Unfair
Date
Competition Case number

March 23, 2023
Court Intellectual Property
High Court, Second
2022 (Ne) 10095,
Division
2022 (Ne) 10112- A case in which, concerning an act of unfair competition as stipulated in Article 2,paragraph (1), item (i) of the Unfair Competition Prevention Act over an indication of
goods or business pertaining to a shape, the court calculated the amount of damage s
pursuant to Article 5, paragraph (1) of the same Act.
Case type: Compensation
Result: Modification of the prior instance judgment
References: Article 2, paragraph (1), item (i), Article 4, and Article 5, paragraph (1)of the Unfair Competition Prevention Act
Judgment of the prior instance: Tokyo District Court 2020 (Wa) 17626; Judgment
rendered on August 4, 2022
Summary of the Judgment
1.

In the present case, X argued that Y's act of selling Y's Product (portable,

disposable, continuous low-pressure suction device) is an act that creates confusion
with X's Product and falls under an act of unfair competition as stipulated in Article 2,paragraph (1), item (i) of the Unfair Competition Prevention Act (Act), and demanded
against Y, pursuant to Article 4 of the Act, for payment of damages in the amount of
31,464,427 yen, calculated pursuant to Article 5, paragraph (1) or (2) of the Act, as
well as relevant delay damages.

The indication of goods or business of the present

case has the shape of X's Product, and Y was selling Y's Product which has a shapeclosely resembling that of X's Product.

In a separate suit between X and Y, the court

ruled that the shape of X's Product falls under a well-known indication of goods orbusiness, and that Y's act of selling Y's Product falls under an act of unfair
competition as stipulated in Article 2, paragraph (1), item (i) of the Act.

In thejudgment that was finalized in said separate suit, the court approved an injunction
against the sale of Y's Product pursuant to Article 3, paragraph (1) or (2) of the Act(Intellectual Property High Court 2019 (Ne) 10002; Judgment rendered on August 29,2019), and in the present case, whether or not the shape of X's Product is an indicationof goods or business is not a point of dispute.
2.

In the judgment of the prior instance, the prior court reasoned that it is unlikely

for the entirety of the quantity of Y's Product sold to have been attributable to theconsumers' misunderstanding or confusion with X's Product, and determined that
there were circumstances due to which X was unable to make sales with regard to
40% of the quantity transferred by Y, and deducted said 40% from the amount ofidamage calculated pursuant to Article 5, paragraph (1) of the Act, and thus partiallyapproved the claim made by X.

Y was dissatisfied with the partial defeat in the caseand filed an appeal, and X also filed an incidental appeal.
3.

Y argued that Y's Product is often sold via a sales channel in which Y or the

distributor explains the product to a medical institution beforehand by presenting theactual product or catalogue, and the product is subjected to trial use by the medica linstitution, after which orders are placed for the product.

In this sales channel, no

consumer would purchase Y's Product with the misunderstanding or confusion thatthe product is X's Product, and there is no specific risk of misunderstanding or
confusion, so that the sale does not fall under an act of unfair competition.

Inaddition, Y argued that there are "circumstances that would have prevented theinfringed party from selling", as stipulated in Article 5, paragraph (1) of the Act.
In the judgment of the present case, the court determined as described below, thatY's sale of Y's Product falls under an act of unfair competition irrespective of thesales channel, and that even if there was actually no confusion, the sale does not fallunder "circumstances that would have prevented the infringed party from selling", asstipulated in Article 5, paragraph (1) of the Act.

The court also held that there are no

grounds for which the presumed amount calculated under the same paragraph shouldbe overcome, and modified the judgment of the prior instance.
(1) Applicability of act of unfair competition
Y sells Y's Product, which has a shape closely resembling the shape of X's
Product, a well-known indication of goods or business, and which is used by the same
method of use as X's Product for the same purpose as X's Product, to the same
consumers as those for X's Product.

It is assumed that consumers received

explanations about Y's Product from Y or its distributor by being shown the actual
product, or by looking at photographs and the like of Y's Product which are posted in
catalogues and on online shops, and recognized that Y's Product has the same ornearly the same shape as X's Product, and the motivation for purchase was formed by
X's business reputation, which is embodied in the shape of X's Product.

When thesecircumstances are considered as a whole, it should be said that there were specificrisks, namely the risk of the consumers, who recognized the shape of Y's Product,confusing Y's Product with X's Product, and the risk of the same consumers
wrongfully believing that there is some kind of close business relationship between X,
who is the agent for X's Product, and Y.

Whatever manner of sales channel was

taken for Y's Product, consumers were able to recognize the shape of Y's Product,
which closely resembles the shape of X's Product, a well-known indication of goodsii

or business, so that there was a risk of confusion, and this does not differ dependingon the sales channel.
Furthermore, there is no ground based on which the scope of what constitutes anact of unfair competition should be understood differently in the case of demanding
for an injunction or in the case of demanding for payment of damages.
(2) Whether the presumption according to Article 5, paragraph (1) of the Unfair
Competition Act should be overcome
If, concerning the quantity corresponding to the entirety or part of the quantity
transferred by an act of unfair competition, there are "circumstances that would have
prevented the infringed party from selling" as stipulated in the proviso of Article 5 ,paragraph (1) of the Act, the presumed amount of damages according to the same
paragraph shall be overcome within the extent of the amount corresponding to such
quantity.

It is interpreted that the "circumstances that would have prevented theinfringed party from selling" as stipulated in Article 5, paragraph (1) of the Act referto the circumstances which interfere with the legally sufficient cause between the actof unfair competition and the decrease in the sale of the product of the infringed party.
Even if the court acknowledges that a person in charge at a medical institution or
the like, which is a consumer, actually did not misunderstand or confuse Y's Productwith X's Product, there are the following circumstances, namely, that Y's Product and
X's Product are strongly competitive in the market, and that Y or its distributor was
selling Y's Product by encouraging the person in charge at a medical institution or the
like, which is a consumer, to switch from X's Product to Y's Product.

Given thesecircumstances, it is reasonable to assume that, had there been no sale of Y's Product,
the same quantity of X's Product as the quantity of Y's Product sold would have beensold, so that it is reasonable to acknowledge that X suffered lost profits resulti ng fromthe inability to sell X's Product in the same quantity as the quantity of Y's Productsold, as a result of the act of unfair competition of Y's sale of Y's Product.
In that case, the nonexistence of misunderstanding or confusion as describedabove does not constitute the circumstances which interfere with the legally sufficientcause between Y's sale of Y's Product, or the act of unfair competition, and thedecrease in the sale of X's Product, so that it does not fall under the "circumstancesthat would have prevented the infringed party from selling".

iii

Judgment delivered on March 23, 2023
2022 (Ne) 10095

Appeal case of seeking compensation

2022 (Ne) 10112

Incidental appeal case for the above(Prior court: Tokyo District Court 2020 (Wa) 17626)
Date of conclusion of oral argument: February 7, 2023
Judgment
Appellant and Incidental Appeal Appellee (Defendant in the first instance):
Cardinal Health K.K.
(hereinafter referred to as "Appellant")
Appellee and Incidental Appeal Appellant (Plaintiff in the first instance):
Sumitomo Bakelite Co., Ltd.
(hereinafter referred to as "Appellee")Main Text
1. Appellant's appeal of the present case shall be dismissed.
2. Based on the incidental appeal filed by Appellee, the judgment of the prior court
shall be changed as follows.
(1) Appellant shall pay to Appellee a sum of 22,522,848 yen and the money
accrued thereon at the rate of 5% per annum for the period from August 29, 2019 until
completion of payment.
(2) The rest of Appellee's claim shall be dismissed.
3. Court costs (including the cost of the appeal and the cost of the incidental appeal)throughout the first and second instances shall be divided into four parts, three of
which shall be borne by Appellant, and the remaining part shall be borne by Appellee.
4. Only the above paragraph 2 (1) of this judgment may be provisionally executed.
Facts and Reasons
The abbreviations of the terms used herein and the meanings of theabbreviations shall be as per the judgment of the prior court in addition to what is
described herein, and "Plaintiff" according to the judgment of the prior court shall beread herein as "Appellee", and "Defendant" according to the judgment of the priorcourt shall be read herein as "Appellant", as is appropriate.

Also,

all

"attached/Attachment" as used herein in the parts quoted from the judgment of theprior court shall be corrected to "attached/Attachment to the judgment of the prior1

court".
No. 1

Object of the appeal, etc.

1. Object of the appeal(1) In the judgment of the prior court, the part which was against Appellant shall be
revoked.
(2) Concerning the above part to be revoked, Appellee's claim shall be dismissed.
(3) Court costs throughout the first and second instances shall be borne by Appellee.
2. Object of the incidental appeal(1) The judgment of the prior court shall be changed as follows.
(2) Appellant shall pay to Appellee a sum of 31,464,427 yen and the money accrued
thereon at 5% per annum for the period from August 29, 2019 until completion of
payment.
(3) Court costs throughout the first and second instances shall be borne by Appellant.
(4) Declaration of provisional execution
No. 2

Background

1. Summary of the caseIn the present case, Appellee argued that Appellant's act of selling the product(Appellant's Product) indicated in the Record of Appellant's Product attached to the
judgment of the prior court is an act which creates confusion with Appellee's Productand falls under an act of unfair competition as stipulated in Article 2, paragraph (1),item (i) of the Unfair Competition Prevention Act, and demanded against Appellant,
pursuant to Article 4 of the Unfair Competition Prevention Act, for payment ofdamages in the amount of 31,464,427 yen (although the amount claimed is the revisedamount of 31,442,347 yen), calculated pursuant to Article 5, paragraph (1) or (2) of
the Unfair Competition Prevention Act, as well as relevant delay damages accrued
thereon at the rate of 5% per annum as prescribed in the Civil Code before therevision by the Act No. 44 of 2017 (hereinafter referred to as "Pre-Revision Civil
Code") for the period from August 29, 2019, which is the day of the latest act of
unfair competition, until completion of payment.
In the judgment of the prior court, the court reasoned that it is unlikely for theentirety of the quantity of Appellant's Product sold to have been attributable to theconsumers' misunderstanding or confusion with Appellee's Product, and determinedthat there were circumstances due to which Appellee was unable to make sales withregard to 40% of the quantity transferred by Appellant, and deducted said 40% fromthe amount of damage calculated pursuant to Article 5, paragraph (1) of the Unfair
2Competition Prevention Act, and thus partially approved Appellee's claim within theextent of payment of a sum of 13,583,708 yen, including attorney's fees, along with
relevant delay damages, and dismissed the rest of the claim.
In response, Appellant, who was dissatisfied with its partial defeat in the case,
filed an appeal, and Incidental Appeal Appellant, who was also dissatisfied with its
partial defeat in the case, filed an incidental appeal.
2.

Basic Facts (facts over which there is no dispute between the parties, and facts

which can be acknowledged from evidence (hereinafter, documentary evidence
numbers shall include branch numbers unless specified otherwise) and the entire
import of the oral argument; hereinafter referred to as "Basic Facts") as well as thepoint of dispute and the parties' claims concerning the points of dispute shall becorrected as follows.

Other than the addition of the parties' supplementary claims inthis court, as described later in Paragraph No. 3, the content of the judgment of t heprior court under paragraphs 2 to 4 of "No. 2 Background" in "Facts and Reasons"shall be applicable and quoted herein.
(1) In [the Japanese original of] the judgment of the prior court, in line 5 onpage 3, the words, "in other words", shall be followed by the insertion of "as of said
point in time".
(2) In [the Japanese original of] the judgment of the prior court, at the end ofline 24 on page 3, enter a line break and insert "(1) Applicability of sale ofAppellant's Product to act of unfair competition (Issue 1)", and at the beginning ofline 25 on the same page, correct "(1)" to "(2)", and in the same line, correct "Issue 1"
to "Issue 2", and at the beginning of line 26 on the same page, correct "(2)" to "(3)",and in the same line, correct "Issue 2" to "Issue 3".
(3) In [the Japanese original of] the judgment of the prior court, by entering aline break at the end of the first line on page 4, insert the following.
"(1) Applicability of sale of Appellant's Product to act of unfair competition (Issue 1)(Appellee's claim)
Appellant's act of selling Appellant's Product falls under an act of unfair
competition irrespective of the sales channel, and this is as per the court's finding in a
finalized judgment rendered in a separate action.

Appellant argues that, in the

judgment of the separate action, the court ruled that an act of unfair competition shallbe established only for the sales made via catalogues for medical instruments andonline shopping sites from among Appellant's acts of selling Appellant's Product.
However, in the judgment of the separate action, the court brought up the instance ofcoming in contact with the shape of Appellant's Product via catalogues for medical3

instruments and online shopping sites as an example of a case which has a possible
risk of causing misunderstanding or creating confusion, and the example does notindicate the court's determination that only the sales made through these channels
have a risk of creating confusion with Appellee's Product.

As such, Appellant istwisting the judgment of the separate action.
Appellant's claim is based on the belief that Appellee does not have part of theright to seek injunction against the act of selling Appellant's Product and is clearly indiscrepancy with the judgment of the separate action, and it substantively drags up an
issue which was carefully examined and determined in a separate action.

As such,Appellant's claim is unjust.
(Appellant's claim)
Not all of Appellant's acts of selling Appellant's Product fall under an act of
unfair competition.

In the judgment of the separate action, the court determined thatwhen medical service workers come in contact with the shape of Appellant's Product,
which is very similar to the shape of Appellee's Product, through product images andthe like shown in catalogues for medical instruments and online shopping sites, there
is a risk of causing the misunderstanding that the source of the product is the same asthat of Appellee's Product.

In other words, the court determined that an act of salevia certain sales channels (when consumers come in contact with Appellant's Product,
which is very similar to the shape of Appellee's Product, through product images andthe like shown in catalogues for medical instruments and online shopping sites) has arisk of causing misunderstanding or creating confusion, and the determination is notdirected to all of Appellant's acts of selling Appellant's Product.
The court's ruling in the judgment of the separate action to uniformly approve
an injunction against the sale of Appellant's Product is an excessive injunction.
However, since cutting out only the manners of transaction, which have a risk ofcreating confusion, and identifying them in the main text of a judgment is too difficu lt,
technically speaking, the determination of approving an injunction for all acts basedon a risk that pertains to some of the acts can be affirmed, to a certain degree, in an
action for injunction.

On the other hand, a claim for compensation on the gro und of

tort is made for the accumulation of cases of tort taking place on a daily basis indifferent manners of sale.

As such, it is not permissible to grant recapitulative

approval as to an act being an act of unfair competition without going through thefact-finding process for individual manners of sale.

Nevertheless, in the judgment of

the prior court, the court did not make an assessment on whether or not each mannerof sale falls under an act of unfair competition, but instead, granted recapitulative4

approval for Appellant's sale of Appellant's Product, so as to determine that all acts ofsale fall under unfair competition.

As such, the court's judgment is unjust."(4) In [the Japanese original of the judgment], "(1)" at the beginning of line 2
on page 4 shall be changed to "(2)", and "Issue 1" in the same line to "Issue 2", and"(2)" at the beginning of line 9 on the same page to "(3)", and "Issue 2" in the sameline to "Issue 3", and each of "Defendant's Product" in lines 4 to 5 on the same pageand in line 15 on the same page to "Appellant's Product".
(5) In [the Japanese original of] the judgment of the prior court, "Plaintiff
submitted" in line 1 on page 5 shall be changed to "As per B of [Appellant's claim]
described later, Appellant argues that many of Appellee's Product is sold in a set witha catheter, and that, despite the reality of transaction which is that the sales price isdifferent according to each sales destination, only secondary sources which indicate
the allocating method pertaining to the set sales and the total of sales performance foreach sales destination have been submitted, but Appellee submitted".
(6) In [the Japanese original of] the judgment of the prior court, "process
pertaining to Defendant's claim" in line 21 on page 5 shall be changed to "process
pertaining to Appellant's claim in D (A) under [Appellant's claim] described later ",and "Defendant's Product" in line 5 on page 6 to "Appellant's Product pertaining toAppellant's claim in D (B) under [Appellant's claim] described later", and "hadacquired" in line 13 on the same page to "had acquired, and", and in line 14 on thesame page, insert "in Appellant's Product" after "considering that", and in the sameline, change "give to Defendant's Product" to "give to consumers", and in line 18 on
the same page, change "in regard to the sales quantity of Defendant's new model ofproduct" to "in regard to the fact that the sales quantity of a new model which cameafter Appellant's Product pertaining to Appellant's claim in D (E) under [Appellant's
claim] described later and which changed significantly in shape from Appellant's
Product greatly outnumbered the sales quantity of Appellant's Product".
(7) In [the Japanese original of] the judgment of the prior court, "no damage,or" in line 18 on page 7 shall be changed to "no damage occurred.

Furthermore,",and in line 13 on page 8, "as a result of repeated improvements," shall be followed by
the insertion of "[1] a safety lock function which securely fastens a catheter with thejoint part of Appellant's Product is fixed, [2] a valve for preventing the backflow ofdischarged fluids, which accumulated in a fluid discharging bottle once, into thepatient's body, is placed, [3] a cap is placed on a connecting tube for discharging the
air inside the bottle to the outside by displacing the tube without taking out a catheterfrom the bottle, and [4] the fluid-collection port is shaped into Y, so that two catheters5can be connected simultaneously".
(omitted)
No. 3

Judgement of this court

1. Issue 1

Applicability of sale of Appellant's Product to act of unfair

competition
The present court acknowledges that Appellant's sale of Appellant's Productfalls under an act of unfair competition as stipulated in Article 2, paragraph (1), item(i) of the Unfair Competition Prevention Act.

The reasons thereof are, other than thecorrections below, as indicated in No. 3-1 of "Facts and Reasons" of the judgment of
the prior court, which shall be quoted herein.
In [the Japanese original of] the judgment of the prior court, "1" at the
beginning of line 16 on page 9 shall be deleted, and "Basic Facts (No. 2-2 (2) above)
shall be changed to "Basic Facts (2)", and line 17 of the same page shall have a line
break at the end and the following shall be added.
"Appellant argues that, from among Appellant's acts of sale of Appellant's
Product, an act of unfair competition is applicable only when the sale is made toconsumers via certain sales channels (when consumers come in contact with
Appellant's Product, which is very similar to the shape of Appellee's Product, throughproduct images and the like shown in catalogues for medical instruments and online
shopping sites).
When the above is considered, the provision of Article 2, paragraph (1), item(i) of the Unfair Competition Prevention Act, which stipulates that the use of an
indication of goods or business which is identical or similar to another person's well known indication of goods or service falls under unfair competition, has the following
import: By prohibiting an act which has a specific risk of creating confusion with the
product or business of another person, who is the agent of a well-known indication of
goods or business, to prevent a person from acquiring consumers by causing themisunderstanding or creating the confusion that another person's goodwill, which isembodied in a well-known indication of goods or business, belongs to said person,
thereby protecting the goodwill inherent to a well-known indication of goods orbusiness and ensuring a fair competition among business operators.

In order to beinterpreted that the "act which creates confusion with another person's goods orbusiness" in the same item is applicable, it is not necessary for confusion to actuallyoccur, but it is sufficient if there is a risk of creating confusion (refer to Supreme
6

Court Judgment 1969 (O) No. 912 rendered by First Petty Bench on November 13,
1969 / Saibanshu (Minji) Vol. 97, page 273), and it is interpreted that said act is not
only an act by a person, whose indication of goods or business is identical or similar
to another person's well-known indication of goods or business, of misleading others
into believing that said person and said another person are agents for the same goods
or business, but also includes an act which misleads others into believing that the twoparties are closely related in business, by way of so-called parent-subsidiary
relationship or as affiliate companies, or belonging to a group in which they operate acommercialization business using the same indication (refer to Supreme Court
Judgment 1982 (O) No. 658 rendered by Second Petty Bench on October 7, 1983;
Minshu Vol. 37, No. 8, page 1082; Supreme Court Judgment 1995 (O) No. 637
rendered by First Petty Bench on September 10, 1998 / Saibanshu (Minji) Vol. 189,
page 857).
When the above is considered in the present case, Appellee's Product has ashape which has been continuously and exclusively used for a long period of time of
approximately 34 years, so that it has come to be recognized among medical service
workers, who are consumers, as an indication of source for Appellee's Product.

It isacknowledged that the shape of Appellee's Product was applicable to a well -known
indication of goods or business, as stipulated in Article 2, paragraph (1), item (i) of
the Unfair Competition Prevention Act as of around January 2018, which is when thesale of Appellant's Product began.

Appellant sells Appellant's Product, which has ashape closely resembling the shape of Appellee's Product, a well-known indication of
goods or business, and which is used by the same method of use as Appellee's Productfor the same purpose as Appellee's Product, to the same consumers as those forAppellee's Product.

It is presumed that consumers received explanation s about

Appellant's Product from Appellant or its distributor by being shown the actual
product, or by looking at photographs and the like of Appellant's Product which areposted in catalogues and on online shops, and recognized that Appellant's Product ha s
the same or nearly the same shape as Appellee's Product, and the motivation forpurchase was formed by Appellee's business reputation, which is embodied in the
shape of Appellee's Product.

When these circumstances are considered on the whole,

it should be said that there were specific risks, namely the risk of the consumers, whorecognized the shape of Appellant's Product, confusing Appellant's Product with
Appellee's Product, and the risk of the same consumers wrongfully believing that
there is some kind of close business relationship between Appellee, who is the agent
for Appellee's Product, and Appellant.

Whatever manner of sales channel was taken
7

for Appellant's Product, consumers were able to recognize, upon purchasing
Appellant's Product, the shape of Appellant's Product which closely resembles theshape of Appellee's Product, a well-known indication of goods or business, so that
there was a risk of confusion, and this does not differ depending on the sales channel.
Furthermore, there is no ground based on which the scope of what constitutes
an act of unfair competition should be understood differently in the case of demanding
for an injunction or in the case of demanding for payment of damages.
In that case, the above claim by Appellant cannot be accepted."
2. Issue 2

Intent or negligence

The present court acknowledges that Appellant was at least negligent in the actof unfair competition of the present case.

The reason thereof is as indicated underNo. 3-2 of "Facts and Reasons" in the judgment of the prior court, in addition to thefollowing corrections, and shall be quoted herein.
In [the Japanese original of] the judgment of the prior court, delete line 18 on
page 9, and in line 19 on the same page, correct "Basic Facts (No. 2 -2 (2) above)" to"Basic Facts (2)".
3. Issue 3

Occurrence of damage having a causal connection to the act of

unfair competition of the present case, and the amount of Appellee's damage(1) Occurrence of damage
As per No. 3-1 under "Facts and Reasons" of the judgment of the prior court,
which was quoted after correction, Appellant's sale of Appellant's Product falls underan act of unfair competition as stipulated in Article 2, paragraph (1), item (i) of the
Unfair Competition Prevention Act.

Appellant's Product is used for the same

purpose and by the same method as Appellee's Product, and Appellant's Product andAppellee's Product are the only two products that are nearly identical in shape, so that
it is clear that they are in a competitive relationship (Exhibit Ko 2; the entire importof the oral argument).

As such, it is presumed that the sale of Appellant's Productdecreased the sales of Appellee's Product.
In that case, it is acknowledged that the act of unfair competition of the present
case caused Appellee to suffer damage.
(2) Calculation of the amount of damage pursuant to Article 5, paragraph (1) of
the Unfair Competition Prevention Act
A. Sales quantity of Appellant's ProductIt can be acknowledged from evidence (Exhibit Otsu 11) and the entire importof the oral argument that from January 2018 until August 29, 2019, Appellant sold atotal of 14,377 units of Appellant's Product to Appellant's distributor (excluding the8units returned).

Data of the quantity of Appellant's Product sold (Exhibit Otsu 11)

indicate that 10 units of Appellant's Product were sold in October 2019, but it ispresumed that this number is a record for the units sold until August 29 of the same
year, and for some reason, the number was recorded as pertaining to October 2019.
The same data indicate that there is no record of any unit being sold for January andFebruary 2018.
Appellee argues that the sales quantity of Appellant's Product totaled 20,073
units, but that Exhibit Otsu 11 cannot be trusted.

However, the sales quantity ofAppellant's Product sold as claimed by Appellee is obtained by the following
calculation.

Using the values pertaining to the market share as claimed by Appellant

in a separate action (Appellee's Product 95%, Appellant's Product 3%; Exhibit Ko 6),
and with the sales quantity (480,000 units) of Appellee's Product between January
2018 and August 29, 2019 as the basis, the quantity of Appellant's Product sold to
medical institutions and the like during the same period is presumed to be 15,158
units, and this number is added to the quantity of 4,916 units (Exhibit Otsu 6), which
was sold by Appellant's distributor to medical institutions and the like on or after thesame date.

However, there is no objective evidence to support the aforementioned

market share or the sales quantity of Appellee's Product between January 2018 andAugust 29, 2019, and it cannot be said that the presumed sales quantity of Appellant's
Product as claimed by Appellee is reasonable.

On the other hand, the data of thequantity of Appellant's Product sold (Exhibit Otsu 11) are based on what is extracted
from the core system of Appellant (Exhibit Otsu 24), and there are no specificcircumstances to suggest that the data were processed or altered in some way.
In that case, as described above, it is reasonable to acknowledge that the sales
quantity of Appellant's Product is 14,377 units.
B. Amount of profit per Appellee's unit quantity(A) Evidence (Exhibits Ko 10, 12 to 17) and the entire import of the oral
argument indicate the following: [1] The quantity of Appellee's Product sold fromJanuary 2018 until August 29, 2019 (limited to those sold singularly) totaled 11,422
units, and the sales figure totaled 25,351,921 yen; [2] The cost required for
manufacturing and selling the above Appellee's Product, including the raw material
cost, variable processing cost (fuel cost, electric power cost, consumables cost), anddirect operating cost (container/packaging cost, sales transportation cost, etc.), totaled
9,085,333 yen; [3] It is acknowledged that the raw material cost and the variable
processing cost are the costs directly required for manufacturing Appellee's Product,
and the direct operating cost is the cost directly required for shipping and transporting9

Appellee's Product.

Attachment 1, which is a list of sales figures, etc., of a statement

by Appellee's employee (Exhibit Ko 13) was prepared based on the data on Appellee'sinternal system, which was then output in an Excel file format (Exhibit Ko 13), andthere are no specific circumstances based on which to entertain doubts as to thecredibility of the data.
In that case, the amount of marginal profit per unit of Appellee's Product is
1,424 yen ((= 25,351,921 yen - 9,085,333 yen) / 11,422 yen; amounts less than 1 yenshall be rounded).
(B) Regarding the above, Appellant argues that, in regard to the materials
concerning sales of Appellee's Product, only secondary sources which indicate theallocating method pertaining to the sales in a set with a catheter, and the total of sales
performance for each sales destination have been submitted, but that there must beother costs which should be deducted from the marginal profit of Appellee's Product,
and that the marginal profit of Appellee's Product as claimed by Appellee isunreasonably expensive.
However, while Attachment 1 of Exhibit Ko 13 is based on data on Appellee'sinternal system, the product codes indicated in the "Code" column are "90253300"
and "90253600", and it is presumed that these data are in a corresponding relationshipwith Appellee's Product, "Set without SB Back Tube (waste fluid bottle and suction
bottle)", having the serial number of "MD-53300", and Appellee's Product, "Setwithout SB Back Tube (low-pressure product) (waste fluid bottle and suction bottle)",having the serial number of "MD-53600", as indicated in the Record of Appellee's
Product attached to the judgment of the prior court.

As such, it is reasonable toacknowledge that the values indicated in Attachment 1 of Exhibit Ko 13 do notinclude Appellee's Product pertaining to the set sales with catheters, but that they are
limited to Appellee's Product that were sold singularly.
As for the variable cost which should be deducted from the marginal profit, thecourt cannot approve, other than the costs identified above in (A), that the costs
pointed out by Appellant have been spent in the present case as costs required,directly or additionally, for the manufacture and sale of Appellee's Product.
Furthermore, although Appellant argues that the amount of marginal profit
claimed by Appellee is unjustly expensive, the marginal profit rate of Appellee's
Product is approximately 64.2% ((= 25,351,921 yen - 9,085,333 yen) / 25,351,921yen), and since this is almost equal to the marginal profit rate of 64.3% for the
manufacturing industry (Other Plastics) during the settlement period from November
2019 until January 2020 (Exhibit Ko 7) as published by TKC Corporation, it cannot
10

be said that the percentage is unjustly expensive.
The marginal profit for Appellee's Product is identified as above based on theevidence submitted in the present case.

As such, even when the records of thepresent case are thoroughly examined, it cannot be acknowledged that there wasbreach of law pertaining to the acceptance of evidence by the court of prior instance,
which identified likewise.
C. Assumption of the amount of damage
As described above, the sales quantity of Appellant's Product between January
2018 and August 29, 2019 is 14,377 units.

When 1,424 yen, which is the marginal

profit per unit quantity of Appellee's Product, is multiplied with the sales quantity, it
is presumed that the amount of damage suffered by Appellee is 20,472,848 yen (=14,377 units  1,424 yen / unit) pursuant to Article 5, paragraph (1) of the Unfair
Competition Prevention Act.
D. Circumstances due to which Appellee is unable to sell all or part of thequantity transferred(A) If, pursuant to the proviso of Article 5, paragraph (1) of the Unfair
Competition Prevention Act, there are "circumstances that would have prevented theinfringed party from selling" the entirety or part of the quantity transferred by an actof unfair competition, the presumption of the amount of damage according to said
paragraph shall be overcome within the extent of the amount corresponding to said
quantity.

It is interpreted that the "circumstances that would have prevented theinfringed party from selling", as prescribed in the same paragraph, refer to thecircumstances which interfere with the legally sufficient cause between the act of
unfair competition and the decrease in the sales of the infringed party's product.
(B) Appellant points out the following [1] to [4] as the "circumstances thatwould have prevented the infringed party from selling", as prescribed in the proviso
of Article 5, paragraph (1) of the Unfair Competition Prevention Act , or as othercauses for overcoming the presumption.
[1] From the perspective of ensuring safety, etc. concerning the use ofAppellant's Product, Appellant and the distributor of Appellant's Product would
explain about Appellant's Product beforehand to hospitals and the like purch asing
Appellant's Product for the first time by providing samples, and the side of the
medical institution actively receives information from manufacturers, etc.

In fact,

Appellant sold Appellant's Product to 84 institutions, and 78 institutions of those,
sales representatives paid visits beforehand to give explanations about Appellant's
Product, and as is clear from the invoices and order placements, etc. exchanged
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between the distributor and medical institutions, etc., medical institutions, etc.
identified Appellant's Product or Appellant's name or the like upon purchasing
Appellant's Product.

Such manner of sale has no specific risk of causing

misunderstanding or creating confusion between Appellant's Product and Appellee's
Product, and there was no instance of a medical institution, etc. placing an order basedon misunderstanding.
This is also clear from the fact that although each of Appellee's Product andAppellant's Product can be connected to the respective catheter only, not even a single
case of complaint was made about someone not being able to connect Appellant's
Product to Appellee's catheter, as well as from the fact that no other medical
institution using Appellee's Product placed an erroneous order.

In addition, thestatements prepared by Appellant's employees and medical service workers (Exhibits
Otsu 17 and 44 to 50) indicate that there was no instance of misunderstanding or
confusion being suffered by the side of the medical institution.
[2] Appellant's Product was in demand by medical service workers because of
its superior functions.

The fact that the sales quantity of a new model, which cameafter Appellant's Product and which changed significantly in shape from Appellant's
Product, greatly outnumbered the sales quantity of Appellant's Product indicates that
Appellant's Product was in demand because of its functions, etc. rather than its shape.
[3] Appellant's trademark and product name being clearly indicated on thesuction bottle part of Appellant's Product, and Appellant being a Japanese subsidiaryof a major global corporation whose sales scale is one of the top 10 corporations
worldwide, and Appellant being a famous corporation in the medical device industry
indicate that the demand for Appellant's Product was not due to the misunderstandingor confusion with Appellee's Product but was due greatly to Appellant's credibility
and brand power as a medical device manufacturer.
[4] Because of Appellant's marketing efforts, Appellant's Product was adopted
by multiple group purchasing organizers (GPO) as a product of recommendation.

Onthe other hand, Appellee's Product was not adopted as such, and it can be said that 24
member institutions of GPO from among the 84 institutions which purchased
Appellant's Product did so because Appellant's Product is a product recommended by
GPO.
[C] Concerning the above (B) [1]Appellant argues that in the manner of sale in which a sales representative pays
a visit to explain about Appellant's Product, no misunderstanding or confusion arisesin the medical service workers who are consumers, so that there is no specific risk of12

misunderstanding or confusion.

However, Appellant's act of selling Appellant's

Product falls under an act of unfair competition as prescribed in Article 2, paragraph(1), item (i) of the Unfair Competition Prevention Act irrespective of the sales
channel as illustrated under No. 3-1 of "Facts and Reasons" in the judgment of theprior court, which is quoted herein after corrections are made thereon.

Appellant

argues that medical service workers who are consumers never purchased Appellant's
Product based on misunderstanding or confusion, and that this argument is supported
by facts such as that there has never been any complaint as to Appellant's Product not
being connectable to the catheter of Appellee's Product.

However, the act of unfair

competition as prescribed in Article 2, paragraph (1), item (i) of the Unfair
Competition Prevention Act does not, as described above, require that confusion musthave actually occurred.

On the other hand, Appellant's argument is premised on theassessment that an act of unfair competition refers only to a case in which confusion
actually occurred, so that Appellant's claim cannot be accepted.
Even if the court acknowledges that a person in charge at a medical institution
or the like, which is a consumer, actually did not misunderstand or confuse
Appellant's Product with Appellee's Product, there are the following circumstances,namely, that Appellant's Product and Appellee's Product are strongly competitive inthe market, and that Appellant or its distributor was selling Appellant's Product byencouraging the person in charge at a medical institution or the like, which is aconsumer, to switch from Appellee's Product to Appellant's Product (Exhib it Ko 2;
the entire import of the oral argument).

Given these circumstances, it is reasonable

to presume that, had there been no sale of Appellant's Product, the same quantity ofAppellee's Product as the quantity of Appellant's Product sold would have be en sold,so that it is reasonable to acknowledge that Appellee suffered lost profits resulting
from the inability to sell Appellee's Product in the same quantity as the quantity ofAppellant's Product sold, as a result of the act of unfair competition of Appellant's
sale of Appellant's Product.
In that case, the nonexistence of misunderstanding or confusion as describedabove does not constitute the circumstances which interfere with the legally sufficientcause between Appellant's sale of Appellant's Product, which is an act of unfair
competition, and the decrease in the sale of Appellee's Product, so that it does not fallunder the "circumstances that would have prevented the infringed party from selling".
(D) Concerning the above (B) [2] to [4]It is acknowledged from evidence (Exhibit Ko 2; Exhibits Otsu 5, 14, and 15)
and the entire import of the oral argument that Appellant's Product and Appellee's
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Product have different functions in terms of the method of connecting the catheter(whether or not there is a safety lock mechanism), whether or not there is a valve forpreventing the backflow of discharged fluids, the number of catheters which can beconnected, and whether or not the connecting tube is able to discharge fluid naturally.
However, there is no evidence to sufficiently acknowledge that Appellant's Producthas a noticeably superior function compared to Appellee's Product, and that it
contributed to the sales of Appellant.

Although Appellant argues that the fact thatthe sales quantity of a new model, which has a different shape from that of Appellee's
Product, greatly outnumbered the sales quantity of Appellant's Product supports theargument that the demand for Appellant's Product is attributable to its function, etc.,
the new-model product has a shape different from Appellant's Product, so that the saleof a new-model product only suggests that it does not fall under an act of unfair
competition in terms of its relationship with Appellee's Product, and this fact alone is
not sufficient to determine that Appellant's Product was in demand because of its
function, etc. instead of its shape.
Next, concerning Appellant's argument that Appellant's credibility and brandpower as a medical device manufacturer contributed to the sales of Appellant's
Product, the court determines as follows.

As of around January 2018 when

Appellant's Product began to be sold, Appellant's Product had become well -known ina field of goods pertaining to orthopedics, which includes Appellant's Product.

Onthe other hand, Appellant was in a state which cannot necessarily be considered ashaving high credibility and brand power in the same field.

Given thesecircumstances, it cannot be acknowledged that Appellant's credibility and brandpower contributed to the formation of the motivation to purchase Appellant's Product.
In addition, even if it is acknowledged that Appellant's Product is adopted as a
product recommended by multiple GPOs, and even if it is acknowledged that some of
the institutions which purchased Appellant's Product were members of such GPOs, it
is not clear how Appellant's Product came to be adopted as a product recommended
by GPO, and there is no evidence to sufficiently acknowledge that the adoption as a
product recommended by GPO contributed to forming the motivation of consumers tomake the purchase.
In that case, it cannot be said that the circumstances of the above (B) [2] to [4]as claimed by Appellant fall under the "circumstances that would have prevented theinfringed party from selling".
(E) Even in light of other circumstances shown in the present case, it cannot be
said that there are "circumstances that would have prevented the infringed party from14

selling".
In that case, the amount of damage suffered by Appellee as calculated pursuant
to Article 5, paragraph (1) of the Unfair Competition Prevention Act is 20,472,848
yen as described above in C.
(3) Calculation of the amount of damage pursuant to Article 5, paragraph (2) of
the Unfair Competition Prevention Act
As described above in (2) A, the sales quantity of Appellant's Product fromJanuary 2018 until August 29, 2019 totaled 14,377 units.
If, as Appellee claims, the unit price of Appellant's Product is 1,900 yen andthe marginal profit rate of Appellant's Product is 65%, the amount of damage which ispresumed pursuant to Article 5, paragraph (2) of the Unfair Competition Prevention
Act is 17,755,595 yen (= 14,377 units  1,900 yen  65%), so that it is less than theamount of damage which is presumed pursuant to Article 5, paragraph (1) of the
Unfair Competition Prevention Act.
As such, in the present case, the amount of damage is calculated pursuant to thesame paragraph.
(4) Attorney's fee
When an allowance is made for various circumstances, including the difficultyof the case, the amount claimed, and the amount approved, it is reasonable toacknowledge that the attorney's fee having legally sufficient cause with the tort
pertaining to the act of unfair competition of the present case is 2,050,000 yen.
(5) Amount of damage
It is 22,522,848 yen in total.
4. Conclusion
Based on the above, Appellee's claim shall be approved within the extent of
seeking payment of a sum of 22,522,848 yen and delay damages accrued thereon at
the rate of 5% per annum as prescribed in the Pre-Revision Civil Code for the period
from August 29, 2019 until completion of payment, and the rest shall be dismissed forbeing groundless.

The judgment of the prior court, which ruled differently bypartially approving Appellee's claim within the extent of 13,583,708 yen and delay
damages accrued thereon and dismissing the rest, is partially unreasonable, and theappeal filed by Appellant in the present case shall be dismissed for being groundless,whereas Appellee's incidental appeal is partially reasonable.

As such, the judgmentof the prior court shall be changed as indicated above, and the judgment shall berendered as per the main text.

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Intellectual Property High Court, Second Division
Presiding Judge:

HONDA Tomonari

Judge:

ASAI Ken

Judge:KATSUMATA Kumiko

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