Episode 25

In Episode 24, we discussed the appeal (Intellectual Property High Court, Reiwa 3 (Ne) No. 10037, Judgment May 27, 2025) of the lawsuit against Sawai Pharmaceutical and Fuso Pharmaceutical for damages for infringement of Toray's use patent for an oral antipruritic agent (Patent No. 3531170, extended registration term expires in November 2022, hereinafter referred to as the "Patent"). In this lawsuit, the defendants were ordered to pay a total of 21,763,810,000 yen in damages and late payment interest, the highest amount ever paid in an intellectual property lawsuit. The judgment had not yet been made public at the time (July 1), but it was made public on July 22, so we will explain the contents of the judgment.
In the ruling on the infringement theory, the court directly cited a reference to interpret the term "active ingredient" in the patent claims. The same term can have different meanings depending on the context when used in a sentence. The Patent Act stipulates that the meaning of terms set forth in the claims shall be interpreted taking into account the descriptions in the specification and drawings (Article 70 of the Patent Act). However, it is a violation of the law to simply quote descriptions in general literature and use them to interpret a claim.
In the ruling on damages, the court found that Torii Pharmaceutical, the exclusive non-exclusive licensee of the patent in question, had an independent right to claim damages against Sawai Pharmaceutical and Fuso Pharmaceutical, and that Toray had received an assignment of this claim from Torii Pharmaceutical.
All of the plaintiff's formulations manufactured by Toray were sold through Torii Pharmaceutical. During the term of the patent in question, Torii Pharmaceutical was granted an exclusive non-exclusive license as a partner of the plaintiff, at least with regard to the plaintiff's formulation (for dialysis use), while Toray, the patent holder, was in a relationship with Torii Pharmaceutical, manufacturing and supplying the plaintiff's formulation as the manufacturing manager.
The exclusive non-exclusive licensee's right to claim damages for lost profits based on the active infringement of a claim, and the patent holder's right to claim damages, are both claims for damages arising from the alleged infringer's act of patent infringement, and therefore, to the extent that they overlap, they are in a relationship of untrue joint and several claims. (Tokyo District Court Case No. 22491 of 2015 (Wa) Judgment of July 27, 2017)
If the patent holder, Toray, exercises its right to claim damages for patent infringement against the alleged infringers (Sawai Pharmaceutical and Fuso Pharmaceutical), the debtor (Sawai Pharmaceutical and Fuso Pharmaceutical) will be deemed to have paid its debt to the creditor (Toray), and that debt will be extinguished (Article 473 of the Civil Code).
An exclusive non-exclusive license is a form of non-exclusive license, which is "a patent holder granting a non-exclusive license to another person under the patent right" (Article 78 of the Patent Act). For this reason, when a patent holder exercises its right to seek damages against an alleged infringer based on its patent right, the claim based on that patent right is extinguished, and an exclusive non-exclusive licensee cannot exercise its rights to the extent of the overlap.
However, the Intellectual Property High Court ruling held that "even in this case, if, in light of the specific facts, Torii Pharmaceutical's interest in the sale of the plaintiff's formulation is found to be a legally protected interest from the perspective of tort law in relation to the infringer, Torii Pharmaceutical should be recognized as having an inherent right to claim damages for the unlawful infringement of that interest."
The Intellectual Property High Court ruling in this case allowed an exclusive non-exclusive licensee to exercise its rights to the extent of the overlap, even though the patent holder (Toray) exercised its right to seek damages against the alleged infringers (Sawai Pharmaceutical and Fuso Pharmaceutical) based on its patent right, and the claim based on that patent right was extinguished. This ruling is illegal and deviates from the framework of the law of obligations, and cannot be considered a judgment in a country governed by the rule of law.
If such a trial were to take place, foreign companies would conclude that there is little predictability in IP litigation decisions in Japan and that doing business in such a country is a high risk. This goes against the government's policy of advocating Japan as an "intellectual property-based nation."