Osaka District Court, January 31, 2019 (No. 9834 (Wa) of 2017)

Section 1  BACKGROUND

The Defendant posted, on its website, sentences that a company that reminds readers of the Plaintiff sold a copied machine of the Defendant's product. The Plaintiff demanded an injunction against indication of the website with the sentences, posting of apology advertisement, and payment of compensation for damages, under Article 2, Paragraph 1, Item 15 of the Old Unfair Competition Prevention Act (Item 21 of the Unfair Competition Prevention Act at present).

The main issue of this case is whether the sentences fall under " false allegations that harm the business reputation of a business competitor" of the above Item,

Section 2  DECISION

(2) Regarding the expression of " copied machine”

…the expression that the other party's product is described as a copy of an own product is allowed to be used only when the appearance, structure, etc. are identical or substantially similar as to be indistinguishable or at least when the patent infringement is affirmed since the other party's product falls within the technical scope of the own patented invention.

…Considering this case, it is found that the shape of the Plaintiff's product is partly similar to that of the Defendant’s product in the Silent Piler, but it can be reasonably inferred that a certain structure and shape must be adopted in order for the machine to function as  hydraulic pile extractors, and the hydraulic pile extractors that were once manufactured by other companies are similar to the Defendant’s product in the Silent Piler and main structure and shape.

…In this case, there is no allegation or proof sufficient to find a fact that the manufacture and the sale of a pile extractor by Tosa Machine Industry or the Plaintiff infringes any exclusive right of the Defendant, including the patent.

According to the above, the Defendant described the Plaintiff's product as a "copied machine" in the Publication of No.1 to No.3 even though the Plaintiff's product cannot be described as a copy of the Defendant's product. Therefore, the description should be found to be false. . In light of the above consideration, this conduct harms the business reputation of the Plaintiff, which is a business competitor of the Defendant.

Section 3  ANALYSIS

This is a case where a court affirmed that the requirement of " false allegations that harm the business reputation of a business competitor" under Article 21, Paragraph 1, Item 15 of the Old Unfair Competition Prevention Act (Item 21 of the Unfair Competition Prevention Act at present) is satisfied.

First, the court found that a person who judges as to whether the publication is false or not is a "person in the relevant industry, such as a related person, business partner and competitor of the Defendant, and contractor that conducts construction work using hydraulic pile extractor" from the nature and contents of the website on which the publication was posted. From the content of the publication, the court also found that the "company" in the publication is the Plaintiff.

Regarding "false allegations that harm the business reputation", the court found that the expression that the other party's product is described as a copy of an own product is allowed to be used only (a)when the appearance/structure are identical or substantially similar as to be indistinguishable or (b)at least when the patent infringement is affirmed since the other party's product falls within the technical scope of the own patented invention”.

Therefore, it should be noted that stating that a product is a "copy" of one's own product, even without directly stating that a product is an "infringing product" of one's own right, may constitute notification of “false allegations that harm the business reputation", unless the case falls under the case of the above items of (a) or (b).