In the case of Jap Auto Products, K.K. v. BBS Kraftfahrzeug Technique AG (commonly referred to as the Aluminum Wheel Case) the Tokyo High Court held that importation into Japan of a wheel purchased from the owner of the corresponding patents in Germany and Japan did not infringe the Japanese patent on the product. The Court concluded that the patentee's rights had been exhausted by the sale of the product in Germany so that the patent could not be asserted in Japan against someone who derived title from a purchaser who purchased from the owner of the patent. The idea of domestic exhaustion of rights is well established in Japanese law. This case, however, seems to be the first time that the Japanese courts have adopted the concept of international exhaustion of patent rights. The court's reasoning was that sale of a patented product by the patentee extinguished any patent rights relating to that product because the patentee in the price charged for the product included additional compensation for disclosure of the invention. The patentee should be given only one such chance to obtain such additional compensation. The court commented that if there were some constraints on the price that the patentee could charge (for example, national price control or compulsory licensing), then, of course, the right would not be exhausted by such a sale. The court noted that the purpose of the Japanese patent law was to encourage both inventions and their utilization and that a balance had to be struck between the public interest and the proprietor's interest in such situations.

It remains to be seen what the full impact of the case may be. The court did not address the issue where goods were put on the market by the proprietor in situations where there was no patent in the country of origin or where the patent has already expired in the country of origin. It may, therefore, be possible to read the case as being confined only to the situation in which the patentee seeks "two bites of the apple". The case has caused considerable discussion in interested circles and suggestions have been made that legislation may be appropriate to reverse the decision. In view of the current political state in Japan, however, this seems unlikely and the uncertainty caused by this decision is likely to be with us for a while.