Friday, May 10, 2013

New Japanese Case on Lost Profits

I saw a mention of this case on the Intellectual Property High Court's website the other day, but so far the decision is available only in Japanese (although the site promises a summary in English soon).  But I just came across this write-up by Michiru Takahashi and Harukuni Ito of Jones Day, Tokyo.  The plaintiff, Sangenic, had an exclusive Japanese distributor who sold the patented articles in Japan, and the defendant (the successor in interest to the old distributor) infringed.  The court awarded the plaintiff the defendant's profits under article 102(2) of the Japanese Patent Act.  Under this provision, however, the defendant's profits are viewed as a proxy for the plaintiff's own lost profits, rather than as a stand-alone type of remedy.  (Alternatively, plaintiffs can seek their own lost profits under article 102(1), but often they don't want to disclose their profit margins.)  According to the authors, some previous cases had held that a patentee may not recover an award of the defendant's profits if the patentee does not practice the invention itself.  (I discuss this issue in my book at p.324.  Interestingly, there was case law in Japan holding that a nonpracticing patentee could recover its own lost profits under article 102(1) if it could prove (as in the U.S. Rite-Hite case) that it would have sold more nonpatented goods but for the infringement, and there was at least one other Japanese case prior to the new case that had extended this reasoning to article 102(2).  But according to Takahashi and Ito, this still wasn't viewed as the majority position.)  The new case holds that 102(2) applies as long as the plaintiff can show that it would have made a profit but for the infringement, even if the plaintiff is not itself practicing the patent.  The authors state that the matter has been appealed to the Japanese Supreme Court.

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