Tokyo District Court, December 27, 2011 (Tokyo District Court, 2009 (Wa) No. 13219)
[Summary of the case]
Plaintiffs X1, which owns the design right to the steam mop, and X2, which is an unregistered exclusive licensee for the design right, alleged that the sale of the products by the defendant infringed their rights and demanded that the defendants be banned from selling. the products under the Design Act and claimed compensation for damage caused by the infringement. The court awarded these damages to claimant X1, the owner of the design right, on the basis of a royalty under Article 39 (3) of the Designs Act, and damages to claimant X2, the unregistered exclusive licensee, on the basis of the defendant’s profits. under section 39, paragraph 2, of the Designs Act, and concluded that the two damages should be applied in the context of a joint and several liability relationship.
Article 39, paragraphs 2 and 3, of the Law on Designs, Damages, Joint and Several Liability
[Point at issue]
Claimants’ damages (claims for damages under Article 39 (3) and Article 39 (2) of the Designs Act).
[Summary of the Decision]
The court determined that the royalty rate for the registered design was 5% of sales of the defendant’s product, based on the average royalty rate (2.8% with upfront fees and 4.6% free of charge. initial) indicated in the “Royalty rates [5th Edition]”published by the Japanese Institute of Invention, taking into account various circumstances (consumer interests, distinctive configuration not found in any design of common knowledge, etc.). The court also found that the plaintiff X1 (Europro), the owner of the design right, is entitled to the amount of JPY 2,286,655, obtained by multiplying the above royalty rate by the sales of the defendant’s products, as an amount of damages equivalent the license fee under Article 39, paragraph 3, of the Designs Act.
On the other hand, with regard to the damages of the plaintiff X2 (Oak Lawn), the unregistered exclusive licensee, the court determined the analogous application of Article 39, paragraph 2, of the Design Law and a awarded JPY 3,262,698, which equals the defendant’s profit margin (i.e. sales amount – purchase money, etc.), as the amount of damages.
The court concluded that the unregistered exclusive licensee is not substantially different from the “registered exclusive licensee” in that the unregistered exclusive licensee is able to exclusively exploit the design right and make a profit in the market, and the purpose of Article 39 (2) of the Designs Law is applicable to the exclusive unregistered licensee.
As to the relationship between the claims for damages of the two claimants (X1 and X2), the court held that these damages should be applied in a relationship of joint and several liability in the overlapping part. More specifically, the court concluded as follows:
The plaintiffs claim damages against the defendant on the basis of their respective rights, and all claims relate to damages caused by the violation of the defendant’s design right.
There is no reason for the defendant to make a double payment of the aforementioned damages, therefore, the right of the plaintiffs to claim damages is a joint and several claim in the overlapping part.
I believe this judgment will be useful in litigation practice as it shows how to award damages in design rights infringement cases.