1. An excerpt from the Judgment
“Article 21 of the Antimonopoly Act provides that the ‘provisions of this Act do not apply to acts found to constitute an exercise of rights under the…Patent Act…’ However, it is understood that if, in light of the purpose or manner of, or the significance of an impact on competition by an exercise of patent rights, an exercise of patent rights is recognized as being against the purpose of the Patent Act that is ‘to encourage inventions…and contribute to the development of industry’ (Article 1 of the Patent Act), or deviating from the purpose of the patent system, the Antimonopoly Act is applicable to such an exercise of patent rights since such an exercise of patent rights does not correspond to ‘acts found to constitute an exercise of rights’ set forth in Article 21 of the Antimonopoly Act.
According to the meaning of the Article 21 of the Antimonopoly Act mentioned above, in the case of a patent infringement suit, if an exercise of patent rights by a patent holder is recognized, combined with the patent holder’s other acts, as an act of ‘unjustly interfering with a transaction between another enterprise that is in a competitive relationship with oneself and its transacting party’ (Paragraph 14 of the Designation of Unfair Trade Practice), and is likely to impede fair competition in light of various circumstances such as the purpose, necessity and rationality, or manner of an exercise of patent rights or any other acts by the patent holder, or the degree of restrictions on competition by the patent holder’s acts, such an exercise of patent rights is recognized, considering all various circumstances in the case together, as an act which impedes the purpose of the Patent Act, the ‘development of industry’, or deviates from the purpose of the patent system, and which may constitute an abuse of rights (Article 1, Paragraph 3 of the Civil Code).
When the defendants sell toner cartridges for which the remaining amount of toner is set to be displayed as ‘?’ due to the rewrite restriction measures taken by the plaintiff, the defendants would suffer a significant disadvantage in competition…As a device for securing accuracy of the display of the remaining amount of toner, the rewrite restriction measures exceed the scope of necessity, and lacks rationality…It should be said that a series of acts performed by the plaintiff is, as a whole, to prevent the defendants, toner cartridge recycling companies, from selling toner cartridges displaying the remaining amount of the toner to users, unjustly interfere with transactions between the defendants which compete with the plaintiff in the toner cartridge market and their users, and impede fair competition, which constitutes a violation of the Antimonopoly Act (Article 19 and Article 2, Paragraph 9, Item 6 of the Antimonopoly Act, and Paragraph 14 of the Designation of Unfair Trade Practices).
Further, considering that the degree of restriction on competition by the rewrite restriction measures is high, that the degree of the necessity and rationality of the restriction measures is low, and that the measures restricts the free distribution and use of used products, seeking an injunction against the sale of the defendants’ products based on each patent right impedes the ‘development of industry’, the purpose of the Patent Act, or deviates from the purpose of the patent system, which corresponds to an abuse of rights (Article 1, Paragraph 3 of the Civil Code).”
2. A modicum of consideration on the approach taken by the Court
In the decision, the Court made (i) fact finding, indicated (ii) “Premises”, then considered (iii) the degree of restriction on competition by the rewrite restriction measures employed by the plaintiff in its product, (iv) whether or not there exist any measures which cause no significant competitive disadvantage while avoiding patent infringement, and (v) the necessity and rationality of the restriction measures, and concluded that (vi) the plaintiff’s acts correspond to an abuse of rights.
Regarding (ii) “Premises”, the Court held that “…according to the meaning of Article 21 of the Antimonopoly Act mentioned above, in the case of a patent infringement suit, if an exercise of patent rights by a patent holder is recognized, combined with the patent holder’s other acts, as an act of ‘unjustly interfering with a transaction between another enterprise that is in a competitive relationship with oneself and its transacting party’ (Paragraph 14 of the Designation of Unfair Trade Practice), and is likely to impede fair competition in light of various circumstances such as the purpose, necessity and rationality, or manner of an exercise of patent rights or any other acts by the patent holder, or the degree of restrictions on competition by the patent holder’s acts, such an exercise of patent right is recognized, considering all various circumstances in the case together, as an act which impedes the purpose of the Patent Act, the ‘development of industry’, or deviates from the purpose of the patent system, and may constitute an abuse of rights (Article 1, Paragraph 3 of the Civil Code)”. This is not based on the logic that if an exercise of a patent right constitutes a violation of the Antimonopoly Act, such an exercise of the patent right immediately constitutes an abuse of right (which is different from the situation before the enactment of Article 104-3 of the Patent Act wherein an exercise of a patent right, in patent infringement litigation, was immediately determined to constitute an abuse of rights when there exists [apparent] reason for invalidation of the patent).
The Court applied a violation of the Antimonopoly Act and an abuse of rights to this case in two steps. More specifically, the Court recognized the patent holder’s acts as a violation of the Antimonopoly Act, stating that “it should be said that the series of acts performed by the plaintiff is, as a whole, to prevent the defendants, toner cartridge recycling companies, from selling toner cartridges displaying the remaining amount of the toner to users, unjustly interferes with transactions between the defendants which compete with the plaintiff in the toner cartridge market and their users, and impedes fair competition, which constitutes a violation of the Antimonopoly Act (Article 19 and Article 2, Paragraph 9, Item 6 of the Antimonopoly Act, and Paragraph 14 of the Designation of Unfair Trade Practices)”, and, on that basis, the Court found that “considering that the degree of restriction on competition by the rewrite restriction measures is high, that the degree of the necessity and rationality of the restriction measures is low, and that the measures restrict the free distribution and use of used products, seeking an injunction against the sale of the defendant’s product based on each patent right impedes the ‘development of industry’, the purpose of the Patent Act, or deviates from the purpose of the patent system, which corresponds to an abuse of rights (Article 1, Paragraph 3 of the Civil Code)”.
It does not have a decisive impact on the conclusion, however, whether a specific act which constitutes a violation of the Antimonopoly Act immediately constitutes an abuse of rights, or even if a specific act constitutes a violation of the Antimonopoly Act, such a specific act is recognized as an abuse of rights could be a point in question.
It can be understood that the logic employed in the Court decision is not that even if a specific act constitutes a violation of the Antimonopoly Act, such a specific act immediately constitutes an abuse of rights.
In any case, the logic employed in the Court decision, and matters and elements examined and considered in the Court decision, serves as very useful reference when asserting an abuse of rights based on a violation of the Antimonopoly Act as a defense in a patent infringement suit.
Writer: Hideki TAKAISHI
Supervising editor: Kazuhiko YOSHIDA
Contact information for inquiries: h_takaishi@nakapat.gr.jp
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