One cannot say that amounts of damages awarded in Japan are significantly attractive for most patent proprietors, while the claim for damages is one of the most important factors for a patent proprietor when deciding whether or not to pursue patents. Now there is good news for such people. The Japan Patent Office has been considering an overhaul of methods for calculating the amount of damages.

The first reform relates to the application of Articles of special provisions regarding presumptions of the amount of damages (Article 102, Patent Law). The amount of damages, currently, may be calculated on the basis of lost profit that is determined within the working capability of a patent proprietor (Article 102(1), Patent Law). Based on this approach, even if an infringer sold one hundred products infringing a patent right, the damages cannot be calculated based on the total number of products actually sold if it was considered that the patent proprietor did not have the working capability for selling one hundred products. In other words, the court may rule that the patent proprietor would not have been able to sell those products, due to circumstances such as the presence of competing products in the market. Accordingly, for example, if it was considered that the patent proprietor had the working capability for selling only sixty products, the damages would be calculated on basis of sixty products.

According to the first reform, as for within the patent proprietor’s working capability, the amount of damages may be calculated on the basis of lost profit the same way as before (that is, Article 102(1) is still applied). In the previous example, as for those sixty products, the damages can be calculated on the basis of lost profit. And as for the rest (which exceeds the patent proprietor’s working capability), the amount of damages may be calculated as to correspond to the amount of license fees receivable by the patentee (Article 102(3), Patent Law) as if the patentee had granted the infringer a license. In other words, as for the portion for which damages are currently being denied, it would be deemed that it had been licensed to the infringer, and that amount is added to the damages. In the previous example, as for the remaining forty products sold by the infringer, the damages can be calculated on the basis of the license fee. This way, Article 102(1) and Article 102(3) would be applied at the same time. Consequently, the total amount of damages would be the sum of the amount based on the lost profit and the amount based on the license fee.

The second reform relates to license fee. The amount of damages corresponding to license fee under Article 102(3), currently, would remain the same before and after patent litigation. In other words, regardless of the actions taken by infringers, e.g. dishonestly prolonging license negotiation, etc., the worst case scenario for the infringers is such that they just have to pay a regular license fee.

According to the second reform, the amount of damages after patent litigation is higher than the regular license fee, that is, increased license fee as punishment for the infringement is applied.