Some Recent Japanese Cases on Patent Damages

The May 2014 issue of A.I.P.P.I.--Journal of the Japanese Group of AIPPI features an article by Yasufumi Shiroyama titled Overview of IP-Related Judgments Handed Down by Japanese Courts in the Second Half of 2013.  Among the cases discussed are three dealing with patent damages.

The first is the Judgment of the Osaka District Court of August 27, 2013 (2011 (wa) No. 6878, 21st Division, partially upheld).  (The term "partially upheld" means that the damages award was less than what the plaintiff sought.)  The patent covered a method that "produces the operation and effect of stabilizing coloring of a colored plaster composition."  Apparently the defendant used the process in making a colored plaster composition that consumers use as a plastering material.  According to the court, the invention prevents "color unevenness of colored plaster coating to be formed by using the colored plaster composition" and thus "will increase the utility of the composition as a plastering material."  Because the method "produces an operation and effect that is directly connected to the value of the product," the court invoked article 102(2) of the Japan Patent Act to award the plaintiff the defendant's profit from the sale of its colored plaster composition.  As I read Mr. Shiroyama's description, it sounds like the court awarded the defendant's entire profit, which could be excessive if the profit was attributable to other factors as well or could have been achieved in whole or in part by using alternative means.  For previous discussion on this blog of article 102(2), see here, here, here, and here. 

The second is the Judgment of the Tokyo District Court of September 26, 2013 (2007 (Wa) No. 2525, etc., 47th Division, counterclaim partially upheld).  According to Mr. Shiroyama, the court awarded a reasonable royalty for the infringement of a patent "regarding an operating switch (click wheel) of a portable music player" based on the expert witness's calculation of the defendant's sales multiplied by a reasonable royalty rate that is not disclosed "due to the restriction on inspection of the case record."  The court took into account, however, that the "invention made a limited contribution to the defendant's product."

The third is the Judgment of the Tokyo District Court of September 12, 2013 (2011 (Wa) No. 8085, etc., 47th Division, partially upheld), in which the court awarded a reasonable royalty for an invention relating to washing machine water levels "by multiplying the sales of the washing machine by the rate of contribution of the water level invention, 0.2 percent, and then by multiplying the result by a reasonable royalty rate, 3 percent (= 0.006 of the sales)."  For the infringement of another patent in suit relating to a dehydrating tank, the court considered the rate of contribution to be 15% and a reasonable royalty rate 1%, resulting in an award of 0.15% of sales.  Total damages amounted to about 45 million yen, or about U.S. $ 329,000.