With regard to damage awards in patent infringement cases,
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 quantity of the infringing products sold by
the infringer to the extent of the capability of the patentee.
Under the provisory clause of Article 102, Paragraph 1, if any
circumstances exist under which the patentee would have been unable
to sell some amount among the actual quantity of the infringing
products sold by the infringer, the amount of damage awards is
reduced depending on such amount.
In the present case, it was disputed whether the provisory
clause of Article 102, Paragraph 1 should be applicable in
circumstances where there were competitors of the patentee other
than the infringer and the price of the patentee's product
differed from that of the infringing products.
IPHC noted that the infringer bears a burden to how
circumstances under which the patentee would have been unable to
sell some amount and that such circumstances included existence of
competitive products, sales efforts of the infringer, performance
of the infringing products and dissimilarity of the market for the
infringing product and that for the patentee's product.
In the present case, the infringer asserted existence of
competitive products and dissimilarity of the products market, as
the circumstances of this case.
Regarding the competitive products, IPHC found that there were
competitors of the patentee other than the infringer. Nevertheless,
IPHC ruled that the existence of such competitors was insufficient
to trigger the application of the provisory clause of Article 102,
Paragraph 1, noting in particular that it was not established that
the bag breaking machines sold by such competitors had effects
similar to those of the claimed invention and that the share in the
market for bag breaking machines or the price of the machines sold
by the competitors were not clear.
Regarding the dissimilarity of the products market, the
infringer argued that the market similarity should be denied in
light of the difference of the average prices between the
infringing products and the patentee's products. Although IPHC
determined around 6.5 million yen as the average price of the
patentee's products while around 3.5 million yen as the average
price of the infringing products, IPHC held that the market
similarity could not be negated by reason that the products were
targeted to not general consumers but companies, and the lifetime
of the product was several years.
As a result, IPHC concluded that no circumstances existed to
reduce the amount of damage to be awarded under Article 102,
Paragraph 1 of the Patent Act.
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