FRAND in Japan

As I note in my forthcoming book Wrongful Patent Assertion, in 2014 a Grand Panel of the IP High Court held, in Samsung Elecs. Co., Ltd. v. Apple Japan Godo Kaisha, Judgment of May 16, 2014, 2013 (Ne) 10043, that the owner of a FRAND-committed SEP may abuse its rights by seeking injunctive relief against a willing licensee; and “[i]n a subsequent decision, Imation Corp. Japan v. One-Blue LLC, Tokyo Dist. Ct., Feb. 18, 2015, Case No. 2013 (Wa) 21383, the court held that the defendant (the manager/operator of a patent pool that included some SEPs) had engaged in unfair competition by sending a warning letter to three retailers threatening injunctive relief, because under the Samsung v. Apple decision, the act of seeking an injunction for the infringement of a FRAND-committed SEP against a willing licensee is an abuse of right.  The [latter] decision therefore appears to read Samsung v. Apple as holding that it is an abuse of right per se to seek injunctive relief against a willing licensee for the infringement of a FRAND-committed SEP.  Cf. Yuzuki Nagakoshi & Katsuya Tama, Japan Without FRANDS?  Recent Developments on Injunctions and FRAND-Encumbered Patents in Japan, 44 AIPLA Q.J. 243 (2016) (critiquing Samsung v. Apple for arguably creating such a per se rule and for ignoring, as part of the abuse of rights calculus, the rightsholder’s subjective intent; and proposing that Japanese courts hearing FRAND cases instead consider whether the rightsholder has satisfied its statutory duty to negotiate in good faith).”  Other than these two cases, however, to my knowledge there hasn’t been much any Japanese case law involving FRAND-committed SEPs, until last year when three new district court decisions—all involving the same plaintiff, Pantech Corp.—came out.  Two of these have recently made available in translation on the IP High Court’s website; the third, not yet.  They all appear to agree, however, that it is an abuse of right for the owner of a FRAND-committed SEP to seek injunctive relief against a willing licensee.

The first of the three, Pantech Corp. v. ASUS Japan Co., 2022 (Wa) 7976 (Tokyo Dist. Ct., Apr. 10, 2025), involves Japanese Patent No. 4982653, titled “Method of transmitting and an apparatus for transmitting ACK/NACK information and a method of transmitting and receiving and an apparatus for receiving ACK/NACK signals.”  The court concludes that ASUS’ products infringe and that the claims in suit are valid.  On the issue of remedy, however, the court states that “a FRAND-encumbered standard essential patent holder's act to demand an injunction against a standard essential patent implementer based on the standard essential patent is impermissible as an abuse of right, unless there is a special circumstance where the standard essential patent implementer has no willingness to obtain a license under FRAND terms” (p.25).  After a review of the parties’ negotiating history (pp. 25-30), the court concludes that the defendant was a willing licensee, stating:

the reason for which the Plaintiff and the Defendant failed to reach an agreement on a FRAND rate in spite of prior consultations relating to the abovementioned findings and settlement talks in this lawsuit is that the FRAND rates presented by both parties were far too divergent, as explained in detail later (No. 7). According to both parties' assertions mentioned above and the entire import of oral arguments, the cause for this divergence is considered to be as follows: in major countries in the world, the Unwired Planet v. Huawei judgment, as presented by the Plaintiff, and other court precedents on FRAND rate calculation methods have developed internationally in response to changes of the times; on the other hand, in Japan, there have been no court precedents based on the abovementioned international development for about 10 years following the Apple v. Samsung Grand Panel judgment, and also, even taking into account various circumstances that appeared in this case, a FRAND rate calculation method has not necessarily been established in Japanese business practice (p.31).

Citing article 102(3) of the Japanese Patent Act (on reasonable royalties) and the IP High Court’s 2019 judgment in NeoChemir (see my blog post here), the court then sets out principles for calculating the FRAND rate:

In light of the global nature and the enormous number of standard essential patents implemented in the manufacturing of products conforming to a standard, when determining a FRAND rate, it is necessary [i] to take into consideration a royalty rate set in the actual license agreement for the standard essential patent, or if it is indefinite, a global average royalty rate in the industry; [ii] to presume the individual values of all standard essential patents to be the same because it is practically difficult to find the individual values of the enormous number of patents, and to calculate the value of a single standard essential patent by dividing the value of all standard essential patents by the total number of standard essential patents, while ensuring that the total amount of royalty obtained through aggregation of royalty rates of the standard essential patents remains  within a reasonable scope; and [iii] to also take into consideration, in such a case, possible contributions to sales and profits if all standard essential patents are used in the product. Furthermore, [iv] as a FRAND rate should fundamentally be agreed upon globally as soon as possible through good-faith negotiations between a FRAND-encumbered standard essential patent holder and a standard essential patent implementer, under the literally fair, reasonable, and non-discriminatory terms, a reasonable FRAND rate should be determined by comprehensively taking into account the negotiation process between the parties and the standard essential patent implementer's willingness to obtain a license under FRAND terms, and other circumstances appearing in the lawsuit, from the viewpoint of facilitating the agreement (p.35).

Ultimately, the court calculates a royalty for the one patent in suit by multiplying the sales revenue from the defendant’s products (redacted) by the aggregate royalty burden for LTE-standard-related patents (which the court figures at 9% for LTE products, based on an analysis of findings made in Unwired Planet, TCL v. Ericsson, and Huawei v. Samsung, and 8% for 5G products (p.39)), and then dividing by the number of LTE-standard-related patents (which the court estimates to be 1,300, taken into account likely validity, etc., see pp. 40-41)).  The rate itself is redacted.

The second and third decisions are both actions by Pantech against Google Japan G.K.  I understand that both cases involve the same patent, Japan Patent No. 6401224 (“Method for mapping a physical hybrid automatic repeat request indicator channel”), but different accused products (the Google Pixel 7, since discontinued, and the Pixel 7a, respectively).  In the first of the two, 2023 (Wa) 70501 (Tokyo District Court June 23, 2025), a translation of which is available here, the Tokyo District Court agreed that a FRAND-committed SEP owner’s demand for an injunction “is impermissible as an abuse of right, unless there is a special circumstance where the standard essential patent implementer has no willingness to obtain a license under FRAND terms" (p.39).  The court nevertheless held that Pantech was entitled to an injunction because Google’s conduct during the course of a court-supervised settlement negotiation (occurring in July 2024) demonstrated that Google was an unwilling licensee.  In dicta, however, the court found no fault with Google’s pre-settlement negotiations behavior and thus would not have found Google unwilling on the basis of that conduct alone (see pp. 47-50).  In the second one, however—according to the commentary cited below, since a translation has not been uploaded yet—the Osaka District Court on July 10, 2025 concluded that Pantech was not entitled to an injunction, because Google had shown itself to be a willing licensee through the end date of negotiations the court took into account (November 30, 2023).  The commentaries below do not say anything about the Osaka court actually determining the FRAND royalty, and some more recent commentary indicates that by early January (with other cases involving newer models of Google phones pending) Pantech and Google had settled on global terms, following a recommendation by the Tokyo district court.

For commentary that was helpful in drafting this post, see Masachi Chucho, Pantech v. ASUS: A Recent FRAND Judgment from Japan (available here); Takeshi Komatani, Japan’s First SEP Injunction:  Pantech v. Google and the High Bar for Establishing Unwillingness (available on AIPPI’s website here); and Kenji Tosaki, Takahiro Hatori & Yujiro Fukuhara, The Japanese court first judgment to grant an injunction based on a FRAND-committed SEP (available on Chambers and Partners’ website here; original, longer version available here).   

Meanwhile, as discussed elsewhere (see, e.g., here, here, here, and here), in early 2026 the Tokyo District Court also issued two new documents, Guidelines for Patent Infringement Litigation Based on Standard Essential Patents and SEP Mediation Procedures.  I may have more to say about these in due time.   

Criminal Contempt in Munich

Florian Mueller has published a post on ip fray concerning a December 10 decision of the Munich I Regional Court, ordering the general manager of a patent infringement defendant to be imprisoned for one month, following the defendant’s alleged failure to comply with an Auskunft (essentially, an order for the provision of information that will be relevant to assessing damages) and a previously-imposed contempt fine of €15,000.  According to ip fray, the order likely will be stayed pending appeal (and, to be sure, may induce compliance with the Auskunft in the interim). 

To my knowledge, resort to contempt proceedings is not all that common either in Germany or the U.S.—and this use of criminal contempt is, according to ip fray, unprecedented in Germany (and would be unavailable in the UPC).  (For a good discussion of contempt proceedings in U.S. patent cases, see my former student Nina Elder’s article The Contours of Contempt in Patent Law After TiVo, Inc. v. EchoStar Corp.: An Empirical Study, 25 Minnesota Journal of Law, Science & Technology 145 (2023), previously noted on this blog here.  She describes criminal contempt in U.S. patent cases as "nearly non-existent," id. at 147 n.18 (citing John M. Golden, Injunctions as More (or Less) than “Off Switches”: Patent-Infringement Injunctions’ Scope, 90 Tex. L. Rev. 1399, 1409–10 (2012).)  On a related note, which I discuss in chapter 6 of my forthcoming book Remedies in Intellectual Property Law, the U.S. does not impose criminal sanctions for patent infringement itself—although many other countries do, at least in principle.  (Germany is one, though in practice German prosecutors rarely if ever file charges for patent infringement.)  The criminal prosecution of IP infringement may be most common in certain Asian jurisdictions, as discussed by a group of authors (Masabumi Suzuki, Su-Hua Lee, Byungil Kim, Xiuqin Lin, Prashant Reddy, Heng Gee Lim, Jyh-An Lee, and Kung-Chung Liu) in a chapter titled Civil Follow Criminal or Criminal Follow Civil Procedure as Models to Deal with IP Infringement: Asian vis-à-vis Western Approaches, in Kreation Innovation Märkte - Creation Innovation Markets:  Festschrift Reto M. Hilty 663 (Florent Thouvenin, Alexander Peukert, Thomas Jaeger & Christophe Geiger eds., Springer 2024), previously noted on this blog here—but the only jurisdiction discussed in that chapter that appears to make extensive use of criminal prosecution for patent infringement appears to be Japan.  (The TRIPS Agreement, for its part, only requires criminal sanctions for “wilful trademark counterfeiting or copyright piracy on a commercial scale,” and in most places I am aware of criminal sanctions are generally reserved for copyright and trademark infringement, and for trade secret misappropriation.)  Among the reasons for some Asian jurisdictions’ more extensive use of criminal law are, according to Suzuki et al., the perceived need for additional deterrence, in view of the practical difficulty of obtaining preliminary injunctions, enforcing permanent injunctions, and/or obtaining fully compensatory damages awards; and, relatedly, the ability of civil litigants to file criminal complaints as a means for obtaining discovery.  (For other useful sources of information on criminal IP law, see, e.g., Eldar Haber,  Criminal Copyright (Cambridge Univ. Press 2018), and other sources cited in chapter 6 of my book.)

Anyway, the German court’s resort to criminal contempt certainly is notable—and, somewhat paradoxically perhaps, contrasts with Japan, where--despite the country's heavier reliance on criminal law generally--Professor Suzuki writes that courts do not order criminal contempt for failure to comply with injunctions.  As for Germany, however, I wonder if we will see more of this, as a deterrent to perceived non-compliance with court orders?

A Couple of New Articles on FRAND/SEPs

1. Michael Nieder has published an article titled EPG-Widerklage auf gerichtliche Bestimmung einer angemessenen FRAND-Lizenz?—Zur Entscheidung der LK Mannheim vom 22.11.2024—UPC CFI 210/2023 (“UPC Counterclaim for a Judicial Determination of a Reasonable FRAND License?—On the Nov. 11, 2024 Decision of the Mannheim Local Division— UPC CFI 210/2023”), 2025 GRUR Patent 401.  Here is the abstract:

The EPG [UPC] has so far issued two injunctions for infringement of a standard-essential patent (SEP) in cases where the FRAND issue played a role.  These are the decisions of the EPG Local Division Mannheim of November 22, 2024—UPC CFI 210/2023—Panasonic/OPPO an OROPE and the EPG Local Division Munich of December 18, 2024—UPC CFI 9/2023—Huawei/Netgear.  Due to corresponding counterclaims by the defendants, the question of the possibility of a court determining the appropriate rate for a FRAND license arose only in the Panasonic/OPPO and OROPE case.  The following remarks deal with this issue.

In the course of the article, Dr. Nieder argues against the position taken by Matthias Leistner (who believes the UPC has jurisdiction to determine FRAND rates), and in favor of the position taken by Peter Meier-Beck and by Tim Dornis (that it doesn’t).  For my previous commentary on the Mannheim decision, see here; for previous posts on Dr. Leistner’s and Judge Meier-Beck’s takes on the issue discussed by Dr. Nieder, see here and here.   

2.  Runhua Want has posted an article on ssrn titled Irrational Unwillingness in SEP Licensing, 34 Tex. Intell. Prop. L.J. __ (forthcoming 2025).   Here is a link to the paper, and here is the abstract:

The role of injunctions in guiding standard-essential patent (SEP) licensing negotiations is important but remains unclear. Many SEP holders argue that a high threshold for injunctions fails to protect them against holdout and efficient infringement. By contrast, SEP implementers are concerned about patent holdup resulting from threats of injunctions by SEP holders. This conflict raises a broader policy issue: how should legal institutions guide parties toward efficient licensing negotiations? However, since the United States withdrew its most recent guidance in 2021, it has lacked a clear position on this issue. Other jurisdictions likewise face challenges in designing effective injunction rules. Among these challenges, the definition of unwilling licensees, a key factor in granting injunctions, remains inconsistent and under development. This Article addresses the unsettled role of injunctions in SEP licensing negotiations and contributes to the policy debate by analyzing cognitive and structural barriers to implementer cooperation. Specifically, it examines whether injunction rules can be designed to effectively enhance the willingness of implementers to license. To that end, it reviews public feedback submitted in a semi-structured survey, which was conducted by the United States Department of Justice in 2022. The survey examined both the thresholds for injunctions and the standards for identifying unwilling licensees. This Article documents various approaches to identifying unwilling licensees, as suggested in the feedback. Based on the documented feedback and textual analysis, the Article identifies four motivations that underline SEP implementers' lack of cooperation in licensing negotiations: 1) resistance to holdup, 2) information asymmetries, 3) habitual holdout and efficient infringement, and 4) financial constraints. These motivations reflect not only strategic behavior but also deeper cognitive biases held by both SEP holders and implementers. This Article argues that due to the cognitive biases, injunction rules, regardless of their design, face inherent limitations in promoting efficient licensing.

Suzuki et al. on Criminal Penalties for IP Infringement in Asia

            For the most part, criminal law does not play a large role in the enforcement of patent rights, although TRIPS article 61 does require that member states make available criminal penalties for “wilful trademark counterfeiting or copyright piracy on a commercial scale”; some free trade agreements extend the obligation to criminalize IP infringement a bit further (e.g., to anti-circumvention measures); and in some places, including the U.S., criminal penalties sometimes are imposed for trade secret misappropriation.  Some countries, moreover, make all or most types of IP infringement at least potentially subject to criminal penalties, although the criminal prosecution of patent infringement isn’t very common (though it does happen from time to time).

Anyway, I’m finishing up work on my book Remedies in Intellectual Property Law, and the last chapter deals with, among other things, criminal enforcement, so I though I would call readers’ attention to a paper that addresses the criminal enforcement of IP rights in the leading Asian jurisdictions.  The authors are Masabumi Suzuki, Su-Hua Lee, Byungil Kim, Xiuqin Lin, Prashant Reddy, Heng Gee Lim, Jyh-An Lee, and Kung-Chung Liu, and the paper is  titled Civil Follow Criminal or Criminal Follow Civil Procedure as Models to Deal with IP Infringement: Asian vis-à-vis Western Approaches, in Kreation Innovation Märkte - Creation Innovation Markets:  Festschrift Reto M. Hilty 663 (Florent Thouvenin, Alexander Peukert, Thomas Jaeger & Christophe Geiger eds., Springer 2024).  Here is a link to the ssrn version, and here is the abstract:

Art. 61 of the TRIPS Agreement of the World Trade Organization (WTO) requires members to provide criminal punishment at least for willful trademark counterfeiting and copyright piracy on a commercial scale. Sweeping criminalization of IP infringement can be observed in the West typified by Germany and many major Asian jurisdictions. However, in practice, there has been relatively rare criminal prosecution of IP infringement in the West, whereas criminal prosecution of IP infringement, excluding patent infringement, is not uncommon or even common in the seven selected Asian jurisdictions. Why is there such a difference? and what effects does it have on the overall development of IP laws in those Asian jurisdictions? These two questions among others are what this article strives to answer. It will first survey the Asian IP landscape, in the order of the introduction of IP laws into the civil law jurisdictions (Japan, Taiwan, Korea, and China), and into common law jurisdictions (India, Malaysia, and Hong Kong) respectively (2). It will then examine German experiences (3), followed by comparative study and policy analysis (4), and end with some suggestions (5).

Highly recommended!

 

  

Another Japanese IP High Court Decision on Infringers' Profits

Last fall I mentioned Hamamatsu Photonics K.K. v. Tokyo Seimitsu Co., Case No. 2023 (Ne) 10037 (IP High Court Mar. 6, 2024), a case in which the Second Division of Japan’s IP High Court held that article 102(2) of Japan’s Patent Act did not apply but article 102(1) did.  By way of background, article 102(1), which addresses lost profits, reads (in translation) as follows:  “If a patentee or an exclusive licensee claims compensation for damages that the patentee or licensee personally incurs due to infringement, against a person that, intentionally or due to negligence, infringes the patent right or violates the exclusive license, and the infringer has transferred infringing articles, the amount calculated by multiplying the number of articles so transferred (hereinafter referred to in this paragraph as the ‘number transferred’) by amount of profit per unit from the products that the patentee or exclusive license could have sold if there had been no infringement, may be fixed as the value of the damage that the patentee or exclusive licensee has incurred, within the limits of an amount proportionate to the ability of the patentee or exclusive licensee to work the patented invention; provided, however, that if there are circumstances due to which the patentee or the exclusive licensee would have been unable to sell a number of products equivalent to all or part of number transferred, an amount proportionate to the number of products that could not have been sold due to such circumstances are to be deducted from the value of damage thus calculated.”  Article 102(2) then states that “If a patentee or exclusive licensee claims compensation for damages that the patentee or licensee personally incurs due to infringement, against a person that, intentionally or due to negligence, infringes the patent or violates the exclusive license, and the infringer has made a profit from the infringement, the amount of that profit is presumed to be the value of damages incurred by the patentee or exclusive licensee.”  Thus, while article 102(2) addresses infringers' profits, it is not considered to be a disgorgement remedy as such, but rather a means for estimating the plaintiff’s lost profit with reference to the profit the infringer made, subject to appropriate adjustments.  In the Hamamatsu case noted above, the plaintiff owned a patent reading on a component (a “stealth dicing” or “SD” engine) that is incorporated into an end product (“stealth dicing” or “SD” equipment).  The plaintiff claimed it was entitled to the defendant’s profit on sales of the end products, adjusted to reflect that the patent in suit contributed some but not all of the value of that product.  The Second Division of the IP High Court rejected that argument, though it concluded that under article 102(1) the plaintiff could recover lost profits on lost sales of SD engines it would have sold to the defendant, plus delay damages, totaling about 136,000,000 yen.

Professor Masabumi Suzuki recently alerted me, however, to an  April 2024 decision of the Fourth Division of the IP High Court, Hamamatsu Phototonics K.K. v. Tokyo Seimitsu Co., Case No. 2023 (Ne) 10037 (IP High Court Apr 24, 2024).  (An English-language summary, but not the full opinion, is now available on the IP High Court’s website.  The Japanese original is here, and a press release by Hamamatsu here.)  As the title indicates, the parties are the same; and while two other patents are in suit, if I understand correctly the products sold by the plaintiff and the products alleged to be infringed by the defendant are the same products.  Nevertheless, in this case, which was pending when the other case was decided, the court holds that article 102(2) entitles the plaintiff to recover an allocable portion of the infringer’s profits—specifically, the ratio of the price of the SD engine to the SD dicer (the end product), multiplied by the marginal profit on the sale of the engine—noting inter alia that the plaintiff’s product is the “core of the technology for the SD dicer.”  The amount awarded under this formula is approximately 832 million yen, which is higher than the plaintiff’s quantifiable lost profits under article 102(1) or a reasonable royalty under 102(3).

Although the two decisions reached different conclusions on the applicability of article 102(2), I’m not sure that they are irreconcilable on the law. The different outcomes may be attributable to the two divisions’ perception of the strength of the evidence submitted to them concerning the defendant’s marginal profit attributable to the SD engine.  In any event, I understand that both judgments are now final and that there is no further appeal pending.  I don't know, but I would guess that there might have been some accommodation made between the parties to avoid a duplicative recovery, though nothing to that effect is indicated in either decision as far as I can see.  Indeed, te first decision noted the pendency of the second decision, but stated that it would not presume to award only half-damages, since the infringement of the patents at issue in the second suit was still to be determined.  The second decision says that the first decision has not yet been “finalized” (according to my machine translation of the Japanese original, which is kind of rough).  Anyway, based on the latter decision, it appears that Japanese courts will now allow an allocable award of the infringer's profits in a case in which the patented invention reads on a component of the defendant's end product.