Thursday, September 5, 2019

Two Recent Damages Judgments from Japan

Yasufumi Shiroyama published an article in the May 2019 issue of AIPPI-Japan  titled Overview of Intellectual Property Judgments by Japanese Courts in the Second Half of 2018, which discusses two damages decisions from late 2018.  In the first, Judgment of the IP High Court of Nov. 20, 2018, 2018 (Ne) 10031.  (There is also a summary of this decision on the IP High Court's website, here, which I quote below.)  There were two joint owners of the patent in suit, but only one of the two--the one that works the patent in suit--was a party.  It sought damages under Japan Patent Act article 102(2), which states that:
Where a patentee or an exclusive licensee claims against an infringer compensation for damage sustained as a result of the intentional or negligent infringement of the patent right or exclusive license, and the infringer earned profits from the act of infringement, the amount of profits earned by the infringer shall be presumed to be the amount of damage sustained by the patentee or exclusive licensee.
On appeal, the IP High Court stated that:
Considering the purport of Article 102, paragraph (2) of the Patent Act, which is to ease the difficulty in proving the amount of damages, if there is a context in which the patent owner would have benefited had there been no infringement by an infringer of a patent right, the application of paragraph (2) of the same Article shall be approved, and the fact that the patent owner works the patented invention concerned shall not be deemed a requirement for the application of the same paragraph. The circumstances which, despite the existence of the above context, provide basis to the fact that the patent owner could not benefit shall be taken into consideration as the reasons for overturning the presumed amount of damages.
Upon being subject to the presumption of the amount of damages pursuant to Article 102, paragraph (2) of the Patent Act, it is reasonable to understand that, in principle, the amount of lost profits suffered by a co-owner shall be presumed according to the extent of his or her working of the patented invention, and it is not rational to use, as the basis for presumption, the ownership ratio which is not in a correlation with the amount of lost profits suffered by each co-owner.
Nevertheless, in the case where not all of the co-owners of a patent right exercise the right to demand compensation against an infringer based on the presumption of the amount of damages pursuant to paragraph (2) of the same Article, it is rational to consider that the presumption of the amount of damages pursuant to paragraph (2) of the same Article shall be partially overturned within the limit of the amount equivalent to the license fee under paragraph (3) of the same Article according to the ownership ratio of the other co-owners pertaining to the non-working of the patented invention.
Thus, according to Mr. Shiroyama, the presumption is "partially annihilated to the extent of the amount thereof, taking into account that the non-party joint owner also holds the right to claim compensation for damages based on the percentage that represents the share of the amount equivalent to a reasonable royalty."  So, if I'm understanding this correctly, the plaintiff here gets the defendant's profit attributable to the infringement, minus the reasonable royalty that would be due the co-owner if the latter were a party.  I hope I've got that right.

The other is the Judgment of the Tokyo District Court of Oct. 25, 2018, 2017 (Wa) 10038, in which Mr. Shiroyama states that the court dismissed a claim to recover attorneys' fees where the defendant allegedly misappropriated the plaintiff's patent application.  If I understand correctly, the court distinguished such a case from one in which the plaintiff suffered some loss in addition to its attorneys' fees, or was itself sued by the other party.

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