News & Topics

A “bill partially revising the patent law, etc.” was passed by the ongoing 198th ordinary Diet session and
promulgated on May 15, 2019.
The outline of partial revision to the Patent Act can be summarized in the following two points.

1.  Creation of an inspection certificate system under which neutral technical experts conduct on-site
inspections of suspected infringers

A) Due to the difficulty in building up evidence in patent infringement cases involving matters such as (i) production methods, (ii) products which are handled in B to B transactions and are not available in the market, and
(iii) software, it is necessary to make the process of gathering the necessary evidence easier. As a result,
an inspection certificate system was created, and under the system, if a party is suspected of infringing on a patent
right of a patent-right holder, neutral technical experts will conduct on-site inspections of manufacturing plants
or other facilities of the suspected infringer, conduct searches necessary for proving the infringement, and file
a report on the search results with a court.

B) The new procedure for gathering evidence makes it possible for the court, upon request by a party to the case
and under certain conditions, and with sufficient care being given to the protection of trade secrets and the like to
issue a court order to let neutral technical experts enter the infringer’s facilities in order to gather necessary
materials and report. The order shall be issued in response to a request by a patent-right holder who claims that
there has been patent right infringement, and in order to prevent the abuse of the procedure, the issuance of
the order is conditional on the following requirements, namely, (i) “necessity” to present evidence for the act of
infringement, (ii) “probability” of patent right infringement, (iii) “complementary nature” of the inspection arising
from the circumstances under which evidence cannot be gathered by any other means, and (iv) “reasonableness”
by taking into consideration the burden suffered by the suspected infringer.

2. Review of the method of calculating compensations for damages

A) Article 102 of the Patent Act provides for special provisions concerning compensation for damages. Paragraph (1) stipulates that the amount of damage sustained by the patent-right holder is presumed to be the amount of profit
per unit which would have been sold by the patent-right holder if there had been no such act of infringement,
multiplied by the quantity of articles assigned by the infringer, Paragraph (2) stipulates that the amount of damage
sustained by the patent holder is presumed to be the amount of profits earned by the infringer from the act of
infringement, and Paragraph (3) stipulates that the amount of damage sustained is presumed to be the amount of
money equivalent to the licensing fees which the patent holder would have been entitled to receive for the working
of the patented invention. The patent holder can make a choice as to which of the items of Paragraphs (1)
through (3) shall be applicable.

B) In regards to lost profits, Paragraph (1) of Article 102 stipulates that “the maximum amount of [the damages]
shall be the amount attainable by the patentee … in light of the capability of the patentee … to work such articles”,
and stipulates that “if any circumstances exist under which the patentee … would have been unable to sell”,
the amount calculated as the number of articles not able to be sold due to such circumstances shall be deducted
from the damages, thereby stipulating that the reduction of the elimination of the amount of damages shall be
accepted due to the “capability of the patentee” and the “circumstances … under which the patentee … would
have been unable to sell”. However, whether or not the provisions of Paragraph (3), which provide for the amount
of money equivalent to the licensing fees the patent holder would have been entitled to receive, apply to
the eliminated part of the presumed amount of damages in the aforementioned case, has been the subject of
various discussions in court precedents and academic theories.
The present revision of the law enables a patent-right holder to request its infringer for compensation for the part
of the damages which was not previously covered by the compensation due to the said part exceeding the right
holder’s production capacity, or the eliminated part, by deeming that the right holder had licensed the patent right
to the infringer.

C) In addition, in regards to the calculation of the reasonable amount of damages based on the amount of money
which is equivalent to the patent license fees pursuant to Paragraph (3) of Article 102, the present revision of
the law includes the explicit stipulation, to the effect that the patent-right holder is allowed to take into account
the estimated amount of money that may be determined if he/she conducts negotiations with the infringer
concerning such fees on the premise of the presence of the infringement. The revision is based on the value
judgment that the amount of money which is equivalent to the patent license fees, as determined through
negotiations upon occurrence of infringement, which is an illegal activity, should be set at a higher amount than
the amount of patent licensing fees which are normally applied in business.