Case 2020 (Ne) No. 10024: a lawsuit seeking an injunction against patent infringement and damages (IP High Court Grand Panel case)
 
Article 102 of the Patent Law of Japan stipulates that damages attributable to patent infringement may be presumed based on the following criteria. Article 102 of the Patent Law is aimed at reducing the burden on patentees and licensees with regard to presenting evidence for damages resulting from an infringing act, by establishing the criteria for presuming the amount of damages.
 

Art. 102(1): (Number of products sold by the infringer) × (amount of profit per unit of product that would have been sold by the patentee if there had been no infringement), up to the maximum amount actually attainable by the patentee
Art. 102(2): Amount of profit earned by the infringer
Art. 102(3): Amount corresponding to license fees

 
The present case is an IP High Court Grand Panel case in which the court upheld the cumulative application of clauses (2) and (3) of Article 102 for the presumption of the amount of damages.
 
Article 102(2) and (3) of the Patent Law stipulates as follows.
 

Article 102
(2) If a patentee or exclusive licensee files a claim for compensation for damage that the patentee or licensee personally incurs owing to infringement, against a person who, intentionally or owing to negligence, infringes the patent or exclusive license, and the infringer has profited from the infringement, the amount of that profit is presumed to be the value of damages incurred by the patentee or exclusive licensee.
(3) The patentee or exclusive licensee may set the value of the damages that the patentee or licensee has personally incurred as being equivalent to the amount of money that the patentee or exclusive licensee would have been entitled to receive for the working of the patented invention, and may claim compensation for this against a person that, intentionally or owing to negligence, infringes the patent or violates the exclusive license.

 
In the present case, the appellant, who owns three patents related to a massage chair, filed an infringement lawsuit, and manufacture and sales of the appellee's products were found by the court to infringe one of the three patents (Patent No. 2866978). With respect to the calculation of the damages, the court brought the following decisions.

(1) Affirmation of Application of Article 102(2)
The court upheld the application of Article 102(2) when calculating the damages in this case by finding that, when the patentee was selling or importing products that were in competition with the infringing products, it could be deemed that there were circumstances in which the patentee could have profited but for the infringing act, since it could be reasonably presumed that the sales of the competing products were reduced by the infringing act.
 
The appellee, in this regard, asserted that since the patentee's products did not exhibit the same function and effects as the patented invention, the patentee's products cannot be deemed to be "competing products", asserting, moreover, that the patented invention actually infringes the appellee's patents. However, the court held that "the foregoing circumstances do not require the fact that the patentee's products are embodiments of the patented invention or exhibit the same function or effects as the patented invention". Further, with regard to the appellee's allegation that the patentee's products infringe the appellee's patents, the court held that, aside from the fact that the alleged infringement had not been confirmed by the courts, the fact of infringement of another patent does not serve as grounds negating the foregoing circumstances, even if said infringement were to be subsequently confirmed.
 
(2) Affirmation of Cumulative Application of Article 102, Clauses (2) and (3)
The court held that since both loss of profit due to reduction of the patentee's sales and loss of profit due to missed licensing opportunities as a result of the infringing act can be presumed, even if the amount of damages presumed based on Article 102(2) is partly overturned, Article 102(3) (amount corresponding to license fees; a "reasonable royalty") can be additionally applied within the scope of the overturned amount.
 
Comments
Following the revisions to the Patent Law that permitted cumulative application of Articles 102(1) and (2), and further to two recent Grand Panel decisions (the beauty device case and the carbon dioxide-containing viscous composition case), the present case engendered another Grand Panel decision in which the criteria for the calculation of damages caused by infringement under Article 102 have been clarified. The decision is of interest in view of the long-held opinion in certain quarters that the amount of damages that can be claimed should be increased in order to ensure proper protection of right holders.

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Summary prepared by the International Information Group
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