A patent is only as valuable as the ability to enforce it. When a competitor introduces a product that falls within the scope of a patent, the patent owner must decide whether and how to act. This decision involves technical analysis, legal strategy, business calculation, and risk assessment. This article explains the legal framework for patent infringement in Japan and the United States—how infringement is established, what remedies are available, and why the vast majority of patent disputes end in settlement rather than trial.
Types of Patent Infringement
Direct Infringement
Under Article 68 of Japan’s Patent Act, a patentee has the exclusive right to “work” a patented invention as a business. Working the invention without the patentee’s authorization constitutes direct infringement. The term “work” (実施) is defined in Article 2(3) and varies by the type of invention:
- For product inventions: manufacturing, using, assigning, leasing, importing, or offering for assignment
- For process inventions: using the process
- For product-by-process inventions: using the process plus assigning, leasing, importing, or offering for assignment the product produced
The phrase “as a business” (業として) limits infringement to commercial activities. Private, non-commercial use by individuals is generally exempt. However, the scope of “as a business” is interpreted broadly—even non-profit organizations or academic institutions may infringe if their use is regular, systematic, and not purely experimental.
Indirect Infringement (Article 101)
Article 101 extends patent protection to certain acts that fall short of direct infringement but contribute to it. Two principal categories exist:
- Supplying a product used exclusively to work the patented invention (Article 101(1) for product patents; Article 101(2) for process/product-by-process patents)
- Supplying a product known to be indispensable for solving the problem addressed by the patented invention, to a person who knows the patent (Article 101(2)(ii), (4))
Japan’s indirect infringement doctrine has historically been narrower than the US “contributory infringement” and “inducement” doctrines (35 U.S.C. §§ 271(b), (c)) because of the strict “exclusive use” requirement. The Supreme Court’s July 11, 2005 decision involving single-use camera flash units clarified the application of this doctrine to specialized components that serve predominantly infringing uses.
The Infringement Analysis: A Three-Step Process
Step 1: Claim Construction
Before comparing the accused product to the patent, the court must determine the meaning of the claim language—a process called “claim construction” in the US and “claim interpretation” in Japan. Under Article 70 of Japan’s Patent Act, claim terms are interpreted based on the specification and drawings. The prosecution history (the record of communications between the applicant and the examiner) also informs interpretation, particularly where amendments or arguments narrowed the claims.
In the US, claim construction is a question of law reviewed de novo by the Federal Circuit (the appellate court with exclusive jurisdiction over patent cases). This appellate standard has historically resulted in a high reversal rate for district court claim constructions—contributing to litigation uncertainty. In Japan, claim interpretation is mixed fact/law and is reviewed with some deference to trial court findings.
Step 2: Comparing Claims to the Accused Product
Once claim terms are construed, the patent owner must demonstrate that the accused product or process includes every element of at least one patent claim. If any element is absent, there is no literal infringement of that claim (the “all-elements rule”).
This comparison is conducted element by element. In Japan, expert testimony from technical witnesses (技術専門委員) appointed by the court often assists in the comparison. In the US, technical experts retained by the parties present competing analyses, and the fact-finder (jury in federal court trials, or judge in bench trials) determines the outcome.
Step 3: The Doctrine of Equivalents
When literal infringement fails because the accused product uses a slightly different implementation, the patent owner may invoke the doctrine of equivalents. Japan’s Supreme Court (Ball Spline Bearing case, February 24, 1998) and the US Supreme Court (Warner-Jenkinson Co. v. Hilton Davis Chemical Co., 520 U.S. 17, 1997) have both confirmed that infringement can extend beyond literal claim language to cover insubstantial variations.
The US “function-way-result” test asks whether the accused element performs substantially the same function, in substantially the same way, to achieve substantially the same result. Japan’s five-factor test (described in Article 5 of this series) is somewhat more demanding. In both systems, prosecution history estoppel limits the doctrine: where the applicant narrowed a claim or distinguished prior art during prosecution, the surrendered subject matter cannot be recaptured through the doctrine of equivalents.
Remedies: Injunctive Relief and Damages
Injunctive Relief (Article 100)
Article 100(1) of Japan’s Patent Act allows the patentee to demand that an infringer stop or prevent infringing acts. Article 100(2) extends this to demand destruction of infringing products and removal of infringing equipment. Importantly, injunctive relief in Japan does not require proof of fault (negligence or intent)—the existence of infringement is sufficient.
In the US, 35 U.S.C. § 283 grants courts discretion to issue injunctions. Before the Supreme Court’s eBay Inc. v. MercExchange, L.L.C. (547 U.S. 388, 2006) decision, injunctions were routinely issued upon a finding of infringement. After eBay, courts must apply the traditional four-factor equity test—including whether monetary damages would be adequate—before granting an injunction. This change significantly limited the ability of patent assertion entities (PAEs) to extract supra-competitive settlements by threatening injunctions against operating companies.
Damages (Article 102)
Patent damages in Japan are governed by Article 102, which provides three alternative calculation methods designed to ease the patentee’s evidentiary burden:
- Article 102(1): Damages are presumed to equal the infringer’s sales volume multiplied by the patentee’s profit per unit (subject to proof that the patentee could have made those sales)
- Article 102(2): The infringer’s profits are presumed to equal the patentee’s damages
- Article 102(3): The patentee is entitled at minimum to a reasonable royalty equivalent to what it would have received through a license
A 2020 amendment strengthened these provisions by relaxing the “capacity to work” restriction in Article 102(1) and clarifying that the “reasonable royalty” under Article 102(3) may exceed the standard market royalty rate to account for the risk premium an infringer incurs by acting without authorization.
In the US, 35 U.S.C. § 284 provides for damages “adequate to compensate for the infringement, but in no event less than a reasonable royalty.” Enhanced damages (up to treble) may be awarded for willful infringement under § 284, following the standard set in Halo Electronics, Inc. v. Pulse Electronics, Inc. (579 U.S. 93, 2016).
Why Most Patent Disputes Settle
Despite the elaborate legal framework, the vast majority of patent disputes—whether in Japan, the US, or Europe—are resolved through negotiated settlement rather than final judgment. According to statistics from the Tokyo District Court’s IP Division, only about 20–30% of patent infringement cases result in a court judgment; the rest are settled or withdrawn before trial.
Several structural factors drive settlement. First, litigation costs are substantial—attorney fees in a contested patent case can reach tens or hundreds of millions of yen in Japan, and several million dollars in the US. Second, the outcome is uncertain: the patent may be found invalid, the infringement may not be proven, or the damages may be modest relative to costs. Third, settlement can produce outcomes that neither party could obtain through litigation: cross-licensing arrangements, technology collaboration agreements, or co-existence agreements that structure the parties’ relationship going forward.
A persistent concern in the US is “nuisance value” settlement—where patent assertion entities (PAEs) with weak patents file suit knowing that the cost of defending to judgment exceeds the settlement demand, effectively monetizing litigation cost asymmetry rather than legitimate patent rights. The Supreme Court’s eBay ruling, combined with the introduction of IPR proceedings under the AIA, has modestly reduced this dynamic, though it remains a subject of ongoing policy debate.
The next article examines prior use rights—the doctrine that allows a party who was already practicing an invention before a patent was filed to continue doing so, even after the patent is granted.
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