FRAND Developments in Japan

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April 14, 2016
Aki Ryuka (Japanese Patent Attorney, Attorney at Law, California, U.S.A.)

FRAND Developments in Japan



“No injunction when a willing licensee infringes a FRAND patent”
— Japan Fair Trade Commission —
January 21, 2016



Japan Fair Trade Commission (JFTC):


* upholds and enforces Japan’s Antimonopoly Act to maintain fair and free competition,

* can levy surcharge payments against price cartels, bid-riggings, and monopolistic behavior, and

* can also lodge injunctions with the court, if consumers or entrepreneurs have incurred or are likely to incur remarkable damage


JFTC published a draft amendment to its guidelines regarding FRAND patents


* JFTC specifies how the Antimonopoly Act is applied in “Guidelines for the Use of IP under the Antimonopoly Act.”

* A draft amendment to the guidelines was published for public comment. (July 8, 2015)

* Reviewing the comments, JFTC partially amended the draft and published the revised guidelines. (January 21, 2016)


“An injunction claim against a party who is willing to take a license to a FRAND patent can be considered to be Unfair Trade Practices,”


* “if the injunction claim tends to impede fair competition,”

* “even if the injunction claim does not substantially restrict competition and is not considered as Private Monopolization.”

– from the revised draft



Whether a party is a willing licensee is judged in light of the behavior of both parties in license negotiations, etc.


* “Even if a party challenges validity or asserts non-infringement of the patent, those facts should not be considered grounds to deny the willingness as long as the party undertakes license negotiations in good faith in light of the normal business practices.”

– from the revised draft



The draft amendment is in line with Apple v. Samsung (IP High Court, May 2014)


“A FRAND patent owner is not entitled to seek an injunction against a party who is willing to take a license under the FRAND conditions.”
Apple v. Samsung


JFTC’s amendment is silent on damages.
What damages can we pursue?

See Apple v. Samsung



Damages were kept within reasonable royalty rate that was calculated considering contribution by the patent


* “Seeking damages that exceed a reasonable royalty under FRAND terms is an abuse of right.”

* “(The patentee) can pursue damages within the range of unpaid royalty that could be granted on FRAND terms.”

* The court calculated the royalty using the following percentages and determined the damages to be only about US$ 82,000:
  contribution of standard / total sales of product
  contribution of patent / contribution of standard


“In special circumstances, damage award may exceed reasonable royalty rate”


“e.g. the infringer had no intention to obtain a license from the patent holder”

“e.g. it would be extremely unfair to limit the damage award to a reasonable royalty rate”


Court cited below negotiation process for determining no “special circumstances”


- Apple asked how the plaintiff calculated its royalty rate ⇒ not explained

- Apple repeatedly asked royalty rates paid by others, which was essential to determine the rate ⇒ not explained

- Apple countered with its own proposed royalty rate and explained its calculation ⇒ denied with no counter

- Law suit for preliminary injunction was filed and maintained despite Apple’s desire for an agreement under FRAND terms


What should you do?



Standard Essential Patents will still be important for making the standard closer to your technologies and increasing sales


Continue to obtain Standard Essential Patents

Obtain relevant, but not essential patents

Utilize relevant patents that are not bound by a FRAND declaration

Disclaimer: These suggestions are general and should not be construed as advice to deal with specific cases.

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