Monday, September 13, 2021

Patent Remedies News from Japan

1.  I recently mentioned in passing a report by the Japanese Ministry of Economy, Trade, and Industry, titled Study Group on Licensing Environment of Standard Essential Patents Interim Report (Overview), and dated July 26, 2021.  The 12-page report does not set forth any definitive recommendations, but does include five directions for further consideration:


1.“Disputes involving SEP licensing among different industries are expected to increase in the future, and various industries in Japan are at risk of being involved in the disputes. The Japanese government, in addition to supporting research and development, will consider the measures to deal with the disputes from the standpoint of the development of Japanese industries and externally disseminate the results of the consideration.”

2. “The Japanese government will promptly consider and externally disseminate rules on good faith negotiations that should be complied with by both SEP holders and implementers, taking into account international discussions, in order to realize an appropriate licensing environment through improvement of transparency and predictability of the SEP licensing negotiation processes.”

3. “Patent pools will be utilized as one measure for licensing SEPs as the number of SEPs increases. The Japanese government will consider the measures for encouraging good faith negotiations by ensuring transparency of their licensing terms and so on, taking account of such a situation.”

4. “The Japanese government will consider the measures to conduct horizontal joint negotiations which will not cause competition law concerns.”

5. “There were opinions that burdens on licensing within the supply chain, such as patent indemnification, varies greatly, depending on individual circumstances, and it is difficult to set unified rules. It is important for the Japanese government to consider a larger direction (such as the allocation of burdens in entire commercial distribution including the distribution from semiconductor supply to service provision) and to get the picture of the facts.”


2. In May I mentioned an article by Professor Masabumi Suzuki titled Recent Trends Concerning Article 102 of the Japanese Patent Act - Court Judgements and Law Amendments Relating to Calculation of Damages for Patent Infringement, Patents and Licensing, No. 291, pp. 8-24 (2021).  The article discusses, among other things, an Intellectual Property High Court Grand Panel decision, Judgment of Feb. 28, 2020, 2019 (Ne) 10003), a case in which the court set forth a framework for applying article 102(1) of the Japanese Patent Act for determining the amount of lost profits to which a patent owner is entitled.  The decision states, albeit in dictum, that a patent owner may recover lost profits on products that compete with the infringing product even if the patent owner itself doesn't sell any products covered by the patent--a result that aligns with the Federal Circuit's 1995 en banc decision in Rite-Hite Corp. v. Kelley Co, 56 F.3d 1538 (Fed. Cir. 1995).  Anyway, I recommend Professor Suzuki's insightful analysis (and critique of certain portions of the decision) to readers' attention, but I would also like to note that there is a short write-up on the decision at pp.351-52 of volume 45, issue 6 of A.I.P.P.I.-Journal of the Japanese Group of AIPPI, in an article by Yasufumi Shiroyama titled An Overview of the IP-related Judgments Handed down by the Japanese Courts in the First Half of 2020.  That issue also contains a case summary by Yosuke Kurita of the Toyko District Court's Judgment of July 29, 2020 in Case No. 2019 (Wa) 3197.  This is primarily a contract dispute involving the payment of patent costs and royalties, but the decision also states that in the court's view "it is rational to specify the product name and set the running royalty rate for each product according to the sales volume, irrespective of whether each product falls within the technical scope of any of the licensed patent rights or patents pending, because this approach enables the patentee to set a fixed royalty rate regardless of the number of patent rights, etc. actually used, and it can also prevent a dispute between the parties regarding the patented right, etc. has been actually used when calculating the amount of running royalty."     


3.  Volume 45, Issue 4, of A.I.P.P.I.-Journal of the Japanese Group of AIPPI includes the response of AIPPI Japan to Study Question (General): Standing to Litigate and Effect on Remedies (pp. 240-46).  The response notes, among other things, that although there are invalidation and opposition proceedings in Japan, "there is no action for declaration of invalidity or non-infringement itself.  A party can only assert invalidity or non-infringement as part of their defense for an action for declaration of non-existence of a right to seek injunction or to seek damages, and the court can only find invalidity or non-infringement in the grounds of the decision." Moreover, such an action can be brought only if, for example, "the defendant notifies the claimant and their customers that a product made and sold by the claimant infringes on the defendant's patent."  (For further, albeit brief, discussion of declaratory judgments in Japan, see my book p.331.)  You can review all of the country reports on AIPPI's website here.  I will need to start going through them myself.

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