[Patent★] Patent Infringement Litigation “Bone Fracture Fixation System” Case: A case in which the Intellectual Property Court approved the application of Article 102, Paragraph 2, of the Patent Act based on the fact that a group company which is a wholly owned subsidiary of a common ultimate parent company embodies the patent right when said group company sells products.

July 18,2024

Intellectual Property High Court Case No.10091 (Ne) 2021, April 20, 2022 (Presiding Judge Honda)

1. Summary of the Judgment

In the Judgment, with regard to the scope of application of Article 102, Paragraph 2, of the Patent Act, based on the established decisional framework in preceding cases that the provision is applicable “where circumstances exist in which the patentee could have obtained profits had there been no infringement of the patent by the infringer,” the court approved the application of Article 102, Paragraph 2 of the Patent Act, because it was alleged and proved in the High Court that the patentee and the implementer of the patented invention were all wholly owned subsidiaries of the ultimate parent company, and that they managed and exercised the patent rights under the control and direction of the ultimate parent company, and manufactured the plaintiff’s products using the patent rights.

2. Related Court Case: Intellectual Property Court Case No. 10015 (Ne) 2012 [Waste Storage Device, Grand Panel Case of IP High Court]

The decision in the Grand Panel case of Waste Storage Device broadly recognized the application of Article 102, Paragraph 2, of the Patent Act even if the patentee themselves is not implementing the patented invention, holding as follows (underlining added by the author):

“Article 102, Paragraph 2, of the Patent Act provides that under the principles of civil law, in order to seek compensation for damages suffered by the patentee, the patentee must allege and prove the occurrence and amount of damages and the causal relationship between said damages and the act of patent infringement. Then, in light of the fact that proving such damages is difficult, and as a result, it may cause an inconvenience such as reasonable compensation for damages not being awarded, the provision aims to reduce the difficulty of proving such damages through the presumption that if the infringer has received profits from the act of infringement, the amount of profit is the amount of damages suffered by the patentee. Thus, Article 102, Paragraph 2, of the Patent Act was established for the purpose of reducing the difficulty of proving the amount of damages, and is presumptive in its effect. In light of its presumptive nature, there is no rational reason to make the requirements for applying said paragraph particularly strict. Therefore, it should be understood that Article 102, Paragraph 2, of the Patent Act is applicable when there are circumstances in which the patentee could have obtained profits if there had been no infringement of the patent right by the infringer. It is reasonable to assume that various circumstances, such as the existence of differences between the patentee and the infringer in the mode of business, etc., are considered as circumstances in overturning the presumed amount of damages. In applying Article 102, Paragraph 2, of the Patent Act, that the patentee has implemented the patented invention is not necessarily a requirement …

“The plaintiff entered into an Agency Agreement with Combi, pursuant to which Combi is the distributor of the plaintiff’s products in Japan, and the plaintiff sells (exports) cassettes, which are related to invention 1 manufactured in the U.K. by the plaintiff, to Combi.

In this case, the facts that follow are held. Combi sells the above-mentioned cassettes manufactured by the plaintiff to general consumers in Japan. Based on the foregoing, it can be said that the plaintiff sells cassettes manufactured by the plaintiff in Japan through Combi. By importing and selling Article 1 in Japan, the defendant is in a competitive relationship with Combi but also with the plaintiff in the Japanese market for waste storage cassettes. Sales of the plaintiff’s cassettes in Japan have been decreasing due to the defendant’s infringing acts. In light of the above factual background, there are circumstances in which the plaintiff could have obtained profits had it not been for the defendant’s infringement. Therefore, there is no reason why the application of Article 102, Paragraph 2, of the Patent Act should be excluded in calculating the amount of plaintiff’s damages.”

Writer: Hideki TAKAISHI

Supervising editor: Kazuhiko YOSHIDA

Hideki TAKAISHI

Attorney at Law & Patent Attorney

Nakamura & Partners

Room No. 616, Shin-Tokyo Building,

3-3-1 Marunouchi, Chiyoda-ku,

Tokyo 100-8355, JAPAN

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