1. The phrase “articles which would have been sold by the patentee…if there had been no such act of infringement” set forth in the main clause of Article 102, Paragraph 1 of the Patent Act refers to the patentee’s product whose sales quantity is affected by the act of infringement. It is sufficient for the patentee’s product to compete with the infringing product in the market.
2. The “amount of profit per unit” set forth in the main clause of Article 102, Paragraph 1 of the Patent Act is an amount of marginal profit in which an additional cost that was necessitated in direct relation to manufacture and sales of the patentee’s product is deducted from the sales figures of the patentee’s product.
3. Regarding the “capability of the patentee…to work (such articles)” set forth in the main clause of Article 102, Paragraph 1 of the Patent Act, it is sufficient that the patentee has the potential capability to work the invention. If the patentee is able to supply the quantity of the patentee’s product corresponding to the sales quantity of the infringing product by such means as outsourcing its production, it is reasonable to construe that the patentee has the capability to work the invention.
4. When calculating the amount of damages due to patent infringement based on Article 102, Paragraph 1 of the Patent Act, even if a characteristic part of the patented invention is implemented only for part of the patentee’s product, the total amount of the patentee’s marginal profit obtained by the sale of its product is presumed to be the patentee’s lost profit. However, in this case, comprehensively taking into account the circumstances such as the importance of said characteristic part of the patentee’s product, any other characteristics of the patentee’s product, and their power to attract customers, the presumption of fact is to be rebutted by 60%, and the amount corresponding to 60% should be deducted from the patentee’s marginal profit in light of the following circumstances: (i) the patented invention is to provide a beauty instrument consisting of rotating bodies, support shafts, bearing members, and a handle, etc., and is characterized by configurations of each support shaft and an inner peripheral surface of each rotating body, (ii) the patentee’s product, for which the patented invention has been worked, is the beauty instrument having a pair of rotating parts which are rotatably supported by the support shafts, and rolled on the skin while applying pressure so that a perking-up effect and beauty effect are imparted to the skin; the foregoing characteristic part is a part of the patentee’s product, and (iii) in the patentee’s product, it is the structure of rotating parts that has high power to attract customers, and the characteristic part of the patented invention cannot be found to contribute to the total amount of profit earned by the sale of the patentee’s product.
5. The phrase “circumstances…under which the patentee…would have been unable to sell” set forth in the proviso of Article 102, Paragraph 1 of the Patent Act refers to circumstances that disprove a reasonable causal relationship between the act of infringement and a decrease in the sale of the patentee’s product, for example, (i) a difference between the patentee’s business or selling price and the infringer’s business or selling price (difference of the subject market); (ii) the presence of other competing products in the market; (iii) marketing efforts of the infringer (brand power and promotion activities); and (iv) performance of infringing products and the patentee’s product (functions, design, and other features different from those of the patented invention). In this case, in light of the difference between selling price of the plaintiff’s product and that of the defendant’s product, it is reasonable to find that the quantity of products, which the patentee would have been unable to sell due to the circumstances, is 50% of the total quantity of the infringer’s sales.
6. Aside from the deduction according to the amount of profit under Paragraph 4, and the deduction according to the quantity of product under Paragraph 5, the deduction of the amount of damages calculated by taking into account the rate of contribution of the Patented Invention 2 to the sales of the defendant’s product cannot be permitted.
1. Regarding the summary of Judgment 1, the IP High Court found for the first time with respect to the meaning of the phrase “articles which would have been sold by the patentee…if there had been no such act of infringement” set forth in the main clause of Article 102, Paragraph 1 of the Patent Act, specifically, with respect to whether (A) the patentee’s product is required to work the patented invention in principle (the “A-theory”), or (B) it is sufficient for the patentee’s product to compete with the infringing product (the “B-theory”). The IP High Court found to the effect that the foregoing phrase should be interpreted based on the B-theory, the majority of the theories (Nobuhiro Nakayama, ed., Chūkai Tokkyo Hō Jō [Dai 3 Han] (Seirin Shoin, 2000) p.1003 [written by Reiko Aoyagi]; Harumi Kojō, “Damages 1 — Claims based on Article 102, Paragraph 1 of the Patent Act; Toshiaki Makino, Toshiaki Iimura, Ryōichi Mimura, Wataru Sueyoshi and Seiji Ōno, ed., “Theories and Practices concerning Intellectual Property Law Vol. 2 Patent Law [II]” (Shinnippon-hoki Publishing, 2007), p.256; Makoto Sano, “Damages 2 (Article 102, Paragraphs 2 and 3 of the Patent Act)”; Toshiaki Iimura and Ryūichi Shitara, ed., “Intellectual Property Related Litigation” (Legal Progressive Series) (Seirin Shoin, 2008), p.222; Kazuo Masui and Yoshiyuki Tamura “Guide to Patent-related Law Cases [4th ed.]” (Yuhikaku 2012), p.359 [written by Yoshiyuki Tamura]; Makiko Takabe, “Issues Surrounding Article 102, Paragraph 1 of the Patent Act”, Research Circle on Intellectual Property Law – Liber Amicorum Professor Tatsuki Shibuya (Japan Institute for Promoting Invention and Innovation, 2016), p.188, etc.), and the majority of the court cases (the Tokyo High Court Judgment, June 15, 1999, Hanji No. 1697, p.96, 103 (the Method for Producing Heat Storage Material used for Latent Heat Accumulating Type Floor Heating Device case); the Intellectual Property High Court Judgment, January 24, 2012 (Case No. 2010 [Ne] 10032), court website (the Solid Golf Ball case); the Intellectual Property High Court Judgment, November 19, 2014, Hanta No. 1425, pp.179-218 (the Plate Cylinder for An Offset Rotary Press case); the Intellectual Property High Court Judgment, June 1, 2016, Hanji No. 2322, p.106, 120 (the Bag Breaker case), not on the A-theory, the prevalent theory (Ryōichi Mimura, “Calculation of damages due to patent infringement – Centering on Article 102, Paragraph 1 of the Patent Act”, Research Report No. 43 of Central Research Institute of Intellectual Property of the Japan Patent Attorneys Association “Compensation for Damages – Further Research” (2017), p.2; Ryū Takabayashi, “Patent Law from the Ground Up [6th ed.]” (Yuhikaku, 2017), p.283, etc.), and the prevailing court cases (the Tokyo High Court Judgment, October 29, 2003 (Case No. 2003 [Ne] 1901), court website (the End Tab for Welding case), etc.).
2. Regarding the summary of Judgment 2, the IP High Court found, for the first time with respect to the meaning of the “amount of profit per unit” in the main clause of Article 102, Paragraph 1 of the Patent Act, to the effect that the amount of profit per unit should be construed based not on the net profit theory, but on the marginal profit theory which is a commonly accepted theory and employed in most court cases.
3. Regarding the summary of Judgment 3, the IP High Court found, for the first time with respect to the meaning of the “capability of the patentee…to work such articles” in the main clause of Article 102, Paragraph 1 of the Patent Act, to the effect that the patentee’s capability should be construed not as the current capability, but as the potential capability which is a commonly accepted theory and employed in most court cases.
4. Regarding the summary of Judgments 4 – 6, the IP High Court determined for the first time the appropriateness and approach of considering the contribution rate of the patented invention for the calculation of damages under Article 102, Paragraph 1 of the Patent Act in the case where the patented invention is worked only for part of the patentee’s product and/or infringing product. It is considered the IP High Court employed the opinion that considers the contribution rate as a matter of the “amount of the profit per unit” of “articles which would have been sold by the patentee…if there had been no such act of infringement” (the “main clause theory”) (Makoto Sano, “Requirements for the Amount of Damages (Article 102, Paragraphs 1 – 3 of the Patent Act); Tetsuya Oōbuchi, Tomokatsu Tsukahara, Yoshio Kumakura, Ryōichi Mimura and Eiji Tomioka, “Specific Litigation Lecture (6), Patent Litigation [the last volume] (Minjiho Kenkyu Kai, 2012), p.1187; Ryūichi Shitara, “Keynote Lecture at Symposium Commemorating the 10th Anniversary of Kansai Intellectual Property High Court”, Chizai Prism Vol. 14, No. 160 (2016), p.14; Makiko Takabe, “Issues Surrounding Article 102, Paragraph 1 of the Patent Act”, Research Circle on Intellectual Property Law – Liber Amicorum Professor Tatsuki Shibuya (Japan Institute for Promoting Invention and Innovation, 2016), p.192; the Intellectual Property High Court Judgment, January 19, 2016 (Case No. 2014 [Ne] 10038), court website (the copyright case with respect to the Database for Search and Itinerary Preparation Operations included in the System for Travel Agents); the Intellectual Property High Court Judgment, April 27, 2016, Hanji No. 2321, p.85, pp.116-117 (the Contact Angle Calculation Program copyright case), etc.), but not the opinion that considers the contribution rate as a matter of “circumstances…under which the patentee…would have been unable to sell the assigned quantity in whole or in part” set forth in the proviso (the “proviso theory”) (Yoshiyuki Tamura, “Calculation for Amount of Damages concerning a Patent Infringement”, Patent Vol.67, No.1 (2014), p.141; Ryū Takabayashi, “Redefinition of Article 102, Paragraph 2 of the Patent Act”, Naoki Koizumi and Yoshiyuki Tamura, ed., “Habataki – 21 Seiki No Chiteki Zaisan Hō” (Kobundo, 2015, pp.464-465; Nobuhiro Nakayama, “Patent Act”, Law Lecture Series [4th ed.] (Kobundo, 2019), pp.401-402; the Intellectual Property High Court Judgment, September 25, 2006 (Case No. 2005 [Ne] 10047), court website (the Chair-type Air Massage Machine case); the Intellectual Property High Court Judgment, January 24, 2012 (Case No. 2010 [Ne] 10032), court website (the Solid Golf Ball case); the Intellectual Property High Court Judgment, March 26, 2014 (Case No. 2013 [Ne] 10017), court website (the Open-type Fermentation Treatment Apparatus), etc.), and the opinion that considers the contribution rate as a matter of circumstances, other than those set forth in the proviso, under which the presumption can be partly rebutted (the “outside proviso theory”) (Kaoru Kamata, “Infringement of Patent Right and Compensation for Damages ― the Council Report on the Industrial Property System and Amendment of Patent Act), CIPIC Journal, Vol.79 (1998), p.23; Harumi Kojō, “Assessment of Damages under Article 102 of the Patent Act and Concept of Contribution Rate: the ‘Nozzle of Liquid Filling Device’ case”, AIPPI Journal, Vol.51 (2006) No. 7, p.33; the Tokyo High Court Judgment, June 15, 1999, Hanji No. 1697, p. 96, 103 (the Method for Producing Heat Storage Material used for Latent Heat Accumulating Type Floor Heating Device case); the Intellectual Property High Court Judgment, September 29, 2005 (Case No. 2005 [Ne] 10006), court website (the Nozzle of Liquid Filling Device case), etc.).
5. Regarding the summary of Judgment 5, the IP High Court found for the first time with respect to “circumstances under which the patentee would have been unable to sell” set forth in the proviso of Article 102, Paragraph 1 of the Patent Act by indicating several types of circumstances which may be taken into consideration in deducting the amount according to the quantity of product, as the case of the foregoing IP High Court decision of June 7, 2019, which indicated, in addition to non-contribution rate of the patented invention, several types of circumstances which may rebut the presumption under Article 102, Paragraph 2 of the Patent Act.
【Keywords】Beauty instrument, the Intellectual Property High Court Grand Panel Decision, Article 102, Paragraph 1 of the Patent Act, burden of proof, theory that patentee’s product is required to work patented invention, theory that it is sufficient for the patentee’s product to compete with the infringing product, net profit theory, marginal profit theory, current capability, potential capability, amount of profit per unit of articles which would have been sold by the patentee if there had been no such act of infringement, presumption of fact, part of rebuttal, circumstances under which the patentee would have been unable to sell, contribution rate, main clause theory, proviso theory, outside proviso theory, MTG, FIVESTARS
※ The contents of this article are intended to convey general information only and not to provide any legal advice.
Kei IIDA (Writer)
Attorney at Law & Patent Attorney (Daini Tokyo Bar Association)
Contact information for inquiries: k_iida@nakapat.gr.jp