Judgments of the Supreme Court

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2019 (Ju) 619

Date of the judgment (decision)

2020.09.07

Case Number

2019 (Ju) 619

Reporter

Minshu Vol. 74, No. 6

Title

Judgment concerning a case in which the Court examined an action filed by the non-exclusive licensee of patent rights against the patentee in order to seek a declaratory judgment to the effect that the patentee does not have the right to demand payment of damages from a third party on the ground of patent infringement and the Court found that an interest in seeking a declaratory judgment does not exist in the action

Case name

Case seeking a declaratory judgment of the non-existence of the obligation to pay damages for patent infringement

Result

Judgment of the Second Petty Bench, partially quashed and decided by the Supreme Court, partially dismissed

Court of the Prior Instance

Intellectual Property High Court, Judgment of December 25, 2018

Summary of the judgment (decision)

In the case where Y, who was a patentee, has granted to X exclusive licenses for patent rights, and when P, who has manufactured products by using the machines sold by X, suffers damage as a result of Y's act of exercising the right to demand payment of damages from P based on an act of tort on the grounds of patent infringement, even though X might pay compensation to P for the damage based on an agreement concluded in advance and request Y to pay damages for the nonperformance of the aforementioned license agreement in order to gain the amount of money equivalent to the amount of the aforementioned compensation, an interest in seeking a declaratory judgment does not exist in the action filed by X against Y to seek a declaratory judgment to the effect that Y does not have the right to demand payment of damages from P based on the aforementioned act of tort.

References

Article 134 of the Code of Civil Procedure



Code of Civil Procedure

(Action for Declaratory Judgment as to the Validity of a Certificate)

Article 134

An action for declaratory judgment may also be filed to determine the authenticity of the provenance of a paper document that certifies a legal relationship.

Main text of the judgment (decision)

1. Of the judgment in prior instance, the part concerning a request for a declaratory judgment to the effect that the appellant of final appeal does not have the right to demand payment of damages from the supporting intervener of the appellee of final appeal is quashed, and the appellee's appeal to the court of second instance concerning said part is dismissed.

2. The appellant's final appeal concerning the other claims is dismissed.

3. The total court costs concerning paragraph 1 shall be borne by the appellee, while the cost of final appeal concerning the preceding paragraph shall be borne by the appellant.

Reasons

Concerning the reason for a petition for acceptance of final appeal stated by the counsel for final appeal, HIRANO Shigetoshi, KURODA Yuki, and TESHIROGI Kei (except for the reasons excluded)

1. This is a case filed by the appellee against the appellant, who was the patentee of the patent rights stated in the list of patent rights presented in Attachment 3 of the judgment in first instance (the "Patent Rights"), in order to seek a declaratory judgment to the effect that the appellant does not have the right to demand payment of damages (the "Right to Demand Payment of Damages") from the supporting intervener of the appellee (the "intervener") based on an act of tort on the grounds of infringement of the Patent Rights.

2. The outline of facts determined by the court of prior instance is as follows.

(1) In 1993, the appellant, who was the patentee of the Patent Rights, granted monopolistic non-exclusive licenses to the appellee for the Patent Rights (the agreement concerning these licenses shall be hereinafter referred to as the "License Agreement").

(2) After having received the aforementioned licenses, the appellee manufactured the machines stated in the list of machines presented in Attachment 1 of the judgment in first instance (the "Machines"). For a period from around March 2005 to around February 2008, the appellee sold the Machines to a foreign corporation, the predecessor of the intervener, which was a rival company of the appellant. Since around April 2008, the intervener had manufactured the products stated in the list of products (the "Products") presented in Attachment 2 of the judgment in first instance by using the Machines in South Korea and exported those products to Japan and the U.S.

The appellee and the intervener agreed that the appellee shall compensate any damage suffered by the intervener in connection with the use of the Machines as a result of the exercise of a patent right by a third party (the Compensation Agreement")

(3) In 2010, the appellant alleged that, since the License Agreement had a special provision to prohibit the appellee from selling to a rival company of the appellant any machine manufactured based on the aforementioned non-exclusive licenses, the intervener's act of manufacturing and selling the Products infringes the U.S. patent right stated in 2 of the list of patent rights presented in Attachment 3 of the judgment in first instance. The appellant filed a lawsuit in the U.S. in order to demand payment of damages from the intervener (the "Separate U.S. Lawsuit"). In May 2017, in the first instance of the Separate U.S. Lawsuit, the court handed down a judgment to order the intervener to pay damages by holding that the intervener's act of manufacturing and selling the Products constitutes infringement of the aforementioned U.S. patent right.

3. The court of prior instance determined as summarized below with regard to said portion of this action that is related to the request for a declaratory judgment to declare the absence of the Right to Demand Payment of Damages (the "Request for a Declaratory Judgment") and found the existence of the interest in seeking a declaratory judgment and thereby revoked the part of the judgment in the first instance that dismissed the aforementioned portion by holding that there is no interest in seeking a declaratory judgment. The court of prior instance remanded this case to the first instance to further examine that part.

In the case where the appellant exercises the Right to Demand Payment of Damages against the intervener and the intervener suffers damage, the appellee must compensate the intervener for the damage based on the Compensation Agreement. Then, the appellee can demand payment of damages from the appellant as compensation for the nonperformance of the License Agreement. In order to determine whether this right to demand damages exists or not, it would be necessary to make a determination in such manner that would be used when finding major facts and making a legal interpretation to make a determination as to whether the Right to Demand Payment of Damages exists or not. Therefore, the request for a declaratory judgment to the effect that the Right to Demand Payment of Damages does not exist would be effective and reasonable in order to clarify the appellee's rights to the appellant and the appellee's legal relationships with the appellant and to eliminate uncertainties. In light of the fact that the appellant filed the Separate U.S. Lawsuit against the intervener and received a judgment to order the intervener to pay damages in the first instance, uncertainties have already arisen in terms of the appellee's right or legal status that would entitle the appellee to make the aforementioned request for payment of damages from the appellant. Therefore, it can be said that an interest in seeking a declaratory judgment exists in the Request for a Declaratory Judgment.

4. However, the aforementioned determination in the judgment in prior instance cannot be upheld for the following reasons.

The action regarding the Request for a Declaratory Judgment was filed by the appellee to seek a declaratory judgment to the effect that the intervener, which is a third party, has no obligation to the appellant. The declaratory judgment would not cover the rights and obligations or the legal status of the appellee itself. Even if a judgment that accepts the Request for a Declaratory Judgment becomes final and binding, the effect of the judgment would not extend to the relationship between the intervener and appellant. Thus, the appellant would not be precluded from exercising the Right to Demand Payment of Damages from the intervener.

In the case where the intervener suffers damage as a result of the exercise of the Right to Demand Payment of Damages by the appellant against the intervener, even if the appellee pays the intervener compensation for the damage based on the Compensation Agreement and demands payment of damages from the appellant for the nonperformance of the License Agreement, it would be uncertain whether the appellee actually suffers damage as a result of paying compensation for the damage suffered by the intervener. If such damage actually arises, the appellee can file a lawsuit against the appellant in order to demand payment of damages for the nonperformance of the License Agreement. Thus, obtaining a declaratory judgment to the effect that the Right to Demand Payment of Damages does not exist cannot be found to be necessary and reasonable in order to eliminate risks or uncertainties that could destabilize the rights or legal status of the appellee. Although the determinations concerning major facts made in relation to the Request for a Declaratory Judgment partially overlap with the determinations made in relation to a request for payment of damages for the aforementioned nonperformance, it would be neither necessary nor reasonable to make those determinations in this lawsuit in advance of the lawsuit to demand payment of damages.

On these grounds, it can be found that an interest in seeking a declaratory judgment does not exist in the action related to the Request for a Declaratory Judgment.

5. The determination of the court of prior instance that differs from the above contains violation of laws and regulations that obviously affects the judgment. To this effect, the counsels' arguments are well-grounded. The part of the judgment in prior instance that is related to the Request for a Declaratory Judgment should inevitably be quashed. When examining this case based on the explanations made above, in view of the fact that the part of the action related to the Request for a Declaratory Judgment has no legal grounds and the fact that the judgment in the first instance that dismissed said part is justifiable, the appeal of the appellee should be dismissed as far as said part is concerned.

Incidentally, the final appeal concerning other claims is dismissed as the reasons for a petition for acceptance of final appeal were excluded by an order to accept a final appeal.

The Court unanimously decides as set forth in the main text of the judgment.

Presiding Judge

Justice OKAMURA Kazumi

Justice KANNO Hiroyuki

Justice MIURA Mamoru

Justice KUSANO Koichi

(This translation is provisional and subject to revision.)