Dwango v. FC2 (Machine Translation: Sup. Ct., 2025)
Dwango v. FC2 (Supreme Court, March 3, 2025)
Judgment
The final appeal is dismissed.
The costs of the final appeal shall be borne by the appellant.
Reasons
Concerning the reasons for the petition for acceptance of the final appeal filed by counsel for the appellant, Takahashi Jun, Dan Toshimitsu, and Miyagawa Toshiaki (excluding the parts dismissed):
1. This case concerns a claim by the appellee against the appellant,alleging that the appellant’s conduct constitutes infringement of theappellee’s patent rights, and seeking an injunction against such conduct anddamages. The issue is whether the appellant’s acts of constructing a systemthat includes servers located outside Japan and terminals located withinJapan—by transmitting files via the internet from outside Japan intoJapan—constitute “production” under Article 2(3)(i) of the Patent Act,thereby infringing patent rights in Japan.
2. The outline of the facts lawfully determined by the court of prior instance is as follows:
(1) The appellee owns the patent right relating to Patent No. 6526304, entitled “Comment Distribution System” (hereinafter “the Patent”). The inventions described in Claims 1 and 2 of the claims of the Patent (hereinafter “the Inventions”) are inventions of a system.
The Inventions concern a system that connects, via a network, a terminal device that displays videos and comments written by users on those videos, with a server that transmits video and comment information to the terminal. The system performs processes such as adjusting the display so that comments shown on the video do not overlap, thereby enhancing entertainment in communication using comments.
(2) The appellant is a corporation established under the laws of Nevada, United States, engaged in operating video distribution websites using the internet. The appellant has provided, to users residing in Japan, several video-sharing services (hereinafter “the Services”) via the internet. (Note: Some services were transferred to a third party in September 2020, but this is irrelevant to the issue at hand.) In the Services, comments written by users are displayed along with video playback.
(3) To provide the Services, the appellant installs and manages web servers,comment distribution servers, and video distribution servers within theUnited States (although in some services the video distribution servers aremanaged by third parties, and may be located either in Japan or outsideJapan). From the web servers, HTML files and program files (such asJavaScript files) are delivered via the internet to terminals in Japan used byusers (this delivery is hereinafter referred to as “the Delivery”).
When the Delivery occurs, the user’s terminal in Japan, based on theinstructions in those files, automatically (though in some cases requiring theuser to press the play button) requests video and comment data files fromthe video distribution and comment distribution servers, receives them, andperforms processes such as adjusting comments so they do not overlap,displaying the comments overlaid on the video. Thus, a system (hereinafter“the System”) falling within the technical scope of the Inventions, comprisingthe terminal and the servers, is constructed.
3. The appellant argues that its conduct is merely the Deliveryperformed outside Japan, and since part of the System exists outside Japan,even if the Delivery results in the construction of the System, such conductdoes not fall within the scope of Japan’s patent rights in light of the principleof territoriality of patent rights. Thus, the lower court erred in interpretingand applying the law by holding that the Delivery constitutes “production”under Article 2(3)(i) of the Patent Act, and also contravened precedent.
4.
(1) The effect of a Japanese patent right is recognized only within Japan (seeSupreme Court, 1st Petty Bench, September 26, 2002, Minshu Vol. 56, No. 7,p. 1551). However, in modern times, where cross-border informationdistribution via telecommunications lines has become extremely easy, if anact to construct a system including both servers and terminals is performedpartly from outside Japan via telecommunications lines, and if a server, aspart of the system configuration, is located outside Japan, it would not alignwith the purpose of the Patent Act—namely, to contribute to thedevelopment of industry by granting exclusive rights to practice patentedinventions—to deny the effect of Japanese patent rights in all such cases andto hold that such conduct does not constitute “production” under Article2(3)(i). Therefore, even in such cases, when the act of constructing thesystem and the system itself, viewed as a whole, can be substantiallyevaluated as constituting “production” within Japan, there is no reason todeny the applicability of Japanese patent rights.
(2) The Delivery involves transmitting program files, etc., from web serverslocated outside Japan to terminals located inside Japan, and thus outwardlypart of the act of constructing the System occurs outside Japan, and part ofthe System (i.e., the comment distribution servers) is located outside Japan.Nevertheless, considering the act of constructing the System and the Systemas a whole, the construction of the System by the Delivery is automaticallycarried out when users in Japan access the relevant webpages to receive theServices, and as a result, processes such as adjusting comments to avoidoverlap are performed, with the results displayed on the terminals located inJapan. Therefore, the construction of the System by the Delivery is aninformation-processing step in the provision of the Services within Japan,and it organizes a system including terminals in Japan so that the effects ofthe Inventions are naturally realized on those terminals. In this context, thefact that some servers are located outside Japan has no special significance.Moreover, there is no indication that the Delivery and the resulting System,given the appellee’s ownership of the Patent, would not economically affectthe appellee. Accordingly, it is reasonable to evaluate that the appellant,through the Delivery and the resulting construction of the System, issubstantially “producing” the System within Japan.From the above, the construction of the System by the Delivery constitutes“production” under Article 2(3)(i) of the Patent Act.
5. Therefore, the conclusion of the court of prior instance, which is consistent with this reasoning, can be affirmed as just. The Supreme Court’s judgment of September 26, 2002, 1st Petty Bench, cited by the appellant, is not applicable here. The appellant’s arguments cannot be accepted.
The other grounds for the petition for acceptance of final appeal were excluded at the stage of the decision on whether to accept the appeal.
Accordingly, in unanimous agreement of all the Justices, the judgment is rendered as stated in the main text.
(Presiding Justice Kusano Koichi, Justice Miura Mamoru, Justice Okamura Kazumi, Justice Oshima Akira)
