In a patent infringement action, the Intellectual Property High Court allowed a defendant to deny that the defendant's products satisfy certain claim elements of the plaintiff's patent, even though the defendant previously made a statement admitting that the products satisfy such claim elements (IP High Court Judgment, June 28, 2021(Case number: 2020(ne)10044).
Summary of the Case
Cosmo Oil Marketing Co., Ltd. (the "Plaintiff") owned Japanese patent no. 4,520,670 on "Fluid providing machine, fluid providing method, recording medium and program" (the "Patent"). The Patent related to fluid providing machines used in gas stations, and resolved a problem that occurs when a customer makes a payment using pre-paid cards. Claim 1 of the Patent claimed a fluid machine that comprises, among other elements, "a means for reading and writing a monetary amount data that is recorded in a recording medium" (Claim Element 1A) and "a means for capturing an amount that is equal to or less than an amount indicated by a monetary amount data of a recording media, as a payment data ... prior to providing of fluid" (Claim Element 1C).
Comota Co., Ltd. (the "Defendant") manufactured and sold devices to be used in oil providing machines (the "Defendant Product(s)"). The Defendant Products enabled customers of gas stations to make payments using contactless payment cards.
The Plaintiff filed a patent infringement action against the Defendant before the Tokyo District Court, claiming that the Defendant's act of manufacturing and selling the Defendant Products infringed the Patent. The Plaintiff sought injunction and damages.
In the complaint, the Plaintiff divided Claim 1 of the Patent into Claim Elements 1A through 1G, and asserted that the Defendant Products satisfy all claim elements.
In the answer, the Defendant denied that the Defendant Products satisfy Claim Elements 1E and 1F. However, with respect to other claim elements, the Defendant made a statement that it "admits" that the Defendant Products satisfy such other claim elements.
The Tokyo District Court ruled that the Defendant Products infringe Claim 1 of the Patent. In doing so, the Tokyo District Court held that there was no dispute between the Plaintiff and the Defendant that the Defendant Products satisfy claim elements other than Claim Elements 1E and 1F. The Tokyo District Court awarded the Plaintiff injunction as well as damages of around JPY 450,000,000.
The Defendant appealed to the Intellectual Property High Court (the "IP High Court" or the "Court").
On appeal, the Defendant argued, for the first time, that the Defendant Products do not satisfy Claim Element 1C, or the term "recording medium" included in claim elements such as Claim Element 1A.
The Plaintiff countered that the Defendant is not allowed to make such an argument, since the Defendant already admitted at the district court level that the Defendant Products satisfy such claim elements.
IP High Court Judgment
The IP High Court ruled that the Defendant is allowed to deny that the Defendant Products satisfy Claim Elements 1A and 1C.
With respect to Claim Element 1C, the Court ruled that whether the Defendant made an admission or not should be decided, not just based on usage of the term "deny" or "admit" in the answer, but also taking into account all other assertions that the Defendant made in the answer. The Court noted that the Defendant made an assertion in the answer that essentially denies the fact that the operation performed by the Defendant Product is different from that of the claimed invention. Therefore, the Court found that the Defendant did not make an admission with respect to Claim Element 1C.
With respect to Claim Element 1A, the Defendant did not make a clear statement in the answer that the Defendant Products do not satisfy the term "recording medium". However, the Court noted that the Defendant argued that the Defendant Products do not realize the technical idea of the Patent, and also that the Defendant denied that the Defendant Products satisfy certain claim elements. Taking these points into account, the Court found that the Defendant did not make an admission with respect to Claim Element 1A either.
The Court then looked into the merits of the Defendant's such arguments, and found that the Defendant Products in fact do not satisfy Claim Elements 1A and 1C. Based on this finding, the Court overturned the judgment of the Tokyo District Court and ruled in favor of the Defendant.
In a Japanese civil action, the general rule is that if a party admits the assertion relating to “material” issues made by the other party, the admission is non-withdrawable; namely, the party that made the admission is bound by the admission and is no longer able to deny the assertion made by the other party, unless in exceptional circumstances.
In the meantime, in a patent infringement action, a plaintiff usually divides a claim of the patent into multiple claim elements, and asserts that the accused products satisfy each of the claim element. In the answer, the defendant, with respect to each claim element, either "admits" or "denies" that the accused products satisfy the claim element. If a defendant "admits" that the accused products satisfy certain claim elements, the court usually considers that there is no dispute between the parties regarding such claim elements.
However, in the current case, even though the Defendant made a statement admitting that the Defendant Products satisfy certain claim elements in the answer, the IP High Court found that the Defendant's such a statement does not constitute a non-withdrawable admission.
In doing so, the Court pointed out that the Defendant denied that the Defendant Products satisfy certain claim elements. Therefore, the IP High Court in the current case seems to be taking a position that, unless a defendant admits that the accused products satisfy ALL claim elements, the defendant's statement admitting the accused products satisfy some of the claim elements does not constitute a non-withdrawable admission.
However, it should also be noted that in a civil case, a court has a power to dismiss an argument presented by a party in an untimely manner, if the argument is likely to delay the conclusion of the case.
Therefore, if the defendant makes a statement admitting that the accused products satisfy a certain claim element, but later overturns the admission and argues that the products do not satisfy the claim element, such an argument could be dismissed by the court unless the argument is made in a timely manner.
Written by: Mr. Yusuke Inui (Attorney at Law, Patent Attorney)