The Intellectual Property High Court Decision of January 29, 2020 (Case No. 2018 (Ne) 10081 — Presiding Judge MORI)
◆ Main text of the case
【Summary of the Judgment】
- In calculating an amount of a reasonable royalty based on the provision of Article 5, Paragraph 3 of the Unfair Competition Prevention Act which may be demanded against a person who has committed misappropriation of a famous indication set forth in Article 2, Paragraph 1, Item 2 of the Unfair Competition Prevention Act, a reasonable royalty rate for the misappropriation as determined post facto should inevitably be a higher rate compared to a usual royalty rate. A reasonable royalty rate for the misappropriation should be determined by comprehensively taking into account various circumstances appeared in a lawsuit such as: (i) a royalty rate set in an actual license agreement for the famous indication, or if it is indefinite, an average royalty rate in the industry; (ii) high consumer attracting power of the famous indication; (iii) a manner of the misappropriation, and contributions by the misappropriation to sales figure and profit obtained by a person; and (iv) the relation between a holder of the famous indication and the person who has committed the misappropriation.
- In this case, it is reasonable to determine a royalty rate to be 15% of the sales of each shop of the defendant of the first instance (the “first instance defendant”) which uses the domain name (maricar.jp, maricar.co.jp, fuji-maricar.jp, and maricar.com), and 12% of the sales of the first instance defendant’s shop which does not use the domain name, in view of the following points: (i) royalty rates set under license agreements which the plaintiff of the first instance (the “first instance plaintiff”) has concluded for its copyrighted works and/or trademarks; (ii) indications of “MARIO KART” and “マリオカート (katakana)”, and the first instance plaintiff’s works (Mario, Luigi, Yoshi, and King Bowser Koopa) are famous and have high consumer attracting power; (iii) the first instance defendant has committed the missappropriation with the intention of taking unfair advantage of the high consumer attracting power of the indication of “MARIO KART” etc., and such first instance defendant’s missappropriation are considered to have significantly contributed to sales figure of the first instance defendant.
- Regarding the summary of Judgment 1, in calculating an amount of a reasonable royalty for misappropriation of a famous indication under the Unfair Competition Prevention Act, the Court affirmed the typical and substantial increase of the amount as a premium to damages to be paid for the misappropriation, and exemplified the typical elements to be comprehensively considered. The summary of Judgment 1 is basically the same effect as the Intellectual High Court Grand Panel Decision of June 7, 2017 (“Carbon Dioxide-Containing Viscous Composition” case) which held with respect to the calculation of an amount of a reasonable royalty as damages due to patent infringement under the Patent Act that:
“…it is not always necessary to be based on a royalty rate in a license agreement under a patent right, but a reasonable royalty rate for a patent infringement as determined post facto for a person who has committed the infringement should inevitably be a higher rate compared to a usual royalty rate”, and
“…a reasonable royalty rate for the infringement should be determined by comprehensively taking into account various circumstances appearing in a lawsuit such as: (i) a royalty rate set in an actual license agreement under the patent, or if it is indefinite, the market rate for a royalty rate in their industry; (ii) the value of the patent invention itself; i.e., the technical content or significance of the patent invention, and the substitutability with alternatives; (iii) contributions to sales and profits when the patent invention is used for products and a manner of infringement; and (iv) competition between a patentee and an infringer as well as the business policy of the patentee”.
- Regarding the summary of Judgment 2, the Court applied the summary of Judgment 1 to this case and awarded a high royalty rate. The summary of Judgment 2 represents recent and future trends of court cases for determining a reasonable royalty rate in calculating an amount of a reasonable royalty as damages.
【Keywords】Misappropriation of a famous indication, a reasonable royalty, a reasonable royalty rate, increase as a premium to damages, elements to be considered, comprehensive consideration, MARIO KART, マリオカート, Mario, Luigi, Yoshi, King Bowser Koopa, Nintendo, MARI Mobility Development, MariCAR, マリカー
※ 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: firstname.lastname@example.org