Just last week, as I was preparing to head for the Patent Damages Roundtable in Austin, I came across a case commentary in GRUR-Int by Atsuhiro Furuta on a case that I was independently planning to blog about (and will be blogging about) later this week, NeoChemir Inc. v. Medion Research Labs. Inc., Case No. 2018 (Ne) 10063, Judgment of June 7, 2019 (IP High Court). Mr. Furuta's commentary alerted me to something I hadn't been aware of, however, namely that Japan had recently amended article 102 of its Patent Act relating to damages. (As Mr. Furuta notes, the NeoChemir judgment anticipates the effect of the amendment I discuss below.) I then searched around a bit to see if I could find an English language translation of the new amendment but came up empty, so I asked my friend Professor Masabumi Suzuki of Nagoya University if he was aware of any such translation. He in turn was gracious enough to provide me with a tentative translation, as well as the other material below.
So here's what we have. First, the new provisions are scheduled to go into effect on April 1, 2020. Second, here is a link to a Japanese government webpage explaining, in English, the enacted changes. The webpage states that the key points relating to patents are these--the first relating to inspection orders, the second to damages:
- Creation of a new system under which
neutral technological experts conduct on-site inspections of suspected
infringers (inspection certificate)
The bill is to create a new system under which if a third party is suspected of infringing on a patent right of a patent-right holder, neutral technological experts conduct on-site inspections of plants and other sites of the suspected third party as an infringer, implement research necessary for proving the infringement, and file a report on the research results with a court.
- Review of the method of calculating compensations for damages
- Under the current provisions, a patent right holder is not allowed to request its infringer for compensation for damages as a certain portion of the total number of products in question sold by the infringer if the portion is estimated to exceed the production capacity of the right holder. However, the bill is to revise the provisions and to allow such rights holders to request its infringer for compensation for damages for all products sold by the infringer by deeming that the rights holder has licensed the patent right to the infringer.
- The bill is to explicitly stipulate
that if a patent right holder intends to calculate the total amount of
compensation for damages by estimating the amount of money equivalent to
licensing fees, he/she is allowed to take into account the estimated
amount of money that may be determined if he/she conducts negotiations
with the infringer concerning such fees on the premise of the presence
of the infringement.
Note: As for item [ii], the Utility Model Act, the Design Act and the Trademark Act are to be revised for the same purpose as explained above.
The first point under heading ii would be relevant when, for example, the infringer sells more products than the patentee was capable of selling. The patentee might want to recover its lost profit on the sales it could have made, but for the infringement, and a reasonable royalty on the remainder, but some cases had required the patentee to choose one method of calculation or the other. (See, e.g., my book at pp. 316-18. I believe this remains the rule in Germany and perhaps some other countries as well.) Anyway, under the newly amended article 102, the patentee would be able to recover a mixed lost profits/reasonable royalty judgment under appropriate circumstances. Third, here is a link to a February 2019 document titled Designing an Intellectual Property Dispute Settlement System for Effective Rights Protection, which Professor Suzuki describes as a report of the JPO's advosory council that led to the amendment. (It discusses possible amendments to article 102 at pages 18-24.) Finally, here is Professor Suzuki's tentative translation, which is based on the unofficial English translation of the current act which the JPO provided to WIPO. The new parts are underlined.
(Presumption of the amount of damages, etc.)
(1) 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 assigned articles that composed the act of infringement, the sum of the amounts listed in the following items may be presumed to be the amount of damage suffered by the patentee or the exclusive licensee.
(i) the amount of profit per unit of articles which would have been sold by the patentee or the exclusive licensee if there had been no such act of infringement, multiplied by the quantity (referred to in the subsequent item as "assigned quantity") of articles assigned by the infringer, the maximum of which shall be the amount (referred to in the subsequent item as “attainable quantity”) attainable by the patentee or the exclusive licensee in light of the capability of the patentee or the exclusive licensee to work such articles (if any circumstances exist under which the patentee or the exclusive licensee would have been unable to sell the assigned quantity in whole or in part, the quantity corresponding to such circumstances (referred to in the subsequent item as “specific quantity”) shall be deducted).
(ii) When the assigned quantity exceeds the attainable quantity, or there is a specific quantity (except in cases where it is not deemed that the patentee or the exclusive licensee would be able to license an exclusive license or a non-exclusive license), the amount of money the patentee or exclusive licensee would have been entitled to receive for the working of the patented invention, corresponding to the exceeding quantity or the specific quantity.
(2) [NO CHANGE] 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.
(3) [NO CHANGE] A patentee or an exclusive licensee may claim against an infringer compensation for damage sustained as a result of the intentional or negligent infringement of the patent right or exclusive license, by regarding the amount of money the patentee or exclusive licensee would have been entitled to receive for the working of the patented invention as the amount of damage sustained.
(4) In determining the amount corresponding to the amount of money to be paid for the working of the patented invention prescribed in paragraph (1), item (ii) and the preceding paragraph, the court may consider the amount that the patentee or the exclusive licensee could have received as the fee for the working of the patented invention, had an agreement been reached with the infringer on the assumption of the existence of the infringement.
I may have more to say about these amendments in a future post, but I thought readers would be interested in having this information now.(5) The provisions of paragraph (3) shall not prevent any relevant party from claiming compensation for damage in an amount exceeding the amount provided for therein. In such a case, where the infringer committed the infringement of the patent right or exclusive license without intent or gross negligence, the court may take these circumstances into consideration in determining the amount of damages.