Episode 26

The Design Act stipulates that, as a requirement for design registration, "Anyone who creates a design capable of industrial application... may obtain a design registration for that design." (Article 3, Paragraph 1, Heading). This means that a design must be capable of industrial mass production.
The need for such design protection arose due to the Industrial Revolution, which led to the mass production of industrial products. This article explains this issue in four major European countries (the United Kingdom, France, Germany, and Italy).
The Industrial Revolution began in the United Kingdom from the mid-18th century to the 19th century. Mass production led to an abundance of cheap products, and factory workers were forced to work in poor conditions. The Arts and Crafts movement was born out of this social climate. However, this movement was merely a nostalgia for the pre-Industrial Revolution era of cottage-based craftsmanship, and did not contribute to British industrial production from a design perspective.
Subsequently, from the late 19th century to the early 20th century, British industry declined as newly industrializing nations like Germany and the United States caught up with Britain during the Second Industrial Revolution. As explained in Episode 11, functional beauty was born in Germany at the Bauhaus, a school of design founded in 1919 after World War I.
Perhaps the most representative industrial designers of modern Britain are Jonathan Ive and Marc Newson (born in Australia and living in the UK). Their designs are characterized by a foundation of Bauhaus-style functional beauty, combined with aesthetic forms and color schemes.
In France, the Industrial Revolution was delayed compared to Britain due to the chaos caused by the French Revolution at the end of the 18th century. Art Nouveau, which originated in the British Arts and Crafts movement and used curves and decoration, emerged in France, favoring designs that rejected mass production. After World War I, the country transitioned to Art Deco, which sought to harmonize mass production with design. Art Deco means decorative arts.
Le Corbusier, a leading French architect and designer (born in Switzerland but later acquired French citizenship), pointed out that the works exhibited at the 1925 Paris World's Fair (Art Deco Exposition) were overly decorative and unsuitable for industrial production.
Italy was originally divided into small countries, and it was not until the end of the 19th century that the entire country was unified. As a result, industrialization was delayed, and it was only after World War II that industry developed, mainly in the north. Today, Italy's population is smaller than France's, but its industrial production exceeds that of France.
Italy was also home to world-renowned industrial designer Giorgetto Giugiaro, who designed the first-generation Golf, Volkswagen's signature compact car. Volkswagen, a German automobile manufacturer, was looking for a Bauhaus-style functional design, and Giugiaro responded to that demand by designing the first-generation Golf, which is hailed as a masterpiece in automotive history.
Modern industrial design is based on Bauhaus-style functional beauty, with aesthetic elements added from the cultural perspective of each designer's background. However, this is premised on the design being suitable for industrial production.

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."

Episode 24

Toray filed a lawsuit against Sawai Pharmaceutical and Fuso Pharmaceutical for damages for infringement of the generic drug patent based on the use patent for an oral antipruritic agent (Patent No. 3531170, extension registration: Patent Application No. 2017-700154, Patent Application No. 2017-700310, hereinafter "the Patent Right", expiring in November 2022). In the appeal trial (Intellectual Property High Court, Reiwa 3 (Ne) No. 10037, judgment dated May 27, 2025), it was found that the manufacturing and sales of generic drugs by Sawai Pharmaceutical and Fuso Pharmaceutical constituted an infringement of the Patent Right, and a judgment was handed down ordering Sawai Pharmaceutical to pay 14,290,930,000 yen in damages and delay damages to Fuso Pharmaceutical of 7,472,870,000 yen. This is the highest amount in an intellectual property lawsuit.
The Intellectual Property High Court's ruling has not been published on the Supreme Court's case law search site. It is unusual that the ruling has not been published on a case law search site, despite the fact that it has attracted so much social attention. There must be some reason for this.
Sawai Pharmaceutical and Fuso Pharmaceutical have appealed the Intellectual Property High Court's ruling to the Supreme Court. The Supreme Court will hear the case from a political perspective.
The government is promoting the use of generic drugs to reduce ever-increasing medical and pharmaceutical costs (https://www.mhlw.go.jp/jigyo_shiwake/dl/h30_jigyou01a_day1.pdf). The Intellectual Property High Court's ruling goes against government policy. For this reason, the Ministry of Health, Labor and Welfare, which has jurisdiction over medical and pharmaceutical costs, and the Ministry of Finance, which has jurisdiction over the government budget, must have filed complaints with the Supreme Court Secretariat's Civil Affairs Bureau. The Civil Affairs Bureau will examine the ruling and consider measures to address the complaints from the Ministry of Health, Labor and Welfare and the Ministry of Finance.
The Supreme Court Research Officer in charge of this appeal will consider the reasons for the appellate court's judgment in line with the Civil Affairs Bureau's response measures. At the Supreme Court, elite judges called Supreme Court Research Officers review the case for appeal and prepare a draft judgment, which is then amended by the Supreme Court judges to make the judgment.
In this case, at the first instance (Tokyo District Court, Heisei 30 (Wa) No. 38504, No. 38508, judgment of March 30, 2021), the claim amounted to 10 million yen as a partial claim of 622.1 million yen against Sawai Pharmaceutical, and 10 million yen as a partial claim of 321.05 million yen against Fuso Pharmaceutical, but the appeal court allowed an expanded amendment to the claim.
At the first instance, literal infringement was not found, and equivalent infringement was also not found due to conscious exclusion (requirement 5). The presiding judge of the first instance was Judge Tanaka Koichi. In the Supreme Court's decision in the Maxacalcitol case, he presented a judgment on the method of judging the fifth requirement of equivalents as a Supreme Court researcher, and later became the presiding judge of the Intellectual Property Division of the Tokyo District Court. He is a typical intellectual property judge, and an expert in judging whether the doctrine of equivalents should be applied to pharmaceutical patents.
In contrast, the presiding judge of the appeal court is Judge Hibiki Shimizu, who specializes in labor-related litigation. In recent years, judges who are not intellectual property specialists have been appointed as presiding judges of the Intellectual Property High Court. The Supreme Court Secretariat, which has the authority to appoint judges, has a policy of not cultivating so-called intellectual property judges in a pure form. What is important in civil litigation is the conclusion, not the reasoning. If intellectual property judges were cultivated in a pure form, they would be more concerned with the reasoning than the conclusion.
Intellectual property litigation is an economic case that has a large impact on society. For this reason, in intellectual property litigation, it is necessary to make judgments that place more importance on the impact on society than the reasoning.
Toray, the appellant (plaintiff) in this case, is in the red in its pharmaceutical business due to the penetration of generic drugs and drug price revisions. If Toray loses this case, generic drugs will become increasingly prevalent, and Toray will be forced to consider withdrawing from its pharmaceutical business or selling it to another company.
The Patent Act stipulates that "The purpose of this Act is to encourage inventions by promoting the protection and utilization of inventions, thereby contributing to the development of industry" (Article 1). Making Toray lose the case would go against the legal purpose of the Patent Act and would discourage pharmaceutical development.
However, making Sawai Pharmaceutical and Fuso Pharmaceutical lose the case would go against the government's policy of promoting the use of generic drugs and reducing medical and pharmaceutical costs.
In general, civil lawsuits attempt to resolve the matter through settlement. A settlement is "an agreement between the parties to make concessions to each other and end the dispute that exists between them" (Civil Code Article 695). In claims for damages, it is common for the defendant to settle by paying a settlement to the plaintiff. In this case before the Intellectual Property High Court, settlement solicitation must have been conducted taking into consideration the circumstances of both the appellant (plaintiff) and the appellee (defendant). However, from the perspective of Sawai Pharmaceutical and Fuso Pharmaceutical, despite having won the first instance case, the idea of ​​settling by paying a settlement money was unacceptable, and it is possible that they refused.
Therefore, as a way to achieve settlement, they changed sides and forced Toray to make concessions and agree to a settlement. To do this, they first had to make Toray win the case.
So the Intellectual Property High Court came up with the idea of ​​ordering Sawai Pharmaceutical and Fuso Pharmaceutical to pay a large amount of damages, causing them to lose the case and forcing them to appeal whether they wanted to or not. For this reason, the Intellectual Property High Court's decision this time was based on the assumption that it would be overturned by the Supreme Court, and so it may have been quite poorly reasoned.
In the appeal hearing, oral arguments are held first (opposite interpretation of Article 319 of the Civil Procedure Law), and the Supreme Court reverses the original judgment and remands the case to the Intellectual Property High Court (Article 325 of the same law).
In the remand hearing, the Intellectual Property High Court will again encourage a settlement, but this time Toray will be the one to make concessions. One possible settlement proposal is for Sawai Pharmaceutical and Fuso Pharmaceutical to pay Toray a settlement equivalent to the amount claimed in the first instance. If Toray can obtain a settlement equivalent to the amount claimed in the first instance, it will achieve its original objective, and Sawai Pharmaceutical and Fuso Pharmaceutical will be able to reduce the amount of compensation to 1/23 of what it was before the remand. The court will not have to issue a judgment, and the information will not be made public. It is a win-win-win settlement proposal. When presenting the settlement proposal, the court will threaten to dismiss the claim if Toray does not accept it. This is a common tactic used by the courts.
The above is the significance of this Intellectual Property High Court ruling and expected future developments. If presiding judge Shimizu Hibiki was able to foresee that far before making his ruling, he must be quite a strategist.