Amount equivalent to royalties fee for compensation for damages in patent disputes

更新日 ： 2019.02.26

 

Yesterday, a symposium sponsored by the Japan Intellectual Property Arbitration Center, entitled “Method of Calculating the Amount Equivalent to license fee for compensation for Damages in Patent Disputes” was held.

Keynote speeches were given by Mr. Yoichi Yamazaki, an attorney at the Japan Intellectual Property Arbitration Center, Mr. Yoshiyuki Tamura, a professor at Hokkaido University, and Mr. Makiko Takabe, a director of the Intellectual Property High Court. After that, a panel discussion was held also with Mr. Makimichi Omizu, a managing director of the Japan Intellectual Property Association.

In many cases, the rate of royalties which the industry is aware of in the public market is determined by trade-offs between companies in the same business on the assumption that they will not file a lawsuit. Therefore, an opinion was expressed that the rate of royalties in the public market is different from the index of calculation of “equivalent royalties” under Article 102, para.3 of the Patent Act in the lawsuit. Rather, it was recommended to calculate the amount of “marginal profit” (sales minus variable costs) that the infringer gained from its act of infringement, then extract the characteristic part of the patent invention, determine the contribution rate from the evaluation result of the customer attraction that the characteristic part of the patent invention brings about, and multiply the amount of marginal profit by the contribution rate.

There is a considerable difference in the concept of royalty between the license agreement and the infringement lawsuit.

In the license agreement, the royalty is an ex-ante reasonable amount of royalty, i.e., a commitment to future performance. The royalty is calculated taking into account the risk of invalidity or non-infringement, since the profit from the action to be performed has not yet been determined. On the other hand, in the case of the infringement lawsuits, the royalty is ex post reasonable amount of royalty, i.e., one calculated retroactively for past acts, so that it is not necessary to take into account the risk of invalidity or non-infringement because the infringement has been determined.