Trends in patent infringement litigation disposed of by the Tokyo District Court (TDC) and Osaka District Court (ODC) between 2014 and 2022
Under Japanese judicial procedures, the first instance of patent infringement litigation is the TDC or ODC. According to statistics released by the IP High Court (IPHC), 745 cases were disposed of by these two courts in nine years between 2014 and 2022, with more than 80 cases on average per year. Approximately 70% of the cases were disposed of by judgement whereas approximately 30% were by settlement. In judgement, the patentee winning rate is never too high. Around 30% of the judgements were favorable to patentees. In settlement, which is difficult to be determined winning from its context, the patentee winning rate can be calculated 33 to 80% based on the IPHC data. As a whole, the patentee winning rate ranged from 31 to 45%. The following graph represents the outcome of patent infringement litigation cases disposed of by the TDC and ODC.
Regarding the amount approved in judgements, the cases approving one million USD or more reached 35 cases, accounting for 7% and cases approving 0.5 million USD or more reached 46 cases, accounting for 9% in total. Regarding the amount of settlements, cases approving more than one million USD are 29, accounting for 7% and cases approving 0.5 million USD are 44, accounting for 19% in total. The amount of compensation in the aggregate of the above cases is indicated in the following graph. Only 9% of the cases have been able to claim more than one million USD in damages. Even if the amount is over 0.5 million USD, the ratio stays about 12%. Considering the fact that litigation costs hundreds of thousands of USD, it would be advisable for a patentee to carefully examine the case in question.
Patent infringement litigation decisions at the Tokyo District Court (TDC) in 2022
We have conducted an analysis of statistics for patent infringement decisions at the TDC in 2022. The actual number of cases for which a decision was handed down by the TDC was 32, of which 24 were rejected, eight were acknowledged or partially acknowledged. Three cases were approved an injunction while the remaining five were not. All eight cases were approved compensation.
The amount accepted by the TDC on each of the eight case is as follows. The average amount is 3.62 million USD. Only mentioning 2022, the amount accepted by the TDC is substantially high.
[Amount accepted by the TDC Scale:USD]
- 15,069,800
- 10,086,600
- 2,371,500
- 573,000
- 518,500
- 217,200
- 82,000
- 70,500
Furthermore, the amount of compensation for damages is calculated generally by two ways in Japan. One calculation, which is in accordance with Japanese Patent Law Article 102-2, is that the amount of compensation is determined based on the amount of the profit which an infringer obtained from the act of infringing a patent right multiplied by [1 – rebuttal to presumption]. The other calculation, which is in accordance with Article 102-3, is that the amount is determined as the amount equivalent to a license fee. The TDC accepted four cases based on Article 102-2, of which two were 0%; one was 10%; and one was 50% in rebuttal presumption rate. Two of the four cases did not claim compensation for damages based on Article 102-3. Please note that the rate of rebuttal to presumption is determined considering the existence of other litigation. In addition, the TDC accepted six cases based on Article 102-3, of which two were 0.01%; another two were 10%: and one was 30% in license fee rate. In the case of compensation for damages based on illegal acts, the courts accept the amount of loss which is equivalent to attorney fees at a certain level. That amount is not an actual amount of attorney fees but the amount accepted by courts multiplied by a certain rate. In 2022, the TDC accepted 10% of attorney fees in all cases.
Japanese patent litigation is categorized into two types, direct infringement and in-direct infringement. Direct infringement is further divided into literal infringement and infringement under the doctrine of equivalents. Literal infringement is a typical patent infringement where an infringement is found within the scope of an invention subject to a patent right. Literal infringement is likely to be rejected. The TDC accepted only 12 cases, accounting for 37% while half of all the cases were rejected. Four cases, which account for 13%, were not subject to examining literal infringement as the patent in question was found invalid by the JPO and therefore, the TDC did not need to further examine whether there is infringement.
[Five requirements]
Infringement with the doctrine of equivalents is defined as an infringement action that an accused product does not literally infringe within the scope of the claims but meets the following five requirements.
- An element of a patented invention that represents a difference from the alleged infringer’s product is not an essential part of the patented invention (non-essential element).
- The purpose, functions and effect of the patented invention can be achieved by replacing the different feature with that of the defendant’s product (possibility for replacement and the identicalness of functions and effect).
- It was easily conceivable to substitute the different feature for that of the defendant’s product at the time of manufacturing the defendant’s product (ease of substitution).
- The defendant’s product, at the time of filing the patented invention, was not identical to publicly known art or was not easily foreseeable based on publicly known art (ease of conceivability).
- There are no special circumstances, such as that the defendant’s product was intentionally excluded from the claim of the patented invention in the course of its prosecution (intentional exclusion).
Among patent infringement cases judged by the TDC in 2022, 12 cases were claimed as infringement with the doctrine of equivalents by patentees. None of the 12 cases were affirmed infringement with the doctrine of equivalents, more specifically, 10 were not affirmed and the remaining two cases were not subject to examining the case. Regarding grounds for equivalency to determine infringement, 10 cases were not affirmed due to the first requirement, two were not due to the second requirement, and four were not due to the fifth requirement. Some cases did not meet multiple requirements.
The next pie chart presents validity or invalidity in judgement to patent infringement litigation. Nine cases were validated, accounting for 28% while 15 cases were invalidated, accounting for 47% and 8 cases were not subject to judgement, accounting for 29%.
Grounds for invalidity are as follows: nine cases for failure to satisfy support requirements, six cases for failure to satisfy enablement requirements, five cases for lack of novelty or inventive step, and one for failure to satisfy amendment requirements. Some cases claimed multiple invalidity grounds.
Patent infringement litigation decisions at the Osaka District Court (ODC) in 2022
We have conducted an analysis of statistics for patent infringement decisions at the ODC in 2022 as well. The actual number of cases disposed of by the ODC was eight, which is lower than the TDC. Among them, five cases were rejected, of which one accepted a request for compensation for damages based on tarnishment. Partially or wholly accepted cases are three, of which two accepted an injunction. Three cases accepted compensation for damages.
Trends at the IPHC in 2022
Patent infringement litigation appealed to the IPHC in 2022 were 49. Among them, 37 were rejected, four were canceled, and eight cases were overturned. Please note that cancellation of the original case and modification of the case are practically the same.
24% of the total cases are cancelation or modification. Regarding the aggregate of four cancellations and eight modifications, six cases overturned the first instance decision which resulted in the plaintiff going from losing to winning, two cases which resulted in the plaintiff going from winning to losing the case. Four cases accepted modification of the amount of compensation.
Our comments
It has been said that Japan is a country where both the number of IP lawsuits and the amount of compensation for damages remain lower than Europe and the U.S. However, taking a look at the above statistics and analysis for 2022, the amount of compensation for damages is not low at any price while patentees’ winning ratio is still less. Raising an IP lawsuit could be feasible as one business strategy as long as a patentee does not sit still but thoroughly prepares for an IP dispute. In addition, considering the situation where the amount of compensation for damages is way higher than the amount calculated based on Article 102-2, it is crucial for a company to conduct competitor’s patent searches when launching a product in Japan so that their own product is not found to infringe a competitor’s patent right.