It is difficult for a patentee to prove the amount of damage caused by infringement in a patent infringement case. In Japanese Patent Law, Article 102 is provided to reduce the patentee’s burden of proof for the amount of damage. Article 102 (2)1 provides for rebuttable presumption of the amount of damage as “profits gained by the infringer”. In many cases, it was considered that the “working” of a patented invention by a patentee is required to apply Article 102 (2) to the damages. On the other hand, Article 102 (3)2 provides that a patentee may claim, as damages, “an amount of money to receive for the working of the patent invention”, which is considered as a “license fee”, and the “working” of a patented invention by a patentee is not required to apply Article 102 (3) to the damages. In the above-stated case, whether or not the “working” of a patented invention by a patentee is necessarily required to apply Article 102 (2) is the focus.
In this case, the plaintiff (patentee) is a manufacturer in the U.K. and has an agreement with a Japanese sales agency. The sales agency actually sells the patented products in Japan. Thus, the patentee itself is not considered to sell its products (i.e., it does not work the patented invention). In the meantime, the defendant sold infringing products.
In the lower court (Tokyo District Court), it was judged that in order to apply Article 102 (2), a patentee is required to work the patented invention. Since the plaintiff did not work the patented invention, Article 102 (2) was not applied. Instead, Article 102 (3) was applied, and the amount of damage was determined to be about 21,130,000 Yen based on the license fee.
On the contrary, in the IP High Court (en banc), it was judged that Article 102 (2) should be applied for the following reasons.
Article 102 (2) has been provided for the purpose of reducing the patentee’s burden of proof for the amount of damage and allowing the patentee to obtain reasonable compensation for damages by lowering the difficulty of proving the amount of damage caused by an infringement.
In light of the purpose of Article 102 (2) and its effect of rebuttable presumption of the amount of damage, there is no reasonable ground for so strictly judging the requirements for applying Article 102 (2). Thus, Article 102 (2) can be applied if there are circumstances where a patentee may have gained profits without infringement, and “working” of a patented invention by a patentee is not required.
In this case, the patented products manufactured by the plaintiff are sold by the Japanese sales agency in Japan, and the defendant is competing with the sales agency as well as the plaintiff in the Japanese market. It follows that the sales of the invented products must have decreased due to the sales of the infringing products of the defendant. Therefore, the plaintiff must have gained profits without infringement, and Article 102 (2) thus should be applied. The amount of damage was then determined to be about 148,070,000 Yen, which is seven times of that determined in the lower court.
In this case, it was judged that the “working” of a patented invention by a patentee is not required to apply Article 102 (2). This judgment by the IP High Court is preferable for a patentee since the amount of damage presumed by Article 102 (2) may be much higher than that based on Article 102 (3) in many cases.
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1 Article 102 (2) defines as “Where a patentee or exclusive licensee claims … compensation for damage caused to him by the infringement, the profits gained by the infringer through the infringement shall be presumed to be the amount of damage suffered by the patentee or exclusive licensee”.
2 Article 102 (3) defines as “A patentee or exclusive licensee may claim, from a person who … infringed the patent right or exclusive license, an amount of money which he would be entitled to receive for the working of the patented invention, as the amount of damage suffered by him.”