Jacob Schindler

Patent owners have dismal odds of getting a favourable verdict when they take an infringement lawsuit all the way to a district court judgment in Japan. However, for the first time this year, the country’s Supreme Court has also published data on the results of court-mediated settlements. Some practitioners say the numbers show that life is not as hard for plaintiffs as you might assume. Perhaps – but the country’s still not going to become a disputes hub anytime soon.

The Supreme Court compiled data on two years’ worth of district court patent litigation in Japan, which totalled just 202 cases that were ultimately resolved, either by a judge’s verdict or through a mediated settlement. The report, available here, is in Japanese. IAM earlier reported on a partial translation of the data made available by Satoshi Watanabe. We’ve since received two other summaries of what is covered from Ryuka IP Law Firm and ITOH International Patent Office which have translated different sections of the report, including the first-of-its-kind information on settlements.

The data does confirm that Japanese judges usually side with defendants at the end of a trial. Just 28 of the 125 cases decided at trial were wins for the patent owner according to ITOH’s summary – a success rate of around 22%. That’s a far cry from what plaintiffs can expect in jurisdictions like Germany, China and even - still - the US, and it goes a long way towards explaining why there were only 202 total cases over two years.

But 77 of the cases were resolved through a court-mediated settlement, and plaintiffs fared well here. Nearly 80% of mediated settlements resulted in a win for the patent owner. The most common outcome was the infringer agreeing to pay an ongoing royalty, while the second most common result involved the defendant ceasing infringement and paying damages. Put together mediated wins with wins at trial, and plaintiffs got what they wanted in about 44% of the 202 cases.

Are these settlement victories evidence of a plaintiff-friendly system? As this blog has written in the past, mediated outcomes in Japan often arise after initial hearings when a judge has told the parties which way he or she is leaning. This provides a strong incentive for whoever is ‘losing’ to settle the case. Losing, however, has to be seen in context. About half of the settlement payouts were less than $88,000, so if you are defendant that agrees to settle you are not exactly suffering serious consequences for any infringing activity you may have undertaken. Essentially, you are paying a small addtional cost to do business.  Therefore, to say that the ‘true’ win rate for plaintiffs is 44% may be overstating things somewhat; perhaps the 'not completely losing rate' might be more appropriate.