Japan: The IP High Court Holds That A Seller Should Cooperate If The Purchaser Is Involved In An IP Dispute

Last Updated: 27 January 2017
Article by Masahito Imai

In a judgment issued on December 24, 2015, the IP High Court held that a seller of chipsets is liable for the purchaser's damages caused by the purchaser agreeing to pay money to a patent owner in negotiations between the purchaser and the patent owner, because the seller failed to meet its contractual obligations to cooperate sufficiently with the purchaser in settling the dispute (IP High Court Case No. 2015 (ne) 10069).


Kanematsu Corporation (the plaintiff and the appellee. Hereinafter "Kanematsu") and SoftBank BB Corporation (the defendant and the appellant. Hereinafter "SoftBank") entered into a master sale and purchase agreement (the "Master Agreement") and several individual agreements on sale of chipsets (the "Chipsets") manufactured by Ikanos Communications, Inc. ("Ikanos"), and Kanematsu delivered to SoftBank the Chipsets under these agreements.

However, SoftBank failed to pay Kanematsu for a part of the Chipsets. Therefore, Kanematsu filed a lawsuit against SoftBank demanding payment for such Chipsets.

On the other hand, Wi-LAN Incorporated ("Wi-LAN") claimed against SoftBank that the Chipsets infringe Wi-LAN's patents, and SoftBank settled this dispute with Wi-LAN by paying 200 million Japanese Yen as a license fee to Wi-LAN and its affiliates. In this regard, paragraphs 18.1 and 18.2 of the Master Agreement provided that: (1) Kanematsu warrants and represents to SoftBank that the Chipsets do not infringe patents and other intellectual properties of any third party (Paragraph 18.1); and that (2) in case of a dispute with a third party relating to infringements of intellectual properties due to the Chipsets, Kanematsu shall settle the dispute at its own responsibility and expenses, cooperate with SoftBank, and indemnify and hold harmless SoftBank from damages (Paragraph 18.2), respectively. Based on these provisions, SoftBank counter-argued that SoftBank suffered damages of 200 million Japanese Yen, which is equivalent of the license fee paid to Wi-LAN, and argued that this amount should be deducted from payment to Kanematsu.

The Tokyo District Court (the first instance) rejected Softbank's counter-argument based on Paragraphs 18.1 and 18.2 of the Master Agreement, and upheld Kanematsu's claim in full. SoftBank appealed to the IP High Court.

Judgment of the IP High Court

With regard to SoftBank's assertion on Kanematsu's violation of Paragraph 18.1 of the Master Agreement, the IP High Court found that the Chipsets do not infringe Wi-LAN's patents, and thus rejected SoftBank's assertion in this respect.

With regard to SoftBank's assertion on Kanematsu's violation of Paragraph 18.2 of the Master Agreement, the IP High Court ruled that details of Kanematsu's obligation in case of infringement of a third party's intellectual properties under Paragraph 18.2 must be determined by considering various factors, such as the third party's allegations on the infringements and negotiations with SoftBank.

In this case, Wi-LAN offered SoftBank a license of Wi-LAN's patents; SoftBank asked Kanematsu from the beginning whether the Chipsets infringe Wi-LAN's patents; and it was agreed between Kanematsu, SoftBank and Ikanos that Ikanos should provide information necessary for determining a reasonable license fee to be paid to Wi-LAN and its calculation basis.

Given these circumstances, the IP High Court ruled that, under Paragraph 18.2, Kanematsu had the obligation to provide technical analysis of Wi-LAN's patents so that SoftBank could determine whether SoftBank needed to enter into a license agreement with Wi-LAN, and also the obligation to collect and provide documents necessary for calculating a reasonable license fee to be paid by SoftBank to Wi-LAN based on the license agreement.

The IP High Court found that neither Ikanos nor Kanemasu provided sufficient technical analysis or documents regarding calculation of a license fee, and that Kanematsu did not perform its obligations mentioned above.

In addition, the IP High Court found that the damages equivalent to the license fee paid by SoftBank to Wi-LAN were caused by Kanematsu's violation of Paragraph 18.2. The IP High Court took into account the fact that, without receiving from Kanematsu or Ikanos any information on calculation of a reasonable license fee, etc, SoftBank would have faced a risk of a lawsuit to be filed by Wi-LAN and then a risk of suffering damages of much more than 200 million Japanese Yen, if SoftBank's infringement of Wi-LAN's patents had been established.

However, the IP High Court did not uphold SoftBank's counter-argument in full. This was because SoftBank had not examined whether the Chipsets actually infringed Wi-LAN's patents, did not face an immediate risk of being filed a lawsuit by Wi-LAN, and paid 200 million Japanese Yen without asking Wi-LAN the calculation basis of this amount as the license fee. These circumstances were considered to be SoftBank's negligence, and the IP High Court upheld SoftBank's claim only partially to the extent of 60 million Japanese Yen.


We often see sales agreements as well as license agreements that contain a provision regarding representation and warranty of non-infringement of third party's intellectual properties and a provision regarding an obligation of cooperation in case of disputes relating to infringement of IP rights. However, this is the first case in which a Japanese court showed its interpretation of these kinds of provisions.

This judgment is notable in several points.

First, although it was not demonstrated that the Chipsets delivered by Kanematsu infringe Wi-LAN's patents, Kanematsu was found to be in breach of its obligation under Paragraph 18.2, namely, the obligation of cooperating with SoftBank in settling the dispute between SoftBank and Wi-LAN in respect of alleged infringement of Wi-LAN's patents.

Secondly, the Court held that the actual conducts that the seller is required to perform under Paragraph 18.2 shall be determined on a case-by-case basis, taking into account the behaviors of the relevant parties.

Thirdly, like SoftBank's counter-argument in this case, a purchaser who has settled with a third party without having sufficient consultations with a seller, would not necessarily be able to recover all damages caused in the process of such a settlement.

Considering the last two points, when IP disputes occur, it would be important from a seller's viewpoint that the seller performs its obligation to cooperate with a purchaser, or and from a purchaser's viewpoint that the purchaser should consult with the seller fully in settling IP disputes (especially, when paying money to a third party who alleges in IP disputes that its patent is infringed) so that the purchaser would be sufficiently compensated even if the purchaser was compelled to pay a license fee to the third party.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.