2023.09.26
PATENT INFRINGEMENT LAWSUIT RELATED TO “COMMENT DISTRIBUTION SYSTEM” -APPLICABILITY OF “PRODUCING” UNDER ARTICLE 2(3)(i) OF PATENT ACT-
PATENT
PATENT INFRINGEMENT LAWSUIT RELATED TO “COMMENT DISTRIBUTION SYSTEM” -APPLICABILITY OF “PRODUCING” UNDER ARTICLE 2(3)(i) OF PATENT ACT-
1. Introduction
In this Newsletter, we introduce a case where, regarding an invention of a system including a plurality of terminal devices which are connected to a server via a network (a network-type system), it was judged whether an act of newly producing a system comprised of a server located outside Japan and user terminals located in Japan falls under the “producing” prescribed in Article 2(3)(i) of the Patent Act, as the act of working the invention (Intellectual Property High Court, Grand Panel, Case No. 2022 [administrative litigation case, the second instance] No. 10046; decision made on May 26, 2023).
2. Outline of Case
The Appellant (Plaintiff in the first instance) is a patentee of Japanese Patent No. 6526304, entitled “Comment Distribution System” (hereinafter, referred to as “the subject patent”).
One of the Appellees (Defendants in the first instance) is a US corporate providing a video distribution service in the Internet, in which comments are added to video files (hereinafter, referred to as “the Defendant’s service”).
The Appellant argued as follows: “each of the systems (each of the Defendant’s systems) related to the Defendant’s service belongs to the technical scope of the invention of the subject patent. The Appellee’s act of distributing files related to the Defendant’s service (the Defendant’s file) to user terminals existing in Japan from the server (the Defendant’s server) existing in the US used for the Defendant’s service falls under the “producing” of each of the Defendant’s systems (Article 2(3)(i) of the Patent Act), and constitutes the infringement of the subject patent right.” The Appellant requested for the injunction of the infringement to the Appellees, but the Appellant’s request was dismissed in the first instance.
Then the Appellant filed the subject lawsuit against the dismissal.
There are many issues in the subject case, but among them, we explain the case while focusing on the issue of “existence of the ‘producing’ of Defendant’s System 1 by the Appellee.”
Note that “producing” of other Defendant’s system as for Subject Invention 1 and “producing” of each of the Defendant’s systems as for Subject Invention 2 were judged similarly, so we omit explanation thereof.
3. Subject Invention 1
The claim of Subject Invention 1 describes as follows.
4. Intellectual Property High Court’s Judgment
4-1. Defendant’s Service 1
The outline of Defendant’s Service 1 held by the Intellectual Property High Court is as follows.
(1) Location of the Server
The server installed and managed by the Appellee for providing Defendant’s Service 1 is located in the United States.
(2) Process of indication of video with comments in a user terminal located in Japan (FLASH version)
4-2. Act of Newly Producing Defendant’s System 1 in Defendant’s Service 1
It is pointed that “producing” in the network-type system is “understood to mean an act of newly producing the system by connecting through a network a plurality of elements independently not satisfying all the elements of the invention so that they have an organic relationship with each other and have functions satisfying all the elements of the invention as a whole.”
Further, it is held as follows: “…at a point of time when the user terminal receives the video file and the comment file described above (⑧), …which enables the overlay display of the comment on the video in the browser of the user terminal, and therefore, it can be said that at the point of time when the user terminal receives each of the files described above, Defendant's system 1 having functions satisfying all the elements of Subject Invention 1 is newly produced.”
4-3. Criterion for Judging Applicability of “Producing” Prescribed in Article 2(3)(i) of Patent Act Regarding Act of Newly Producing Network-type System
The following points are indicated:
● In the network-type system, a server is generally installed outside Japan, and even if the server constituting the network-type system exists overseas, when the terminals constituting the system exist in Japan, the system can be used in Japan, and the use of the system may affect economic benefits obtained by the patentee working the invention in the home country.
● When the principle of territoriality is strictly interpreted so that the “working” prescribed in Article 2(3)(i) of the Patent Act is inapplicable uniformly because the server as a part of the elements of the system exists outside Japan, then the patent can be easily avoided as long as the server is installed in a foreign country, which makes it impossible to sufficiently protect the patent right.
● When it is recognized that the “working” under Article 2(3) of the Patent Act is applicable uniformly because a part of elements constituting the system exists in Japan, the patent right is overprotected, which may cause difficulty in carrying out economic activities.
Based on these points, the court indicates that, in view of appropriate protection of the patent right directed to the network-type system, the act of newly producing the network-type system may fall under the “producing” under Article 2(3)(i) of the Patent Act, and provides the following criterion for such a judgment.
4-4. Applicability of “Producing” Prescribed in Article 2(3)(i) of Patent Act Regarding Appellee’s Act of Newly Producing Defendant’s System 1
Regarding the above A-D, the court admitted the infringement of the subject patent, because the Appellee’s act of newly producing Defendant’s System 1 can be considered to be carried out inside the territory of Japan, while recognizing as follows.
(1) Regarding above A
Since the transmission of each file from the server in the United States to the user terminal in Japan and the reception of each file by the user terminal in Japan are performed altogether, and Defendant's System 1 is completed by the reception of each file by the user terminal in Japan, it can be considered that the transmission and reception of the files are performed in Japan.
(2) Regarding above B
The user terminal existing in Japan serves a function of the determinator which is required for representing comments displayed on the video at positions where the comments do not overlap with each other, and a function of the display position controller, which are the main functions of Subject Invention 1.
(3) Regarding above C
Defendant's System 1 can be used in Japan via the user terminal. Thus, the effect of Subject Invention 1, that is, improving the entertainment in communications using the comments, is exhibited in Japan.
(4) Regarding above D
The use of Defendant’s System 1 in Japan may affect the economic benefits obtained by the Appellant using Subject Invention 1 in Japan.
5. Our Comments
In the first instance, the principle of territoriality is strictly interpreted, and it is judged that the applicability of “producing” under Article 2(3)(i) of the Patent Act is understood to require a product satisfying all the elements of the patented invention to be newly reproduced in Japan. Thus, the infringement of the subject patent right was not admitted, because it cannot be recognized that the Appellee “produced” the Defendant’s system in Japan.
In our opinion, the subject case is significant, because it indicates that an act of newly producing a network-type system may fall under “producing” in Article 2(3)(i) of the Patent Act and provides the criterion for judgment, while reversing the judgment in the first instance and interpreting flexibly the principle of territoriality.
The above criteria for judgment are provided in the Intellectual Property High Court Grand Panel Decision, and thus are criteria in practice, unless they are changed in the Supreme Court. Therefore, in practice in the future, it will be necessary to take measures in consideration of the above criteria.
As examples of necessary measures, even if a server is installed outside Japan, it should not be simply judged that your own implemented product does not constitute infringement of rights of others, but the existence of infringement should be carefully judged in view of the above criteria, or, in filing an application in Japan, the specification should actively describe a function and a role exerted by a user terminal existing in Japan in the invention directed to a network-type system, and a process in which the function and the role are exerted (for example, access from the user terminal to the server, timings of transmission and reception of data between the user terminal and the server, etc.).
If you have any questions or you need consultation about individual cases, please do not hesitate to contact us.
In this Newsletter, we introduce a case where, regarding an invention of a system including a plurality of terminal devices which are connected to a server via a network (a network-type system), it was judged whether an act of newly producing a system comprised of a server located outside Japan and user terminals located in Japan falls under the “producing” prescribed in Article 2(3)(i) of the Patent Act, as the act of working the invention (Intellectual Property High Court, Grand Panel, Case No. 2022 [administrative litigation case, the second instance] No. 10046; decision made on May 26, 2023).
2. Outline of Case
The Appellant (Plaintiff in the first instance) is a patentee of Japanese Patent No. 6526304, entitled “Comment Distribution System” (hereinafter, referred to as “the subject patent”).
One of the Appellees (Defendants in the first instance) is a US corporate providing a video distribution service in the Internet, in which comments are added to video files (hereinafter, referred to as “the Defendant’s service”).
The Appellant argued as follows: “each of the systems (each of the Defendant’s systems) related to the Defendant’s service belongs to the technical scope of the invention of the subject patent. The Appellee’s act of distributing files related to the Defendant’s service (the Defendant’s file) to user terminals existing in Japan from the server (the Defendant’s server) existing in the US used for the Defendant’s service falls under the “producing” of each of the Defendant’s systems (Article 2(3)(i) of the Patent Act), and constitutes the infringement of the subject patent right.” The Appellant requested for the injunction of the infringement to the Appellees, but the Appellant’s request was dismissed in the first instance.
Then the Appellant filed the subject lawsuit against the dismissal.
There are many issues in the subject case, but among them, we explain the case while focusing on the issue of “existence of the ‘producing’ of Defendant’s System 1 by the Appellee.”
Note that “producing” of other Defendant’s system as for Subject Invention 1 and “producing” of each of the Defendant’s systems as for Subject Invention 2 were judged similarly, so we omit explanation thereof.
3. Subject Invention 1
The claim of Subject Invention 1 describes as follows.
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[Claim 1] 1. A comment distribution system including a server and a plurality of terminal devices connected with the server via a network, the server receiving a first comment and a second comment on a video that are given from a user watching the video transmitted from the server, and transmitting the video and comment information to the terminal devices, and the comment information including the first comment and the second comment, and a comment posting time that is a video playback time indicative of a video elapsed time based on the beginning of the video and corresponds to time points at which each of the first comment and the second comments are added, wherein the distribution system comprises: a representor configured to display on a display unit of the terminal device the video and the first comment and the second comment moving in a horizontal direction and overlapping with at least a part of the video, during the video playback time corresponding to the comment posting time, based on the video and the comment information; a determinator configured to determine whether a display position when the second comment is displayed on the one video overlaps with a display position of the first comment; and a display position controller configured to, when it is determined that the display positions overlap with each other, adjust so that the first comment and the second comment are displayed not to overlap with each other, and wherein, in response to the transmission of the video and the comment information to the terminal devices by the server, the display unit of each terminal device displays the video and the first comment and the second comment moving in a horizontal direction and overlapping with at least a part of the video, during the video playback time corresponding to the comment posting time, so that the first comment and the second comment do not overlap with each other. |
4. Intellectual Property High Court’s Judgment
4-1. Defendant’s Service 1
The outline of Defendant’s Service 1 held by the Intellectual Property High Court is as follows.
(1) Location of the Server
The server installed and managed by the Appellee for providing Defendant’s Service 1 is located in the United States.
(2) Process of indication of video with comments in a user terminal located in Japan (FLASH version)
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① (omitted) ② A user specifies a webpage of Defendant's Service 1 for displaying a desired video in a browser of a user terminal. ③ In response to ②, the web server of the Appellee transmits an HTML file and an SWF file of the webpage to the user terminal. ④ The HTML file and the SWF file are received by the user terminal and are stored in the cash of the browser. The FLASH reads the SWF file in the cash of the browser. ⑤ (omitted) ⑥ The SWF file read by the FLASH in ④ includes a command for requiring the browser to issue a request of acquisition of information on a video and a comment. According to the command, the FLASH instructs the browser to acquire a video file and a comment file. In response to the instruction, the browser issues a request for the video file to the Appellee’s video distribution server, and issues a request for the comment file to the comment distribution server of FC2, the Appellee. ⑦ In response to the requests of ⑥, the video distribution server of FC2, the Appellee, transmits the video file, and the Appellee’s comment distribution server transmits the comment file, respectively, to the user terminal. ⑧ The user terminal receives the video file and the comment file of ⑦. Then, the user terminal uses the browser to enable the overlay display of the comment on the video, based on the received video file and comment file. Calculation for determining whether two comments overlap with each other when displayed, and designation of a display position where the comments do not overlap with each other when it is determined that the comments overlap with each other, are performed based on a condition specified by the SWF file.
<Appendix 8-2 partly simplified by the author>＜/div＞
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4-2. Act of Newly Producing Defendant’s System 1 in Defendant’s Service 1
It is pointed that “producing” in the network-type system is “understood to mean an act of newly producing the system by connecting through a network a plurality of elements independently not satisfying all the elements of the invention so that they have an organic relationship with each other and have functions satisfying all the elements of the invention as a whole.”
Further, it is held as follows: “…at a point of time when the user terminal receives the video file and the comment file described above (⑧), …which enables the overlay display of the comment on the video in the browser of the user terminal, and therefore, it can be said that at the point of time when the user terminal receives each of the files described above, Defendant's system 1 having functions satisfying all the elements of Subject Invention 1 is newly produced.”
4-3. Criterion for Judging Applicability of “Producing” Prescribed in Article 2(3)(i) of Patent Act Regarding Act of Newly Producing Network-type System
The following points are indicated:
● In the network-type system, a server is generally installed outside Japan, and even if the server constituting the network-type system exists overseas, when the terminals constituting the system exist in Japan, the system can be used in Japan, and the use of the system may affect economic benefits obtained by the patentee working the invention in the home country.
● When the principle of territoriality is strictly interpreted so that the “working” prescribed in Article 2(3)(i) of the Patent Act is inapplicable uniformly because the server as a part of the elements of the system exists outside Japan, then the patent can be easily avoided as long as the server is installed in a foreign country, which makes it impossible to sufficiently protect the patent right.
● When it is recognized that the “working” under Article 2(3) of the Patent Act is applicable uniformly because a part of elements constituting the system exists in Japan, the patent right is overprotected, which may cause difficulty in carrying out economic activities.
Based on these points, the court indicates that, in view of appropriate protection of the patent right directed to the network-type system, the act of newly producing the network-type system may fall under the “producing” under Article 2(3)(i) of the Patent Act, and provides the following criterion for such a judgment.
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Even if a server which is a part of elements constituting the system exists in a foreign country, when it can be considered that the act was carried out inside a territory of Japan, it is understood that the act falls under the “producing” in Article 2(3)(i) of the Patent Act, as a result of comprehensively considering: A. the specific mode of the act; B. the function and role exerted in the invention by element(s) existing in Japan among the elements constituting the system; C. the place where the effect of the invention is obtained by using the system; D. an influence of the use of the system on the economic benefits of the patentee of the invention, etc. |
4-4. Applicability of “Producing” Prescribed in Article 2(3)(i) of Patent Act Regarding Appellee’s Act of Newly Producing Defendant’s System 1
Regarding the above A-D, the court admitted the infringement of the subject patent, because the Appellee’s act of newly producing Defendant’s System 1 can be considered to be carried out inside the territory of Japan, while recognizing as follows.
(1) Regarding above A
Since the transmission of each file from the server in the United States to the user terminal in Japan and the reception of each file by the user terminal in Japan are performed altogether, and Defendant's System 1 is completed by the reception of each file by the user terminal in Japan, it can be considered that the transmission and reception of the files are performed in Japan.
(2) Regarding above B
The user terminal existing in Japan serves a function of the determinator which is required for representing comments displayed on the video at positions where the comments do not overlap with each other, and a function of the display position controller, which are the main functions of Subject Invention 1.
(3) Regarding above C
Defendant's System 1 can be used in Japan via the user terminal. Thus, the effect of Subject Invention 1, that is, improving the entertainment in communications using the comments, is exhibited in Japan.
(4) Regarding above D
The use of Defendant’s System 1 in Japan may affect the economic benefits obtained by the Appellant using Subject Invention 1 in Japan.
5. Our Comments
In the first instance, the principle of territoriality is strictly interpreted, and it is judged that the applicability of “producing” under Article 2(3)(i) of the Patent Act is understood to require a product satisfying all the elements of the patented invention to be newly reproduced in Japan. Thus, the infringement of the subject patent right was not admitted, because it cannot be recognized that the Appellee “produced” the Defendant’s system in Japan.
In our opinion, the subject case is significant, because it indicates that an act of newly producing a network-type system may fall under “producing” in Article 2(3)(i) of the Patent Act and provides the criterion for judgment, while reversing the judgment in the first instance and interpreting flexibly the principle of territoriality.
The above criteria for judgment are provided in the Intellectual Property High Court Grand Panel Decision, and thus are criteria in practice, unless they are changed in the Supreme Court. Therefore, in practice in the future, it will be necessary to take measures in consideration of the above criteria.
As examples of necessary measures, even if a server is installed outside Japan, it should not be simply judged that your own implemented product does not constitute infringement of rights of others, but the existence of infringement should be carefully judged in view of the above criteria, or, in filing an application in Japan, the specification should actively describe a function and a role exerted by a user terminal existing in Japan in the invention directed to a network-type system, and a process in which the function and the role are exerted (for example, access from the user terminal to the server, timings of transmission and reception of data between the user terminal and the server, etc.).
If you have any questions or you need consultation about individual cases, please do not hesitate to contact us.
