approvals/licences that are required to engage in the following activities:
  • Import of new plant species or varieties and import of crop growing technologies.

  • Set up of R&D centres and use of test plots of new crops.

  • Crop seed production.

  • Commercial crop production.

  • Distribution of seeds or crops (wholesale/retail/e-commerce).

Import of new plant species or varieties and crop growing technologies

See Question 15 regarding ordinary import controls for plants (quarantine, prohibition of import and so on).

As for varieties registered under the Plant Variety Protection Act, seeds, harvests, and processed goods designated under regulation cannot be imported without the consent of the holder of the breeder's right. See Question 17of co regarding notification by "designated seeds" importers. If crop growing technologies are patent-registered in Japan, such technologies cannot, in principle, be used in Japan to cultivate crops without the approval of the patent holder. In addition, crops produced by the technologies cannot, in principle, be imported to Japan without the approval of the patent holder.

Set up of R&D centres and use of test plots of new crops

There is no approval or licence system regarding setting up R&D centres. However, the Cartagena Act applies to GMOs, which, depending on the circumstances of use of such GMO, imposes a duty to acquire prior consent from the government, or the duty put in place containment measures (see Questions 25 to 31). There are cases where, under the approval of MAFF, a plant whose import is prohibited under the Plant Protection Act can still be imported for research and development at a research and development institution. Even if a plant variety is registered under the Plant Variety Protection Act, the breeder's right under that Act does not extend to "exploitation of the variety for the purpose of breeding new varieties and for other experimental and research purposes" (Article 21).

Crop seed production

While there is no approval or licence system regarding cultivation and production of crop seeds, the following laws apply:

  • If individuals or entities sell or purchase or lease agricultural land for cultivation purposes, certain conditions must be satisfied (the land must be used effectively, operations must be of a certain geometric area (in principle at least 50 ares), and there must be no hindrance to any neighbouring agriculture and, in principle, permission from the relevant local governmental agricultural affairs committee must be received (Agricultural Land Act).

  • Ordinary entities can lease, but not own, agricultural land. For an entity to be able to own agricultural land, in general that entity must be an agriculture land ownership qualified entity that satisfies certain conditions (see Questions 6 to 11).

  • The maximum period for leaseholds is 50 years (see Questions 6 to 11).

There are no other approvals required or regulations applicable to crop seed production.

For information regarding GMOs, see Questions 25 to 31.

Commercial crop production

See above, Crop seed production.

Distribution of seeds or crops

As described below, labelling controls exist regarding sale of food products.

Anyone that seeks to carry out the business of shipping or selling rice must, prior to starting the business, submit a notification of commencement to the Ministry of Agriculture, Forestry and Fisheries (MAFF) Minister (Act on Stabilisation of Supply, Demand and Prices of Staple Food). Additionally, under that Act, for certain use-limited rice (that is, rice whose use is limited to non-staple food uses, such as rice used for processing (including that to be distributed under certain local distribution agreements); rice for new use other than staple foods and rice for processing (rice used as rice flour and feed crops)), any other use is prohibited. If a party engages in shipping, sale, purchase, moving, or disposal of rice, seed rice, and certain processed rice, the Act imposes an obligation to create records of the activity and keep the records for three years.

Also, under the Plant Variety Protection Act, when dealers (including importers) of "designated seeds" (which basically include all agricultural, forestry, and aquatic plants for food use (as listed in Notification 920 of the MAFF 2005)) commence business, or if there is a change in the notified matters, then the dealer must notify MAFF within two weeks regarding the seed business.

 
17. Set out the domestic labelling requirements in the crop business sector.

The following must be indicated in labelling for "designated seeds" (including basically all edible agricultural, forestry or aquatic plants):

  • The name and the domicile of the seed dealer providing these matters.

  • The type and the variety name (in the case of grafted saplings, the types and the variety names of scion and rootstock).

  • The place of production.

  • For seed: the date of production or the time limit of validity and the germination percentage.

  • The quantity.

  • Any other matters specified by Ministry of Agriculture, Forestry and Fisheries (MAFF) ordinance.

A violation of the above could result in a penalty of no more than JPY500,000.

Also, the MAFF Minister can order either that labelling be made, that labelling matters be changed accordingly, or that sale be prohibited.

In addition, labelling controls for sale as food products exist based mainly on the Food Labelling Act.

Items to be labelled include (but are not limited to):

  • Name.

  • Allergens.

  • Preservation method.

  • "Best by" date.

  • Ingredients.

  • Additives.

  • Nutritional information.

  • Place of origin.

 
18. Are there any restrictions on foreign direct investment (FDI) in this sector?

A prior notification must be made (six months) to the Minister of Finance and the Minister having jurisdiction over the business regarding direct investment to Japanese businesses that carry out crop related businesses (except that it is an ex post facto notification for direct investment to offices that carry administrative and ancillary economic activities). See Questions 3 to 5 for related information.

 
19. Summarise landmark or recent cases that have defined the law and practice in this sector.

The Agricultural Land Act was revised in 2009 to allow easier entry into the agricultural industry, and joint-stock companies (kabushiki kaisha) are now able to lease agricultural land. Specifically, the maximum lease term was extended from 20 years to 50 years (what it currently is). Also, depending on the conditions of a particular region, the requirement of a minimum area (generally at least 50 ares; in Hokkaido, at least 200 ares) on acquiring agricultural land may be relaxed. Subsequently, there has been an increase in companies that carry out agricultural businesses, with MAFF's statistics showing that the number of ordinary entities entering the industry increased by about five times since before 2009.

 

Plant variety rights (PVR)

20. Has your jurisdiction ratified the International Convention for the Protection of New Varieties of Plants 1961 (UPOV Convention) and its revisions in 1972, 1978 and 1991?

Under the 1947 enacted Agricultural Product Seed Act, Japan had rules regarding plant name (denomination) use, to protect new plant varieties. Subsequently, based on a complete revision of that law in 1978, the Plant Variety Protection Act was enacted, establishing a system of registration to provide direct protection of new plant varieties. Japan at that time had not yet ratified the former UPOV Convention (which had a provision prohibiting "double protection" under a patent protection system). However, in 1982 Japan ratified the 1978 revised version, which recognised exceptions to the prohibition on "double protection". The Plant Variety Protection Act was revised in accordance with that convention. Now, patent protection under the Patent Act and registration under the Plant Variety Protection Act are both available.

 
21. Briefly describe the registration process for PVR in your jurisdiction.

The new plant varieties registration process in Japan under the Plant Variety Protection Act applies to any species of plant, and is as follows.

A party that bred the new plant variety (or such party's successor in title) can apply for registration, so long as such variety meets all of the following requirements:

  • In terms of characteristics:

    • it is distinguishable from already-existing varieties;

    • there is uniformity with plants of the same generational stage;

    • it has stability.

  • The variety's denomination is appropriate.

  • The variety being applied for has novelty (that is, in principle, it has not been transferred in Japan earlier than one year before the application date, or outside Japan earlier than four years before such date (or, for the case of perennial plants, earlier than six years before such date).

The prescribed application is submitted to the MAFF Minister (with necessary attachments, explanation forms and pictures of the relevant plant variety), and the prescribed application fee must be paid.

When the application is received, certain application details are made public.

The MAFF Minister carries out examinations (including cultivation experiments and field surveys) regarding the variety's characteristics, denomination, and confirming that there have not been any transfers.

The MAFF Minister must carry out the registration, unless the application is rejected due to a certain reason for rejection. Registration is indicated in the registry of plant varieties, the applicant is notified, and necessary public announcement is made.

The application process operates under a first-to-file rule and the principle of reciprocity.

 
22. Briefly describe the laws and procedures of your jurisdiction covering the protection of PVR in terms of:
  • Requirements for protection.

  • Extent of the protection.

  • Restrictions on the rights of the PVR holder.

  • Farmer's privilege.

Requirements for protection

Requirements for protection under the breeder's right are that the (Plant Variety Protection Act):

  • Plant variety is registered.

  • Duration of the right has not expired (25 years from the date of registration; for perennial plants, 30 years from that date).

  • Registration has not been rescinded (for example, because the registration fee was not paid).

Extent of the protection

The breeder's right holder has the exclusive right (including the ability to grant an exclusive exploitation right or non-exclusive exploitation right) to exploit the registered plant variety and plant varieties whose special characteristics cannot clearly be distinguished from the registered plant variety (including essentially derived varieties). The denomination of a registered variety must be used in the transfer of the registered variety in the course of business, and cannot be used in the transfer of a non-registered variety in the course of business. Further, the Plant Variety Protection Act does not provide for extension or renewal of registration (see Question 21).

Restrictions on the rights of the holder

The holder's right does not extend to any of the following:

  • Exploitation for purpose of experimentation and research.

  • In connection with a process patent:

    • exploitation of the variety, by a holder or licensee of a patent right for the process of breeding the registered plant variety;

    • exploitation after such patent has lapsed;

    • exploitation of the harvested material obtained by using the seeds of the first two bullets above; or

    • exploitation of the processed goods pertaining to the harvested material of the immediate above bullet.

  • Plant propagation materials for use by farmers in subsequent production cycles, unless otherwise agreed upon by contract or such plant propagation materials, belong to any one of the genera or species designated by MAFF ordinance as being propagated vegetatively.

  • When the right is exhausted (that is, the registered plant variety's seeds, harvest, and processed goods have been transferred based on the intent of the right holder), except the acts involving further propagation of the registered plant variety, exporting propagating material of the registered variety to a state which does not provide protection for the plant genus or species to which that registered plant variety belongs, or exporting harvested material of the registered variety to such a state for a purpose other than final consumption.

Pursuant to the Ministry of Agriculture, Forestry and Fisheries (MAFF) Ministerial authority, the registration may be cancelled (if such cancellation is deemed necessary) but, unlike the Patent Act, the Plant Variety Protection Act does not provide for any trial system for invalidation but only provides for a hearing system for cancellation as a matter of general administrative procedure.

Farmer's privilege

A breeder's right does not extend to harvested materials where a farmer individual or an agricultural production entity both (Paragraph (2), Article 21, Plant Variety Protection Act):

  • Has acquired harvested materials by using certain varieties (except for those relating to certain vegetative propagation) that have been duly transferred from the breeder's right holder.

  • Uses those harvested materials, in their own agricultural management, as propagating material for the subsequent cycle of production. (However, this privilege does not apply where there are special provisions that, for example, prohibit that privilege.)

 
23. Which legal actions are available to owners of PVR in the event of PVR infringements?

Under the Plant Variety Protection Act:

  • The breeder's right holder may make a demand for injunction, against any party that is infringing or is likely to infringe such right, to discontinue or refrain from such infringement. In that event, a demand can be made for the destruction of the relevant seeds or other demands necessary for the prevention of infringement.

  • In a lawsuit against an infringing party, special exceptions may be available in favour of the breeder's right holder (such as the presumption of amount of damages and the presumption of negligence of the infringing party), and special obligations can be imposed on the party arguing against infringement (such as the obligation to clarify the specific reasons for non-infringement, the obligation to submit related documentation, and confidentiality protective orders).

  • Where necessary, the courts may make orders against infringing parties to restore the business trustworthiness of the breeder's right holder.

Also, regarding infringement of the breeder's right, in addition to the gradual increasing of statutory penalties in accordance with the strengthening of the breeder's right, covered situations have been expanded to include gratuitous transfers and situations relating to their processed goods.

 
24. Summarise landmark or recent cases that have defined the law and practice in this sector.

In the "Kurakata Yellow Peach" Case (Supreme Court Judgment, February 29, 2000, Minshū, Vol. 54, No. 2, p. 709/Hanji, No. 1706, p. 112/Hanta, No. 1028, p. 173), the court recognised the "method of breeding the new type of yellow peach" as a patent under the Patent Act (based on the reasoning that, if the yellow peach breeding was repeatable, then there was the possibility to reproduce the traits identical to those of the relevant objective invention).

In the Eryngii Mushroom Hokuto No.2 case (Intellectual Property High Court Judgment, December 21, 2008, Hanji, No. 1961, p. 150/Hanta, No. 1237, p. 322), the court refused the enforcement of a plant variety right (PVR). The court stated that the alleged PVR has a reason for cancellation of the registration set out in Article 49, paragraph 1, item 1 of the Plant Variety Protection Act and concluded that it would be an abuse of right to enforce such a PVR. The court also clarified the meaning of the statutory language in Article 3, paragraph 1, item (i) of the Act. This requires that the variety in an application for variety registration must be clearly distinguishable from any other varieties that are publicly known in Japan or overseas before the filing of the application by all or some of its expressions of the characteristics. The court interpreted "any other varieties" as the already-existing varieties that must be compared with the variety in the application to examine the distinctiveness. The court concluded that varieties that are objectively identical with the variety in the application fall within "any other varieties". However, where the already-existing and objectively identical variety is the variety in the application itself, the variety in the application does not necessarily lack the distinctiveness. It must only be subject to Article 4, paragraph 2 of the Act, under which there is no novelty where it has either:

  • It has been imported to Japan more than one year before the application date.

  • Exported out of Japan more than four years before the date (or, for the case of perennial plants, earlier than six years before such date).

In the Nameko case (Intellectual Property High Court Judgment, June 24, 2015, Hanji, No. 2286, p. 160/Jurist, No. 1486, p. 8), the court set out general criteria for judgment of infringement as to whether the accused product can fall into "plant varieties whose special characteristics cannot clearly be distinguished from the registered plant variety" under Article 20, Paragraph 1 of the Act. The court held that this encompasses the plant varieties which, while different from the registered variety in special characteristics, do not have a clear enough difference to reach a level of recognised distinctiveness to meet the requirement for registering a variety. The court also held an infringement can be found both for plant varieties that are in the same class value as the registered variety and those that are not can be infringement, by considering the extent in difference, type and nature of the plant and so on. Therefore, the numerical conversion of special characteristics that can be registered as "the expression of the characteristics of the variety" under Article 20, Paragraph 2, Item (i) of the Act is not conclusive. Instead, a comparison of the subject plants is necessary to determine whether the accused variety is not clearly distinguishable in its special characteristics from the registered variety.

 

Genetically modified (GM) crops

25. Has your jurisdiction ratified the Cartagena Protocol on Biosafety 2002? What is the domestic policy with respect to GM crops?

Japan ratified the Protocol in November 2003. For the implementation of the Protocol domestically, the Act on the Conservation and Sustainable Use of Biological Diversity through Regulations on the Use of Living Modified Organisms (Cartagena Act) was promulgated, and both became effective in February 2004. Therefore, genetically modified organisms (GMOs) intended for deliberate introduction into the environment, and GMOs for food, feed, or processing, are deemed to fall under "Type-1 Use" under the Cartagena Act (see Question 26), and structures are in place requiring prior assessment of the environmental impact in Japan on biodiversity, as required under the Protocol. As a major importer of soybeans and corn, Japan ordinarily adopts a passive and conservative stance regarding genetically modified agricultural products.

 
26. Describe the domestic laws regulating genetic engineering. Which authority(ies) is(are) responsible for approving GM crops. Set out the permit requirements and prohibitions as well as sanctions in the event of infringement.

Cartagena Act

The Cartagena Act provides regulations relating to the effects on ecosystems and biodiversity, mainly under the joint jurisdiction of Ministry of Agriculture, Forestry and Fisheries (MAFF) and the Ministry of the Environment (MOE).

"Type-2 Use" is use that takes place inside some facility (for example, a laboratory or factory) undertaken with the intention of preventing the dispersal of GMOs into the environment outside such facility, in accordance with the required measures. Direct use or use in processing as food or feed that does not fall under "Type-2 Use" is deemed to be "Type-1 Use".

"Type-1 Use" is use other than "Type-2 Use". A party that seeks to produce or import or otherwise engage in GMO "Type-1 Use" (including uses as seeds or crops) must make an application to MAFF/MOE that includes the party's assessment of the GMO for effects on biodiversity and the party's "Type-1 Use Regulations", and must receive approval from MAFF/MOE before engaging in that use. The same applies to parties seeking to import to Japan to make a third party engage in "Type-1 Use".

If a party has used or is using a GMO in violation of the above, then that GMO could become subject to compulsory orders for collection and/or be punished by imprisonment for six months or less, or a fine of JPY500,000 or less. If the order is violated, a further punishment of imprisonment for one year or less, or a fine of JPY1 million can be imposed (cumulative punishment possible).

Food Sanitation Act

The Food Sanitation Act regulates food safety under the jurisdiction of the Ministry of Health, Labour and Welfare (MHLW), and prohibits the manufacture, sale, import, processing, use, preparation, collecting, transporting, displaying, delivering and storing of food products not meeting the applicable standards (if any). Regarding GMOs, it provides standards pursuant to MHLW public notification. A new kind of GMO must undergo a prescribed examination and must receive a safety assessment (also the fact of the acquisition of safety assessment becomes publicly available information). If a party manufactures, imports, or sells a GMO without an above-described safety assessment, the party may be punished by imprisonment for two years or less, or a fine of JPY2 million or less (cumulative punishment possible).

Act on Safety Assurance and Quality Improvement of Feeds

The Act on Safety Assurance and Quality Improvement of Feeds (Feed Safety Act) regulates safety of feed for farm animals, under the jurisdiction of MAFF, including feed safety for humans regarding human consumption of milk, meat, and eggs (MMEs) derived from farm animals that ingested feed that used GMOs. The Act prohibits the manufacture, storing, use, import and sale of feed not meeting the applicable standards (if any). Standards for GMOs are provided under an MAFF ministerial ordinance, and a new kind of GMO must undergo a prescribed examination and receive a safety assessment (the fact of the acquisition of the safety assessment becoming publicly available information). If a party manufactures, imports, or sells a GMO without a safety assessment, the party may be punished with imprisonment for three years or less, or a fine of JPY1 million or less (cumulative punishment possible).

 
27. Which safety evaluations are legally required before GM crop commercial market entry? How are GM crops regulated?

Approval of the "Type-1 Regulations" under the Cartagena Act

Isolated field use. First, in principle, a "Type-1 Use" approval for isolated field use must be acquired, even if actual cultivation in Japan of GMO is not expected. The applicant must prepare its "Type-1 Use Regulations" and submit its application to Ministry of Agriculture, Forestry and Fisheries (MAFF) or the Ministry of the Environment (MOE). Specifically, the committee for Assessment of Effect on Biological Diversity examines the matter. If the Committee determines that there is no risk of effect on biodiversity, MAFF then gathers reports on the matter, submits the matter for public comment, and MAFF/MOE issue the relevant approval. The standard process period for this approval is set at six months, but in practice about 12 to 18 months is required.

Ordinary use. After the acquisition of the "Type-1 Use" isolated field use approval, a "Type-1 Use" approval for ordinary use may be obtained. At present, in principle, such ordinary use approval is to include cultivation, even if actual cultivation in Japan of the GMO is not expected (to be specific, an approval that covers the purpose of cultivation is actually obtained for non-cultivation purposes, except for the case of commercial cultivation of "ornamental flowers for cut flower use"). The procedures are the same as for an "isolated field use" approval, except that, in addition, if the use is to be as food or feed, then the acquisition of the food or feed safety assessment is a prerequisite. This approval process also ordinarily requires 12 to 18 months.

Safety assessment under the Food Sanitation Act

An application is made to the Ministry of Health, Labour and Welfare (MHLW), together with materials providing necessary information as prescribed in the MHLW public notifications. Specifically, the Food Safety Commission (FSC) examines the matter, during which time a specialised panel of experts makes a report to FSC and the matter is submitted for public comment. FSC reports its findings and opinions to MHLW. Then MHLW, where it determines that there is no risk of effect on human health, makes its safety confirmation, and the applicant is notified by MAFF and the fact of the acquisition of the safety assessment becomes publicly available information.

The standard process period for this assessment is set at one year, but in practice, about 12 to 18 months is required.

Safety assessment under the Feed Safety Act

An application is made to MAFF, together with materials providing necessary information as prescribed in the MAFF public notifications. Specifically, the Agricultural Materials Council examines the matter. Then opinions are gathered, and the matter is submitted for public comment. (Also, where applicable, for MME safety for humans, MAFF makes inquiries to FSC, and then the FSC examines matters together with its food safety assessment.)

Once the procedures for feed safety assessment (and, where applicable, the food safety assessment) have been completed and safety has been confirmed (for both where applicable), MAFF, where it determines that there is no risk for farm animals (and human, where applicable), makes its safety confirmation, the applicant is notified by MAFF, and the fact of such acquisition of safety assessment becomes publicly available information.

Ordinarily, when introducing a new GMO, the process (about 24 to 36 months in total) involves the following:

  • Making simultaneous applications for isolated field use, approval under the Food Sanitation Act and under the Feed Safety Act.

  • Once approval for isolated field use is acquired, making an application for ordinary use.

  • After receiving the safety assessments for approval under the Food Sanitation Act and the Feed Safety Act, ordinary use approval is acquired.

 
28. Describe the GM crop test plot regulations and requirements.

For information on isolated field use or test plots for GM crops, see Question 27.

 
29. Describe pre-market approval requirements (and approval timelines) to grow, produce and sell GM food or feed. Provide details on the competent approval authorities.

For information on the approval requirements and estimated approval timelines, see Question 27.

 
30. Set out the domestic product genetically modified organism (GMO) content labelling obligations (or the absence of them) and sanctions in the event of non-compliance or inaccurate content labelling.

Under the Food Labelling Act, sale is prohibited of GMO-related agricultural products (soybeans, corn and so on) and processed foods using such products as ingredients that do not comply with the following labelling rules:

  • Where a GMO is segregated and used, labelling is required (for example, "soybeans (GMO)").

  • Where a GMO and a non-GMO are used but not segregated, labelling is required (for example, "soybeans (non-sorted with GMOs)").

However, where a non-GMO is differentiated and used, labelling is voluntary (for example, "soybeans (not GMOs)"). Further, if the GMO or protein derived from it no longer exists after processing, the above labelling requirements are voluntary.

 
31. Summarise landmark or recent cases that have defined the law and practice in this sector.

2005 and 2008 saw cases where unapproved corn seed produced outside of Japan contaminated approved seed produced outside of Japan that was then imported into Japan in the same shipments, measures were adopted to prevent customs clearance, and subsequent pre-shipment inspections were thoroughly conducted. Subsequently a manual was made for the purpose of response in the event of recurrence.

2002 saw a case where a non-safety assessed GMO contaminated corn imports from the US. Because the corn had already been consumed and disposed, inspections were strengthened to prevent subsequent contamination, which continued for a considerable period. Also, 2005 saw a case of non-safety assessed GMO potato contamination (which led to a Japanese goods manufacturers recall).

As of December 2016, the technology for editing genomes using nucleases is now beginning to be practically realised. There are various types of genome-editing technology; it is arguable whether there are provisions in each of the Japanese laws mentioned previously (the Cartagena Act, the Food Sanitation Act, the Feed Safety Act and the Food Labelling Act) regarding produce that was produced using these technologies. For each of the competent supervisory authorities as of October 2016 (MAFF, MOE, MHLW, and the Ministry of Education, Culture, Sports, Science and Technology), it is possible that each of the Japanese laws mentioned above are applied in relation to organisms that had been produced using genome-editing technology. However, these authorities also adopt the use of holding prior discussions with relevant parties if genome-editing technology is used or an organism that had been produced using genome-editing technology is used and so on.

Also, Japan is a party to the Nagoya – Kuala Lumpur Supplementary Protocol to the Cartagena Protocol on Biosafety, and as of December 2016, amendments to the Cartagena Act are being considered in Japan to implement the protocol. These amendments mainly involve enabling a supervisory authority to issue orders for restoration to original conditions if damages are incurred from the use of GMOs without approval under the Cartagena Act. For example, these orders include not only the recovery of GMOs or the removal of hazardous substances, but also maintenance or improvement of deteriorating habitats and environments, enforcement of artificial propagation or reintroduction, introduction of the same types of species and so on).

 

Importing animals and gene patents

32. Summarise the import/export control measures for animals and genetic resources.

Quarantine stations are set up at major national airports and ports, for the inspection of imported animals and animal products, including:

  • Animals like even-toed ungulates (cows, pigs and so on), horses, poultry (chickens, ducks and so on), dogs, rabbits, honeybees and so on.

  • Bones, muscles, skin, and processed goods derived from such animals.

  • Hay and straw (for animals, animals are tethered in isolated facilities).

Diseases subject to inspection are animal infection diseases (28 diseases, such as foot-and-mouth disease, transmissible spongiform encephalopathy and so on) and notifiable infectious diseases (71 diseases). Region-indicated import prohibition measures also exist with respect in particular to virulent infectious diseases (rinderpest, foot-and-mouth disease and African swine fever). Further, a certificate of inspection from the exporting country is required for designated quarantine items. If such inspection is passed, then an import quarantine certificate is submitted to the customs house and, on confirmation of the certificate, import can proceed.

Also, certain import controls exist regarding dogs (rabies), monkeys (Ebola hemorrhagic fever), and aquatic life like carp and goldfish.

Regarding export of animals and animal products, Japan issues a certificate of export quarantine whenever the importing country so requests.

Apart from the quarantine system, there is no special separate system in place for import of genetic resources or breeding materials. However, genetic materials or breeding materials would fall under the above animal and animal products quarantine inspections (as animals and processed goods derived from them).

These import/export controls and inspection standards are based on standards of international organisations like the IOE. Regarding the quarantine stations for inspections, international standard certification was obtained in 2011 (ISO/IEC17025).

Standards and guidance exist based on the Act on Domestic Animal Infectious Diseases Control, such as the "Standards of Rearing Hygiene Management" with which farmers must comply based on animal classification, and the "Disease Appraisal Guidance" and the "Guidance on Prevention of Infectious Diseases" for the purpose of precise outbreak prevention.

Further, on receiving approval under the Pharmaceutical Affairs Act, use of vaccination for animals is permissible.

Japan joined the IOE in 1930, and at the yearly general meetings, Japan is represented by the section manager of the Food Safety and Consumer Affairs Bureau of the Ministry of Agriculture, Forestry and Fisheries (MAFF). From 2012, that person has been serving as an IOE council member.

 
33. Does the law of your jurisdiction allow for patentability of livestock genes on the grounds of isolating and purifying them?

Patentability regarding gene "isolation" and "purification" may be possible in Japan.

General rules of patent law will apply to the scope of protection. Genes or certain genetic sequences that include specific traits can be patented if they are industrially applicable and can be exploited by a person with ordinary skill in the art. They can be protected as a patent invention to the extent that industrial applicability of the genes or certain genetic sequences is properly disclosed in the patent specification.

 
34. Which legal instruments are available to protect animal breeding know-how and a resulting animal nucleus?

Patent protection is available regarding animal breeding know-how, and may also be recognised for animals having unique characteristics originating from animal nuclei resulting thereof (for example, in a 13 February 1990 case, the Tokyo High Court recognised the patentability of a discovery of a breeding method for carp and goldfish by feeding them specific feed that would colour the fish with certain speckles or colour tones). This means that animals having unique characteristics bred by the patent on the breeding technique can also be protected by such patent. In this sense, the patent holder cannot claim infringement just because the accused infringer holds an animal with the characteristics; it is the patent holder's burden to demonstrate that such animal was actually bred by the patent on the breeding technique.

If a patent application for this kind of technology is submitted, it becomes open to the public, regardless of whether or not the application is successful. However, another legal instrument is available to protect such technology, by not filing a patent application but keeping such technology confidential. The Unfair Competition Prevention Act (the UCPA) defines "trade secret" as technical or business information that is managed with confidentiality and not publicly known. It must also be useful for business activities, such as manufacturing methods, marketing methods and so on. A holder of a trade secret can seek injunction as well as damages under the UCPA, just like a patent holder asserting patent infringement.

While there are no other intellectual property-based protections available, the Act on Improvement and Increased Production of Livestock (Livestock Improvement Act) provides for a system whereby animals are registered with certain private organisations based on pedigree, for the purpose of commercial transactions involving animals.

 
35. Are there legal or practical restrictions on the introduction of new breeds/species, the breeding of certain animal species or certain breeding practices?

Restrictions are provided for in the following laws:

  • Regarding breeding stock and sperm, the Livestock Improvement Act.

  • Regarding animal drug safety, the Pharmaceutical Affairs Act and the Veterinarians Act.

  • Regarding feed safety and quality assurance, the Act on Safety Assurance and Quality Improvement of Feeds.

There have been partial successes in somatic cell cloned animals, but this has yet to reach a level of widespread prevalence in Japan.

There are some cases relating to the application of the Cartagena Act regarding animals (including marine products), with an example of inappropriate use under the Act being the import and sale of certain unapproved aquarium fish.

As for animals brought in from overseas, in addition to the above system under the Act on Domestic Animal Infectious Diseases Control, there is an "animal import notification system" for implementation of quarantine stations of the Ministry of Health, Labour and Welfare (Act on Prevention of Infectious Diseases and Medical Care for Patients Suffering Infectious Diseases). Also, under the Customs Act, checks are made at Japan customs regarding provisions under the Customs Act relating to animal imports.

 
36. Summarise landmark or recent cases that have defined the law and practice in this sector.

Enacted in 2003, the Act on Special Measures Concerning Information Management and Transmission for Cow Classification (Cow Traceability Act) imposes centralised management using "individual identifying numbers" and earmark identifiers for individual cows from birth to processing. Individual information on beef being managed is based on individual identifying numbers being relayed and exchanged at each level of distribution.

Regarding BSE, in 2013 Japan received "negligible risk status" from IOE. On Japan relaxing beef import restrictions from countries where there has been BSE outbreak, disagreement of opinion has manifested between Japan and the US regarding the "age in months" of safe cows and the scope of "specific dangerous portions". Relating to these issues, on Japan entering into relevant agreements with other countries, Japan has allowed the import of US, Canadian or French beef that is no older than 30 months, and Dutch beef that is not older than 12 months. Cranial and spinal cord portions are designated as specified risk materials (just as with domestic beef).

Regarding foot-and-mouth disease, in February 2011, IOE recognised Japan as being "FMD free where vaccination is not practised".

Japan in principle has suspended imports of birds and so on from China and countries in Southeast Asia where avian influenza (in particular highly pathogenic avian influenza) has occurred.

 

Agricultural safety and product liability

Standards

37. Summarise the system of food safety standard setting, the main regulator(s) and regulations. If industry input on the standards is possible, indicate how this is conducted.

The standards for food relating to human safety are under the jurisdiction of the Ministry of Health, Labour and Welfare (MHLW) and are provided in the MHLW public notice, "Specifications and Standards for Food and Food Additives", under the Food Sanitation Act (see section 6.2(2)). The Food Sanitation Act prohibits the manufacture, sale, import, processing, use, preparation, and storing of food products that do not meet the applicable standards (if any). On preparing these standards, the MHLW Minister receives the opinions of the Food Safety Commission and the matter is submitted for public comment.

In essence, the following standards apply to food products:

  • Compositional standards:

    • non-existence of antibiotics, chemical-synthetic antibacterial and radioactive substances;

    • for GMOs and special health food, that safety assessment has been acquired and the fact of such acquisition becomes publicly available information; and

    • non-existence or maximum residual limit of specific agricultural chemical substances.

  • Radioactive cesium maximum concentration standards.

  • Food processing and storage standards.

  • Specific standards for grains, beans, and vegetables:

    • compositional standards for grains and beans (non-existence or maximum residual limit of pollutants (such as cadmium and cyanide));

    • standards relating to use of beans where cyanide is detected; and

    • processing standards for radiation exposure for germination inhibition in potatoes.

Japan is a WTO member. Japan joined the Codex Alimentarius in 1966, where it participates in the formulation of international standards. However, some of the major standards are either stricter or more relaxed than the Codex standards, to fit with circumstances in Japan depending on the scientific basis. For example, the compositional standard relating to non-existence or maximum residual limit of specific agricultural substances, and the specific standard for grains and beans relating to processing standards differ. In particular, where the Codex standards are stricter, standardisation is made only when justified by a legitimate scientific basis.

 

Liability

38. Set out the legal requirements to establish the liability of producers and suppliers for defective or contaminated food ingredients that cause damage, in relation to:
  • Tort.

  • Product liability.

Tort

The requirements for damages/compensation under tort law are:

  • Rights or legally-protected interest of the injured party have been harmed by the injuring party.

  • There is intent or negligence.

  • There are damages.

  • There is a causal relationship between intent/negligence and the damages.

There is no legal distinction regarding whether the injuring party is the producer or supplier.

In connection with the production and supply of food products that require absolute safety, courts may recognise a presumption of negligence on the part of the manufacturer where there is a defect in the product and a health-related injury to consumers as a result of the product.

Product liability

The requirements for damages/compensation under the Product Liability Act are:

  • The injuring party is deemed to be a "manufacturer and so on" (as defined below).

  • There is a defect in the "product" manufactured and delivered by the injuring party.

  • There are damages.

  • There is a causal relationship between the defect and the damage.

There are no consumer requirements as to the injured party.

A "manufacturer and so on" means a manufacturer, importer, labelling manufacturer, or substantial manufacturer. A labelling manufacturer is one that represents its name on the product as the manufacturer or who otherwise provides the representation of its name, and so on, on the product in a way which misleads others into believing that it is the manufacturer. A substantial manufacturer is one that participates significantly in the planning, development, manufacture, and sale of the product.

A "product" is defined to mean a "movable that is manufactured or processed" and, in principle, primary product production is understood not to fall within "manufactured or processed". Accordingly, in principle, the Products Liability Act does not apply to unprocessed agricultural products (although of course tort law would apply to unprocessed agricultural products so long as the requirements for tort are met).

However, GMO seed manufacturers and importers might be deemed "manufacturers etc", and, if there is injury due to defective seed or defect of a product produced with such seed, such manufacturers or importers might be liable under the Product Liability Act.

An agricultural product that is processed is deemed to be a "product" (seasoning, heating, grinding, juice extraction qualify as "processed", but picking, cold storage, cutting, and natural seasoning do not).

An agricultural product that is produced using extremely particular production technology and under extremely strict management might possibly be deemed to be a "manufactured or processed" "product" (although such an interpretation of law is unlikely to be successful, so this point would be best resolved through further legislative amendment, along with addressing how to deal with new technologies like GMO-related technologies).

A "defect" is a lack of safety that the product ordinarily should provide and includes manufacturing defects, design defects, and failure to warn. The liability under the Products Liability Act is based on strict liability.

Contract law

Finally, in addition to tort law and product liability law, contract law could apply and, depending on the circumstances, a violation of the Food Sanitation Act (see Question 37) could constitute grounds for liability under applicable tort law, product liability law, and/or contract law.

 
39. Which defences are available to the producer and/or supplier to avoid liability? For instance, is market-entry prior government approval a legal defence against product liability and under which conditions?

Manufacturers or importers can use the defence of "development risk" (that is, that awareness of a product defect was not possible due to scientific or technological knowledge at the time of product delivery).

There is no theory of market-entry approval defence in practice.

 
40. Which types of damage are generally compensated by civil courts in food safety liability cases? For instance loss of value, reparation costs, loss of revenue, personal injury damages and punitive damages. Are punitive damages available?

Tort

Damages include direct damages like medical costs, hospital and car costs, funerary costs, physical damages, and reasonable attorneys' fees, and include indirect damages like lost profits, damages due to work suspension, and solatium.

Causality is not causation-in-fact but legally sufficient causation, and damages ordinarily arising out of the act are recoverable under tort theory. However, damages arising due to special circumstances are recoverable only if such circumstances were foreseen or were foreseeable at the time of tortious act. Damages can be mitigated due to the negligence or other mitigating factors of the injured party. Punitive damages are not available as a matter of law.

Product liability

Damages are handled the same as under Japan tort theory, except that there is no liability when the damages occur only with respect to the product.

 
41. Summarise landmark or recent cases that have defined the law and practice in this sector.

In the "Snapper Fish" case in 2002, the Tokyo District Court recognised the application of the Products Liability Act where consumers eating fish provided at a restaurant contracted food poisoning sickness due to toxins inside the fish. According to the court, food processing was deemed to have occurred if, by some human interference like heating the ingredients and adding seasoning, it could be said that a new attribute or value was added. Further, a food product was deemed a manufactured product that must be unconditionally safe, a defect was deemed to exist and the requisite level of safety was deemed lacking if illness-inducing toxins were inside the product. Also, the court recognised the "development risk" defence for manufacturers (under such defence, the applicable standards are the highest global scientific and technological standards attainable at the time of product delivery, and the defence can be successful if it can be proven that, even if a manufacturer had knowledge of such global standards, the defect was unforeseeable).

In a 1999 case, the Nagoya District Court recognised the application of the Products Liability Act in a case where a person who consumed a drink provided by McDonald's incurred throat injuries by what felt like a sharp object but, when the subject drink was inadvertently thrown away, the existence of any sharp object or other foreign body could not be confirmed. Ultimately, causality was presumed (as it was determined that, under the factual circumstances at the time of drink delivery, there was no possibility of any other reason for the injury), and a "defect" was recognised.

In a 2013 case where foul smells occurred due to chlorophenols in processed foods that had been produced with imported food products as ingredients, the foods were subjected to recall. The Tokyo District Court recognised a "defect, based on, for example, consumer complaints about the smell and the fact that safety was insufficiently guaranteed (despite the fact that the levels of chlorophenols themselves were not hazardous to the human body).

*We would like to thank co-authors Yasuo Shida, Takeshi Kubota, Keiko Tsushima, Tetsuri Kurozumi, Munehiko Watanabe, Ryugen Watanabe, Atsushi Adagawa, Tsuneyoshi Odajima, Koichiro Yoshida and Tomohiro Ise.

 

Online resources

W www.japaneselawtranslation.go.jp/?re=02

Description. The Ministry of Justice maintains this website. English translations are unofficial. Some translations, also unofficial, may be available in print, such as the EHS Law Bulletin Series Japan. The cases cited in this article do not have any translations.


Summary: agricultural law in Japan

Japan

Agricultural policy

Household farming

Industrial farming

Foreign investment

Encouraged/neutral/restricted?

Encouraged

Encouraged

Neutral

Acquisition of a domestic agricultural company

Transaction review

National security review

Competition review

Government approvals?

Required

No

Applies

Foreign acquisition of agricultural land

Allowed/not allowed

Transferable

Auction/tender required

Agricultural land ownership?

Allowed

Yes

Government-owned farm land

Agricultural land usage rights (maximum term)?

Allowed (maximum 50 years)

Yes

Government-owned farm land

Mortgage/pledge of agricultural land?

Allowed

Yes

N/A

Agri/green parks

Agri investment

Tax

Land fees

Foreign investment incentives?

No

No

No

Foreign investment in crop business

Generally permitted

Restricted

Prohibited

Import of foreign plant varieties?

Generally permitted

R&D/test plots?

Generally permitted

Ministry of the Environment (MOE) approval (GMO)

Production of crop seed?

Ministry of Agriculture, Forestry and Fisheries (MAFF)/MOE approval (GMO)

Commercial crop production?

MAFF/MOE approval (GMO)

Distribution of crop seeds?

MAFF/MOE approval (GMO)

IP Protection

Available

Certain varieties/species

Not protected

Plant variety right?

Available

Patent on plant genetic sequence?

Available

Patent on livestock genes?

Available

Exemption from breeder rights to a protected plant variety

R&D for scientific purpose

Prior consent breeder

Royalty payment obligation

Third parties breeding rights?

Allowed

No

No

Farmer's privilege

Re-use

Share/exchange

Sell

Farmer rights to harvest protected plant varieties?

Allowed

Not allowed

No allowed

Genetics

Generally permitted

Restricted

Prohibited

Import of GM seeds?

MAFF/MOE approval

Import of GM crops?

MAFF/MOE approval

Testing of GM seeds?

MAFF/MOE approval

Local production of GM seeds

MAFF/MOE approval

Local production of GM crops?

MAFF/MOE approval

Import of animal genetic material?

Yes, if quarantine inspection is passed

Import of new animal breeds?

Yes, if quarantine inspection is passed

Food product liability

Strict liability

Negligence

Market-entry approval is a legal defence?

Producer?

Strict Liability Under Product Liability Act

Negligence under tort law

No

Importer?

Strict Liability Under Product Liability Act

Negligence under tort law

No

Distributor?

Strict Liability Under Product Liability Act (in the case of a distributor that is deemed a "substantial manufacturer")

Negligence under tort law

No

 

Contributor profiles

Takashi Hirano

Blakemore & Mitsuki

T +81 3 3503 5571
F +81 3 3503 5577
E hirano@blakemore.gr.jp
W www.blakemore.gr.jp

Professional qualifications. Japan, Lawyer, 1985.

Non-professional qualifications. LL.B., Chuo University, 1980; Diploma, Legal Training and Research Institute of the Supreme Court of Japan, 1985.

Languages. Japanese, English.

Professional associations/memberships. Daini Tokyo Bar Association; Professor at Cyber University (2012-Present); Director of Computer Software Association Japan (2006-Present); Councilman of Software Information Center (2006-Present); Ministry of Trade, Economy and Industry, Head of Working Group regarding contract and business practices for secured information systems (2007); Ministry of Trade, Economy and Industry, Chairperson of Steering Committee of Consortium for highly developed business practices for information systems and software (2008); Ministry of Internal Affairs and Communication, Member of study group for activation of data counters in crowd computing era (2009); Managing Director of Japan Life Style Counselors' Association (2009-2012), Director of Japan Life Style Counselors' Association (2012-Present); Director of International Foundation of Information (2011-2013); Statutory Auditor of Morpho Inc, (2008-Present); Member of Copyright Law Association Japan, Intellectual Law Association Japan, Antitrust Law Association Japan.

Taketo Nasu

Blakemore & Mitsuki

T +81 3 3503 5571
F +81 3 3503 5577
E nasu@blakemore.gr.jp
W www.blakemore.gr.jp

Professional qualifications. Japan, Lawyer, 1996; New York, Lawyer, 2001.

Areas of practice. Intellectual property law; corporate law.

Non-professional qualifications. LL.B., Sophia University, 1991; Diploma, Legal Training and Research Institute of the Supreme Court of Japan, 1996; LL.M., University of Texas School of Law, 2000.

Languages. Japanese, English

Professional associations/memberships. Lecturer, Japan Patent Attorneys Association (2005-2012); Visiting Lecturer, Toin University of Yokohama Law School, Yokohama, Japan (2006-2014); Instructor (in charge of advocacy of civil cases), Legal Training and Research Institute of the Supreme Court of Japan (2014-2017); Daiichi Tokyo Bar Association; New York State Bar Association; American Bar Association; Japan Association of Industrial Property Law; Copyright Law Association of Japan; Corporate Law Study Group and Bankruptcy Law Study Group of the All-around Legal Research Institute of Daiichi Tokyo Bar Association.

Daisuke Beppu

Blakemore & Mitsuki

T +81 3 3503 5571
F +81 3 3503 5577
E beppu@blakemore.gr.jp
W www.blakemore.gr.jp

Professional qualifications. New York, Lawyer, 2009.

Non-professional qualifications. B.A., Yale University, New Haven CT, USA, 2001; J.D., Benjamin N. Cardozo School of Law, New York, NY, USA, 2008.

Languages. English and Japanese.

Publications. Senior Articles Editor of the Cardozo Law Review.


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