The Intellectual Property High Court (“IPHC”) awarded damages on Article 102, Paragraph 1 of the Patent Act against infringing products; specifically, shell plates, which constitute a rotary press (a commercial product that arises from business to business transactions) for printing a medium such as newspapers.

Article 102, Paragraph 1 of the Japanese Patent Act allows for damages to be calculated based on the profit per unit of the patentee multiplied by the quantity of the infringing products sold by the infringer. However the court will take into consideration whether any circumstances exist under which the patentee would have been unable to sell some amount among the actual quantity, and damages awarded will be reduced depending on such amount.

The Article  102, Paragraph 1 presumes an incurrence of damage in cases of an existence of a patent infringement. This is helpful for a patentee as a causal link between a patent infringement and damages tends to be difficult to prove.The alleged infringer argued that the Article 102, Paragraph 1 is not applicable because the users would not have bought the patentee’s products (i.e., shell plates) even without the infringement. The reasons of the allegation include the followings:

  • The infringing product, a shell plate, is a subcomponent of rotary press machinery which is not manufactured by the patentee.
  • Therefore, the patentee would have to measure, design and fabricate the shell plate on site to install the patentee’s shell plate into the existing rotary place.
  •  Also, this had to be done during the patent term, which in this case was approximately 6 months.

IPHC has ruled that the Article 102, Paragraph 1 of the Patent Act applies in this instance as the users could have purchased the patentee’s shell plates because of the importance of the problems to be solved by the patent invention. The court noted that the above circumstances as alleged by the infringer would be taken into account in reducing damages awarded.

As for the factors to be considered in the reduction of damages awarded, the IPHC considered various aspects, including: the existence of competitive products; the sales effort of infringer; the performance of infringing products; and the similarity of the products between infringer and patentee. As a result, IPHC reduced the award by ¾ of the total amount of the products sold by the infringer.

This case would include a useful guideline for a patentee to seek damages pursuant to Article 102, Paragraph 1, especially in terms of products arising from business to business transaction.