Shogo SASHIHARA

The Intellectual Property High Court (“IP High Court”) Grand Panel rendered the decision which granted reasonable royalty to the part where a presumption of damages was overturned on October 20, 2022 (Case 2020 (Ne) 10024). (Note that only the summary of the decision is available as of November 8.)

Under the Japanese Patent Act Art. 102, a patentee may claim damages against infringers, either lost-profit type damages (Arts. 102(1)(2)) or reasonable royalties (Art. 102(3)). Art. 102 (1) provides that the amount of a patentee’s profits per unit of articles that would have been sold if there had been no acts of infringement multiplied by the quantity of articles assigned by an infringer is presumed to be the amount of damages [patentee’s profits]. Art. 102 (2) provides that the amount of profits earned by an infringer is presumed to be the amount of damage sustained by a patentee [infringer’s profits].

Presumptions under Art. 102(2) [infringer’s profits] can be overturned if the infringer establishes circumstances such as [i] the invention is implemented only in a partial portion of the infringing products; [ii] presence of a difference in the business forms, prices, and the like between the patentee and the infringer (non-identicality of the market); [iii] presence of competitive products in the market; [iv] sales efforts (brand strength, advertisement) of the infringer; [v] presence of differences in performances of the infringement product and the product of the patentee (features other than the patent invention such as functions, designs, and the like).

In the present case, the patentee seeks damages under Art. 102(2) [infringer’s profits], and the defendant has raised several circumstances to overturn the presumption. The Grand Panel admitted the above circumstances [i] and [iii] and granted certain percentages deduction of the presumed damages. Even though the presumption is overturned, the Grand Panel applied Art. 102(3) to the portion overturned by circumstance [iii] and awarded reasonable royalties. In contrast, the Grand Panel denies the application of Art. 102(3) to the portion overturned by circumstance [i].

You will see the details of the IP High Court Grand Panel Decision from the following link (English translation is no yet published).

https://www.ip.courts.go.jp/eng/hanrei/g_panel/index.html