Patent

Date

May 25, 2022

Right

Case

2019 (Ne) 10027

Court

Intellectual Property High
Court, Fourth Division

number- A case in which the court determined the contribution degree of the employer to be
95% or 97% when calculating reasonable compensation for employee inventions
based on Article 35, paragraph (3) of the Patent Act before amendment by Act No. 79
of 2004 (hereinafter referred to as the "Former Patent Act"), and, concerning thecontribution degree among co-inventors, the court ruled that it should be an equal
percentage in principle, but in this case, there are special circumstances, anddetermined the contribution degree that exceeds an equal percentage.
- A case in which the court determined that the "amount of profits that the employer,
etc. should receive" as defined in Article 35, paragraph (4) of the Former Patent Act
refers to the amount of profits that are objectively expected for an employer, etc.
when succeeding to the rights, and this is not limited to the profits actually received
by the working of the invention, and the court calculated the exclusive profits thatthe employer obtained not by using the profits actually obtained from a licensing
agreement, but by the use of the "Virtual Accumulation Method."- A case in which the court found that the employer lost the ground of renewal ofprescription or the right to invoke prescription concerning the extinctive prescriptionof the right to demand payment of compensation for employee inventions that theemployer invoked.
Case type: Appeal case on seeking payment of compensation for employee inventions
Results: Modification of the prior instance judgment, partially granted
References: Article 35, paragraph (3) and paragraph (4) of the Patent Act before
amendment by Act No. 79 of 2004
Related rights, etc.: US Patent No. 4998252 and US Patent No. 5805564
Summary of the Judgment
No. 1 Outline of the caseIn this case, the First-instance Plaintiff, who was an employee of the First-instance
Defendant, alleged that the invention of error-correcting technology for optical discs
that the First-instance Plaintiff made while in service (hereinafter the invention isreferred to as the "Invention") is an employee invention, that the First-instance
Defendant succeeded to the right to receive its patent pursuant to employment
regulations, etc., and therefore that the First-instance Plaintiff has the right to receiveipayment of reasonable compensation from the First-instance Defendant. Based on these
allegations, the First-instance Plaintiff demanded that the First-instance Defendant pay
3 billion yen, which is part of the amount of reasonable compensation, 27,815,620,335
yen, pursuant to Article 35, paragraph (3) of the Patent Act before amendment by Act
No. 79 of 2004 (hereinafter referred to as the "Former Patent Act") and delay damages
accrued thereon at the rate of 5% per annum as prescribed by the Civil Code before
amendment by Act No. 44 of 2017 for the period from May 13, 2015 (the day following
the day on which the complaint was served) until the completion of the payment.
The judgment in prior instance granted the demand of the First-instance Plaintiff toseek payment to the extent of 8,336,319 yen and the amount of delay damages accrued
thereon at the rate of 5% per annum for the period from May 13, 2015 until thecompletion of the payment, and dismissed the remaining demand.
The First-instance Plaintiff filed an appeal, being dissatisfied with the part against
him/herself to the extent of demanding from the First-instance Defendant the payment
of one billion yen and delay damages accrued thereon at the rate of 5% per annum fromMay 13, 2015 until the completion of the payment, while the First-instance Defendant
filed an appeal, being dissatisfied with all of the parts against itself.
The First-instance Plaintiff limited the subject patents for which he/she seeks
payment of compensation for employee inventions to 5. (US patent No. 4998252; Patent1-5) and 6. (US patent No. 5805564; Patent 2-1) stated in the Attachment "Patent List"of the judgment in prior instance.
No. 2 Outline of the judgment in second instance
The second instance altered the judgment in prior instance and granted the demandof the First-instance Plaintiff to seek payment to the extent of 32,048,673 yen and theamount of delay damages accrued thereon at the rate of 5% per annum for the period
from May 13, 2015 until the completion of the payment. The outline of the judgment is
as stated below.
1. Patent 1-5
The First-instance Defendant received royalty allocations, concerning the workingof Patent 1-5 based on [i] a licensing program where the First-instance Defendant andPhilips jointly license patents necessary for the manufacturing and selling of products
based on CD-ROM standards to licensee candidates (hereinafter referred to as the "Joint
License Program") and [ii] an agreement on licensing patent rights, etc. for PlayStation
Series concluded with SCE (hereinafter referred to as the "SCE License Agreement").
(1) The amount of profits that the First-instance Defendant should receive from theinvention related to Patent 1-5 (hereinafter referred to as "Invention 1-5")
ii

A. Joint License Program(A) According to the contractual provisions under the Joint License Program, royalties
that licensees pay under the licensing program can be deemed to be compensation for
the use of patents subject to licensing throughout the world. Since it is difficult toanalyze patents subject to licensing throughout the world, the most appropriate
calculation method is found to estimate the royalty allocation amount for Patent 1-5 byidentifying US patents subject to licensing and based on the percentage that Patent 1 -5
contributed to said patents among royalties for the portion in the U.S.A.
The First-instance Defendant also does not argue about dividing the royalties(worldwide) allocated to the First-instance Defendant by Philips into the portion for
manufacturing and the portion for selling, and 15% of the former portion and 25% of
the latter portion are to be presumed to be the portion in the U.S.A.
(B) Concerning the contribution percentage of Patent 1-5, there are provisions in theagreement used from fiscal year 1993 through fiscal year 2002 that standard essential
patents for CD-ROM players ([a]) and patents for CD audio players ([b]) are included,
but they are not limited to patents [b] ([c]). There are the same provisions for otherstandards, such as those for discs, etc. There is no dispute between the parties
concerning the number of patents [a] and [b] and patents related to [c] need to be patents
related to CD audios based on the tenor of the license agreement. Concerning"Releasable cover locking device" (US4412320A) and "Optical reproducing apparatus"(US4592038A), they are expected to be worked or are able to be worked for CD audio
players and, therefore, they fall under [c].
And, CD-ROM discs and their derivatives, CD-R discs, etc., are based on thestandards for music CDs and standards for patents related to discs have been established .
Accordingly, it is presumed that most patents related to [b], which are related to CD
audios (discs), are patents related to formats that have no other choice. Therefore, it isreasonable to treat patents related to [a], which are the standard essential patents for
CD-ROM discs, etc., and patents related to [b], which are related to CD audio (discs),
by deeming them having the same value. On the other hand, concerning CD -ROM
players and their derivatives, i.e., each drive-related product, the EFM patents related
to the modulation system (US patent 4501000) and CIRC patents related to errorcorrection (US patent 4413340), from among patents related to [b] for CD audio(players, etc.), are also essential patents for the drives and have major value. However,patents related to other drives are different from discs and most of them are presumed
to include selectable patents at each company. The patents related to [a] for CD -ROMdrives, etc. and the EFM patents and CIRC patents, from among patents related to CDiii

audios (players, etc.) ([b]), have the same value as patents under the license; however,
it is reasonable to calculate the contribution percentage by considering that other patents
in [b] have 0.5 of the value of standard essential patents for CD-ROM drives, etc. andthat patents related to [c] have 0.1 of the value of patents of [a], etc. since all the patents
related to [c] are patents that are worked or have possibility to be worked only.
Meanwhile, patents [a] alone are subject to the number of patents subject to eachproduct category in fiscal year 2003 and after and therefore, they are considered to havethe same value as Patent 1-5.
B. SCE License Agreement
Article 35, paragraph (4) of the Former Patent Act stipulates that the amount of
reasonable compensation for employee inventions shall be determined in considerationof the "amount of profits that the employer, etc. should receive" from the invention andthe contribution degree of the employer, etc. for achievement of the invention. The
expression, "amount of profits that the employer, etc. should receive" provided for bysaid paragraph refers to the amount of profits that are objectively expected for theemployer, etc. when succeeding to the rights, and it is understood that this is not limited
to the profits actually received by working the invention, but includes cases of self working, etc. and refers to exclusive profits that the employer, etc. could have received
originally.
PS1 gaming console main body and game discs and PS2 gaming console main bodyare the products subject to the Joint License Program. If the First -instance Defendantconcluded a cross-license agreement with Philips for patents held by each party
concerning the manufacturing and selling of the PlayStation Series, SCE would havebecome an affiliated company of the First-instance Defendant that does not have to pay
royalties again under the Joint License Program, and the profits that the First -instance
Defendant received under the cross-license agreement would have been "the amount of
profits that the employer, etc. should receive." However, even examining all articles ofevidence in this case, it is insufficient to find that the First-instance Defendantconcluded a cross-license agreement with Philips concerning the manufacturing andselling of the PlayStation Series. It is rather found that the First-instance Defendantconcluded a license agreement (SCE License Agreement) with SCE for licensing patentrights, etc. (including Patent 1-5 and Patent 2-1) held by the First-instance Defendantthat are helpful for manufacturing, selling, developing or otherwise handling the
PlayStation Series, gave favorable treatment to SCE over other licensee companies, andreceived compensation from SCE.
In this way, since the First-instance Defendant treats SCE not as an affiliatediv

company under the Joint License Program, but as a licensee concerning the
manufacturing and selling of the PlayStation Series that are products subject tolicensing under said program, which is operated jointly with Philips, according to thefact that the program adopts a so-called open policy to grant licenses under open andnon-discriminatory conditions, the exclusive profits that the First-instance Defendant
could have received for the manufacturing and selling of PS1 gaming console main
body and game discs and PS2 gaming console main body should be the amountcalculated based on the royalty amount that is obtained by multiplying the amountcalculated by the royalties determined under said license program by the allocation rate
for the First-instance Defendant (hereinafter referred to as the "Virtual Accumulation
Method") based on the assumption that SCE received a license for the manufacturing
and selling of the PlayStation Series from Philips. Therefore, said exclusive profits do
not have be limited to the profits that the First-instance Defendant actually received
under the SCE License Agreement.
(2) Degree of the First-instance Defendant's contribution related to Invention 1-5
A. Joint License Program
Invention 1-5 is an error-correction technology that makes it possible to apply music
CDs to the computer field and it has high technical value, for example, it is adopted asa standard essential patent for CD-ROMs, etc. However, it cannot be denied that there
is an aspect where part of the prior art accumulated by the First-instance Defendant wasused in Invention 1-5. In addition, during the procedures to establish the right forInvention 1-5, there was no contribution of the First-instance Plaintiff, including theprocedures related to Patent 1-1 and Patent 1-2 that are the basis for priority right. The
procedures were commissioned to the office in the U.S.A. The Intellectual Property
Department of the First-instance Defendant made considerable contributions, including
having taken appropriate actions for the grounds for refusal received from the US Patent
and Trademark Office.
In addition, the First-instance Defendant and Philips adopted a so-called open
license policy that is non-discriminatory and open, and provided licensing opportunities
broadly. The First-instance Defendant and Philips also took the initiative and created
not only the physical format of CD-ROMs, but also unified the logical format of CDROMs and provided compatibility. In addition, they achieved unified transmission data
standards to connect peripheral devices of personal computers, thereby making CDROMs broadly used as personal computers or gaming software.
Furthermore, the First-instance Defendant established manufacturing factories forcontract production of CD-ROM discs, prepared to increase production capacity of CDv

ROM drive units, engaged in the planning and development of various goods using CDROMs, and established alliances, etc. with companies in other business categor ies. Asa marketing promotion, the First-instance Defendant organized licensee meetings,
proactively approached the content industry, developed the technology of devices todisseminate the standards, and provided technical support to licensees. Therefore, it isfound that the First-instance Defendant engaged in research and development andpromotion for improvement of not only CD-ROM standards, but also CD-Family
standards, such as CD-Rs, etc.
In consideration of the aforementioned circumstances, concerning the exclusive
profits that the First-instance Defendant received under the Joint License Program, it isreasonable to consider that the contribution degree of the First-instance Defendant is95%.
B. SCE License Agreement
PS1 and PS2 are proud of their high operational performance and graphic
performance and system G technology that the First-instance Defendant developed forbroadcasting stations is used for the graphic technology adopted by PS1, and PS2 isequipped with a processor that was jointly developed with Toshiba, etc. Cutting -edge
technologies are incorporated in them in addition to CD-ROMs and DVD-ROMs.
The First-instance Defendant, jointly with affiliated companies, established SCE,
which engages in the development of gaming consoles, such as PS1, etc., and inlicensing business with software manufacturers, and made a significant investment todevelop gaming consoles of PS1 and PS2 in which cutting-edge technologies of thetime are incorporated. In addition, SCE proactively encouraged new software
manufacturers to enter the market, made it possible for various kinds of game software
to be played on PS1 and PS2 and adopted direct marketing for software to enableappropriate inventory management. In addition, SCE released low-end versions of thegaming console main body and developed PS2 compatible with the next generation
network. These SCE acts led PS1 and PS2 to acquire dominant position in the gamemarket and resulted in increases in exclusive profits that the First-instance Defendantreceived under the SCE License Agreement. These marketing efforts and investment
activities, etc. by SCE should be included in the contribution degree of the side of theFirst-instance Defendant that is a joint investment company.
In addition to the contribution degree of the First-instance Defendant that is
explained related to the Joint License Program as stated above, when adding thecontribution degree of the First-instance Defendant and SCE concerning the PlayStation
Series, it is reasonable to determine the contribution degree of the First-instanceviDefendant to be 97% concerning exclusive profits that the First-instance Defendantreceived under the SCE License Agreement.
(3) Degree of the First-instance Plaintiff's contribution among co-inventors of Invention
1-5
The inventors of Invention 1-5 are five persons, namely the First-instance Plaintiff,<B>, <D>, <E>, and <C>, and the 4 persons excluding <C> are employees of the Firstinstance Defendant.
The contribution degree in the joint invention between inventors is found to be equal
unless there are special circumstances. The First-instance Plaintiff is found to havefulfilled a certain role for Invention 1-5; however, there is not enough evidence to findthat the First-instance Plaintiff took initiatives or had an important role.
Rights were established for Invention 1-5 based on the patent application form
naming <E>, <D>, and <J> as the inventors (however, a notice naming <E>, <D>, <B>,
the First-instance Plaintiff, and <C> as the inventors, was submitted subsequently) andthe patent application form naming <B>, the First-instance Plaintiff, and <D> as theinventors. In the "Annex A (Standards) Coding for error-correction by RSPC" for the
CD-ROM standards, examples of embodiment of Patent 1-5 (Figure 6 and Figure 7) arestated. These examples of embodiment are the same figures, etc. attached to the patentapplication form naming <B>, the First-instance Plaintiff, and <D> as the inventors,
and it is presumed that they are based on multiple drafts that the First-instance Plaintiff
created at the request of <B>. Therefore, it is found that the contribution of the First instance Plaintiff for standardization of the error-correcting system of CD-ROMs isgreater than that of <E>, etc.
Consequently, it is considered that there are special circumstances where thecontribution degree of the First-instance Plaintiff among co-inventors of Patent 1-5
exceeds the equal percentage, and it is reasonable to consider the First-instancePlaintiff's contribution degree to be one-third.
2. Patent 2-1
The First-instance Defendant received royalty allocation concerning Patent 2 -1
based on [i] a joint license program concluded between the First-instance Defendant
and Philips in which the First-instance Defendant jointly licensed with Pioneer thepatents related to DVD standards held by the First-instance Defendant and Philips(hereinafter referred to as the "3C License Program"); [ii] a license program in which
One-Red, LLC, which was established by Philips, the First-instance Defendant, andother companies, provides joint licensing for DVD products (hereinafter referred to as
the "One-Red License Program); [iii] a license program in which One-Blue, LLC, whichviiwas established by Philips, the First-instance Defendant, and other companies, provides
joint licensing of patents, including essential patents for Blu-ray discs (hereinafterreferred to as the "One-Blue License Program"); and [iv] the SCE License Agreement.
(1) The amount of profits that the First-instance Defendant should receive from theinvention related to Patent 2-1 (hereinafter referred to as "Invention 2-1")
A. License programs
There is no dispute between the parties concerning royalties that the First -instance
Defendant received under each license program (concerning the 3C License Program,the court-related costs were deducted) and the number of US patents for each productcategory under each license program. They are standard essential patents and therefor e,
it is reasonable to make calculations by deeming that the contribution percentages ofPatent 2-1 in royalties have the same value.
B. SCE License Agreement
It is reasonable to treat PS2 game discs and PSP game discs as products subject tolicensing under the 3C License Program or in accordance with such products. Underthe 3C License Program, patents subject to licensing held by the First -instance
Defendant are licensed to Philips with sub-license. Therefore, if SCE had received alicense under the 3C License Program from Philips when manufacturing and selling
PS2 and PSP, SCE would not have to pay royalties again to the First-instance Defendant.
The royalties to be allocated to the First-instance Defendant by Philips would be the"amount of profits that the employer, etc. should receive." However, after examining
all the articles of evidence in this case, there is no evidence to find that SCE received alicense for the manufacturing and selling of PS2 or PSP. Rather, it is found that theFirst-instance Defendant concluded the SCE License Agreement on the assumption that
SCE had not received a license, gave more favorable treatment to SCE, which is anaffiliated company of the First-instance Defendant, than to other licensees, and obtainedcompensation from SCE.
In this way, since the First-instance Defendant treats SCE as a licensee that has notreceived a license from Philips concerning the manufacturing and selling of PS2 or PSP,
based on the fact that the 3C License Program adopts a so-called open policy to grant
licenses under open and non-discriminatory conditions, the exclusive profits that theFirst-instance Defendant could have received originally for the manufacturing andselling PS2 or PSP game discs should be the amount calculated based on the royalties
specified by said license program (the Virtual Accumulation Method) on the assumptionthat SCE had received a license under said license program, and it is not necessary forsaid exclusive profits to be limited to the profits that the First -instance Defendantviii

actually received under the SCE License Agreement.
(2) Degree of the First-instance Defendant's contribution related to Invention 2-1
A. License programs
Invention 2-1 is an essential patent for DVD standards, including DVD-ROMs, etc.,
and therefore, its technical value is considered to be high. However, the patent claims
related to Patent 2-1 contain a statement that enables data recording discs and theirrecording devices, etc. to belong broadly to the technical scope and there is not enoughevidence to find that the First-instance Plaintiff contributed to procedures to establish
rights for Patent 2-1, including the Patent Filed in Japan that is the basis for priority
right of Patent 2-1. The Intellectual Property Department of the First-instance
Defendant made considerable contributions, including establishing rights for said wide
range of claims.
In addition, [i] it can be said that the DVD standards spread more broadly as the
DVD Forum and the DVD+RW Alliance, in which the First-instance Defendant also
participated, established various standards for physical formats after an agreement wasreached between the SD side that was announced by Toshiba, etc. and the First-instance
Defendant's MMCD side and standards were unified: [ii] Patent 2-1 is a patent subject
to licensing for DVD-standards products under the 3C License Program, One-Red
License Program, and One-Blue License Program, and it can be valued that the Firstinstance Defendant endeavored to disseminate DVD standards through these joint
licensing activities with other companies; and [iii] it is found that, in order to respondto the expansion of demand for DVDs, the First-instance Defendant establishedproduction bases not only in Japan, but also overseas and made a large investment,
developed DVD-R with other companies, planned and sold various goods using DVD
standards, and newly commenced the DVD recorder business, in addition to engaging
in promotion activities through contract production business of DVD-ROMs that canbe used for sales promotion of new products and for company guides, etc., jointly with
its group company, SME.
In consideration of the aforementioned circumstances, concerning the exclusive
profits that the First-instance Defendant received under each license program, it isreasonable to determine the contribution degree of the First-instance Defendant to be
95%.
B. SCE License Agreement
PS2 is proud of its high operational performance and graphic performance, and isequipped with the processor that was developed jointly with Toshiba. In this manner,
cutting-edge technologies, in addition to DVD-ROMs, are incorporated in PS2. Inix

addition, SCE proactively facilitated the entry of new software manufacturers to makeit possible to offer a variety of game software and enable appropriate inventory
management, and it developed PS2 to be compatible with next generation networks.
These marketing efforts and investment activities, etc. by SCE should be included in
the contribution degree of the side of the First-instance Defendant side that is a joint
investment company.
In addition, a portable gaming console that SCE developed, PSP, is a multimedia
terminal that draws graphics with a quality close to PS2 and is also equipped withmultimedia viewing, Wi-Fi, and web browser. These technology developments by SCE
should also be included in the contribution degree of the First-instance Defendant.
In addition to the contribution degree of the First-instance Defendant that is
explained related to license programs above, when adding the contribution degree ofthe First-instance Defendant and SCE related to the PlayStation Series, concerning
exclusive profits that the First-instance Defendant received under the SCE License
Agreement, it is reasonable to determine the contribution degree of the First-instance
Defendant to be 97%.
(3) Degree of the First-instance Plaintiff's contribution among co-inventors of Invention
2-1
The inventors of Invention 2-1 are found to be three persons, including the Firstinstance Plaintiff, <F>, and <G>.
The contribution degree between inventors in a joint invention should be found tobe equal unless there are special circumstances. Invention 2-1 was found to becompleted after discussions on the idea were held between <F> and <G> based on theformat that the First-instance Plaintiff conceived of; however, concerning the degree ofcontribution to the invention, <G> had a lower contribution degree than the Firstinstance Plaintiff and <F>, for example <G> did not prepare the invention report for
which <G> was in charge. In light of these circumstances, there are special
circumstances to find that the First-instance Plaintiff made special contributions to thecompletion of the invention related to Patent 2-1. In addition, in light of processes, etc.
for the completion of the invention, the contribution degree of the First -instancePlaintiff and <F> are considered to be at the same level and that of <G> is half of theirs.
It is reasonable to determine that the contribution degree of the First -instance Plaintiff
is two-fifths.
3. Whether the period of extinctive prescription has expired
The First-instance Defendant's Invention and Device Rules do not conform to the
purport and details of Article 35, paragraph (4) of the Former Patent Act. The First x

instance Defendant naturally recognized that the compensation for employee inventions
that is paid based on the rules is only part of reasonable compensation as determined inparagraph (3) and paragraph (4) of said Article and the compensation is less than theamount of reasonable compensation that is specified in accordance with Article 35,
paragraph (4) of the Former Patent Act.
Based on the above, the payment of incentive remuneration for Patent 1-5 falls
under the acknowledgment of debt after completion of prescription. Therefore, theFirst-instance Defendant lost the right to invoke prescription in relation to the right todemand payment of reasonable compensation for Patent 1-5 under the principle of goodfaith. Meanwhile, the payment of incentive remuneration for Patent 2-1 falls under the
acknowledgment of debt before completion of prescription and therefore, it falls undergrounds for renewal of prescription and extinctive prescription started on December 18,
2004. However, the First-instance Plaintiff demanded payment by the First-instance
Defendant based on the right to demand payment of reasonable compensation forInvention 2-1 and filed this action on April 28, 2015, within six months from making
the demand. Therefore, the period of extinctive prescription has not expired.

xi

Judgment rendered on May 25, 2022
2019 (Ne) 10027, Appeal case seeking payment of compensation for employee
invention(Court of prior instance: Tokyo District Court, 2015 (Wa) 11651)
Date of conclusion of oral argument: March 14, 2022
Judgment
Appellant and Appellee (First-instance Plaintiff): X(hereinafter referred to the "First-instance Plaintiff")
Appellee and Appellant (First-instance Defendant): Sony Group Corporation(hereinafter referred to the "First-instance Defendant")
Main text
1. Based on the appeal by the First-instance Plaintiff, the judgment in prior instanceshall be changed as follows.
(1) The First-instance Defendant shall pay to the First-instance Plaintiff 32,048,673 yen
and the amount accrued thereon at the rate of 5% per annum for the period from May
13, 2015 until the completion of the payment.
(2) The remaining claims of the First-instance Plaintiff shall be dismissed.
2. The appeal by the First-instance Defendant shall be dismissed.
3. Court costs in the first and second instances shall be divided into fifty and the First instance Defendant shall bear one-fiftieth of the costs and the First-instance Plaintiff
shall bear the remaining costs.
4. This judgment may be enforced provisionally only for Paragraph 1 (1).
Facts and reasonsNo. 1 Object of the appeal
1. The First-instance Plaintiff(1) The judgment in prior instance shall be changed as follows.
(2) The First-instance Defendant shall pay to the First-instance Plaintiff one billion yen
and the amount accrued thereon at the rate of 5% per annum for the period from May
13, 2015 until the completion of the payment.
2. The First-instance Defendant(1) The part of the judgment in prior instance which is against the First -instance
Defendant shall be rescinded.
(2) Concerning the part defined in the preceding paragraph, claims of the First -instance1

Plaintiff shall be dismissed.
No. 2 Outline, etc. of the case (Unless particularly noted, the same abbreviations usedin the judgment in prior instance shall be used herein.)
1. Outline of the caseIn this case, the First-instance Plaintiff, who was an employee of the First-instance
Defendant, alleged that the invention of error-correcting technology for optical discs
that the First-instance Plaintiff made while in service (hereinafter this invention isreferred to as the "Invention") is an employee invention, the First-instance Plaintiff had
the First-instance Defendant succeed to the right to receive the patent pursuant toemployment regulations, etc., and therefore, the First-instance Plaintiff has the right toreceive payment of reasonable compensation from the First-instance Defendant. Basedon these allegations, the First-instance Plaintiff demanded that the First-instance
Defendant pay 3.0 billion yen, which is part of the amount of reasonable compensation,
27,815,620,335 yen, pursuant to Article 35, paragraph (3) of the Patent Act before
amendment by Act No. 79 of 2004 (hereinafter referred to as the "Former Patent Act")and delay damages accrued thereon at the rate of 5% per annum as prescribed by the
Civil Code before amendment by Act No. 44 of 2017 (hereinafter simply referred to as
the "Civil Code") for the period from May 13, 2015 (the day following the day on which
the complaint was served) until the completion of the payment.
The judgment in prior instance granted the demand of the First-instance Plaintiff toseek payment to the extent of 8,336,319 yen and the amount of delay damages accrued
thereon at the rate of 5% per annum for the period from May 13, 2015 until thecompletion of the payment, and dismissed the remaining demand.
The First-instance Plaintiff was dissatisfied with the part against him/herself andfiled an appeal to the extent of the Object of the appeal (No. 1, 1. above), while theFirst-instance Defendant was dissatisfied with all of the parts against itself and filed an
appeal.
In this instance, the First-instance Plaintiff limited the subject patent for which
he/she seeks payment of compensation for an employee invention to 5. (Patent 1-5) and6. (Patent 2-1) stated in the Attachment "Patent List" of the judgment in prior instance.
2. Basic facts
The basic facts are as stated in No. 2, 2. in the "Facts and reasons" section of thejudgment in prior instance, except for the corrections as stated below, and therefore
they are cited.
(Correction of the judgment in prior instance)(1) The term "5" in line 4, page 4 is altered to "7", and the phrase from "Patent 2 -1" in2line 9 through the end of line 11, page 4 and the phrase from "(see No. 3, 4. (1) A. (B)c. below)" in line 22 through "(see No. 3, 4. (1) A. (B) a. below)" in line 23, page 4 aredeleted respectively.
(2) The following is added as a new line after the end of line 21, page 5.
"(5) Royalties, etc. that the First-instance Defendant received by the working of Patent
1-5
A. Royalties, etc. related to the Joint License Program(A) The First-instance Defendant and Philips started a license program from June 1990
to jointly license patents necessary for manufacturing and selling products based on
CD-ROM standards to licensee candidates (hereinafter the program is referred to as the'Joint License Program'). Under this program, Philips was to engage in administration,such as negotiations with licensees and receipt of royalties, etc., and to decide theallocation rate of royalties in consideration of the administration fees. However, bothcompanies reached an agreement on the allocation rate on December 30, 1992 andtherefore, royalties came to be allocated quarterly from Philips to the First -instance
Defendant in January 1993 onward (Exhibits Otsu 51, 54, 68, and 152).
(B) The royalties to be paid by a licensee under the Joint License Program were notcalculated per subject patent and were not to change even in cases of addition ordeletion of any patent from a standard license agreement (Exhibit Otsu 26).
For the period from fiscal year 1993 until fiscal year 2005, when the patent term ofPatent 1-5 expired, the amounts allocated to the First-instance Defendant from Philips
as royalties for subject patents, including Patent 1-5, (worldwide) were as stated below.
(From fiscal year 1993 to fiscal year 2002)
Product category

Royalty (*)

CD-ROM Disc●●●●●●●●●●

CD-ROM Drive●●●●●●●●●●

CD-R Disc●●●●●●●●●●

CD-R Drive●●●●●●●●●●

CD-RW Disc●●●●●●●●●●

CD-RW Drive●●●●●●●●●●

Video CD Disc●●●●●●●●●●

Video CD Drive●●●●●●●●●●* ●●●●●●●●●●●●(From fiscal year 2003 to fiscal year 2005)
Product category

Royalty (*)

3

CD-ROM Disc●●●●●●●●●●

CD-ROM Drive●●●●●●●●●●

CD-R Disc●●●●●●●●●●

CD-R Drive●●●●●●●●●●

CD-RW Disc●●●●●●●●●●

CD-RW Drive●●●●●●●●●●

Video CD Disc●●●●●●●●●●

Video CD Drive●●●●●●●●●●* ●●●●●●●●●●●●

B. Royalties related to PlayStation Series(A) On December 29, 1995, the First-instance Defendant reached an agreement with
SCE as follows: the First-instance Defendant would license to SCE the use of patentrights (including Patent 1-5) and utility model rights (including rights in theapplication) held by the First-instance Defendant that are useful for the manufacturing
and selling of home video games, computers, and their relevant equipment that SCE
developed and sold with the trademark 'PlayStation,' home application software to be
operated on PlayStation that is recorded on CD-ROM media, equipment for thedevelopment of said software, etc.; SCE would pay to the First-instance Defendant theamount equivalent to 0.5% of the net sales as compensation for the license for two years
from April 1, 1995; and SCE would not exercise any right of claim based on the patent
held by SCE against the First-instance Defendant and subsidiary companies designatedby the First-instance Defendant during the agreement period (hereinafter referred to as
the 'SCE License Agreement'; Exhibits Otsu 242 and 417).
(B)

The

First-instance

Defendant●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●.
(C)

The

First-instance

Defendant●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●.
(6) Royalties, etc. that the First-instance Defendant received by the working of Patent
2-1
A. Joint License Programs(A) 3C License Program4

On November 24, 1997, the First-instance Defendant concluded a joint licenseprogram (hereinafter referred to as '3C License Program') with Philips to license jointlywith Pioneer Corporation the patent related to DVD standards held by the First-instance
Defendant and Philips. Under this license program, it was determined that the subject
patents held by the First-instance Defendant would be licensed to Philips with the sublicensing right and part of the royalties that Philips received from licensees would beallocated to the First-instance Defendant in accordance with the predeterminedallocation rate (Exhibit Otsu 231).
The amounts that were allocated to the First-instance Defendant by Philips inrelation to the 3C License Program as allocation of royalties of the subject patents,
includingPatent

2-1,

for

the

periodfrom1999

through

June

2016,

●●●●●●●●●●●●●●●, were as stated below.
DVD-ROM Disc●●●●●●●●●●DVD Video Disc●●●●●●●●●●

DVD RECORDABLE Disc (*1)●●●●●●●●●●

DVD RECORDABLE Drive (*2)●●●●●●●●●●*1 Including DVD-R Disc, DVD-RW Disc, DVD+R Disc, and DVD+RW Disc
*2 Including DVD-R Drive, DVD-RW Drive, DVD+R Drive, and DVD+RW Drive(B) One-Red License Program
One-Red, LLC that was established in August, 2009 by Philips, the First -instance
Defendant, LG Electronics, and Pioneer Corporation, started providing joint patent
licenses of DVD products on July 1, 2012 and started providing joint patent licenses of
DVD software products on October 15, 2012 (hereinafter referred to as the 'One -Red
License Program'; Exhibit Ko 177 and Exhibit Otsu 198).
The amounts that were allocated to the First-instance Defendant by One-Red, LLC
in relation to One-Red License Program as allocation of royalties, including Patent 21, for the period from 2012 through June 2016 were as stated below.
DVD-ROM Disc●●●●●●●●●●DVD Video Disc●●●●●●●●●●(C) One-Blue License Program
One-Blue, LLC was established in February 2009 with contributions made by
Philips, the First-instance Defendant, and multiple other companies and started toprovide joint patent licenses, including essential patents for Blu-ray Disc (hereinafterreferred to as 'BD') products from September 2011 as a patent pool formed by morethan ten licensers, including the First-instance Defendant (hereinafter referred to as the5'One-Blue License Program'; Exhibit Ko 178 and Exhibit Otsu 198).
The amounts that were allocated to the First-instance Defendant by One-Blue, LLC
in relation to the One-Blue License Program as allocation of royalties, including Patent
2-1, for the period from 2012 through June 2016 were as stated below.
BD Recorder●●●●●●●●●●BD Recorder Drive●●●●●●●●●●

B. Royalties related to PlayStation Series●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●"(3) The term "(5)" in line 22, page 5 is altered to "(7)"; the term "(6)" in line 9, page 6
is altered to "(8)"; the phrase from "争いがないが [There is no dispute ... ; however,]"in line 15, page 6 through "争いがある。 [there are disputes ... .]" in line 16, page 6
is altered to "争いがない。 [There is no dispute ... .]"; the phrase "争いがないが[There is no dispute ... ; however,]" in line 20, page 6 through "争いがある。 [there
are disputes ... .]" in line 23, page 6 is altered to " 争 い が な い 。 [There is nodispute ... .]"; the term "(7)" in line 24, page 6 is altered to "(9)"; and the term "(8)" inline 3, page 7 is altered to "(10)" respectively.
3. Issues(1) Issues related to Patent 1-5
A. The amount of profit that the First-instance Defendant should receive from theinvention related to Patent 1-5 (hereinafter referred to as "Invention 1-5") (Issue 1-1)
B. Degree of the First-instance Defendant's contribution related to Invention 1-5 (Issue
1-2)
C. Degree of the First-instance Plaintiff's contribution among co-inventors of Invention
1-5 (Issue 1-3)
D. The amount of reasonable compensation for Invention 1-5 (Issue 1-4)
(2) Issues related to Patent 2-1
A. The amount of profit that the First-instance Defendant should receive from theinvention related to Patent 2-1 (hereinafter referred to as "Invention 2-1") (Issue 2-1)
B. Degree of the First-instance Defendant's contribution related to Invention 2-1 (Issue
2-2)
6C. Degree of the First-instance Plaintiff's contribution among co-inventors of Invention
2-1 (Issue 2-3)
D. The amount of reasonable compensation for Invention 2-1 (Issue 2-4)
(3) Whether the period of extinctive prescription for the right to demand payment of
reasonable compensation for Invention 1-5 and Invention 2-1 has expired (Issue 3)(omitted)
No. 4 Judgment of this court
1. Facts found in this case
Based on No. 2, 2. of the judgment in prior instance related to citation (after
correction), evidence (Exhibits Ko 4 through 7, 9, 12 through 16, 110, 133 through 138,
141, 142, 145, 159, 160, 163, 165, 174, 175, 177, 178, 194, 195, 199, 200, 207, 210
through 212, 216 (including branch numbers; the same applies hereinafter), 221, 237,
273 through 282, 290, 295 through 306, and 319 through 325; Exhibits Otsu 4 through8, 10 through 15, 17 through 23, 26, 28, 29, 31, 32, 37, 44, 46, 51, 54 through 59, 68
through 73, 77, 80 through 82, 84, 88 through 91, 131, 132, 137, 140 through 144, 148,
150 through 168, 170, 172 through 183, 190, 194 through 196, 198 through 202, 205
through 208, 211, 213 through 216, 218, 220, 225, 228 through 231, 235 through 239,
242 through 246, 251, 252, 261, 263 through 295, 297 through 302, 323, 324, 329, 337,
339, 344, 361, 363, 365, 367, 370, 377, 380, 390, 410, 417, 419 through 421, 423, 425,
426, 429, and 435; Witness <H>, the First-instance Plaintiff him/herself), and the entire
import of oral arguments, the following facts are found.
(1) Career, etc. of the First-instance Plaintiff at the First-instance Defendant
After graduating from university in March 1979, the First-instance Plaintiff joined
the First-instance Defendant, was assigned to the technology laboratory, started
research on Cross Interleave Code using computer simulations, participated in a joint
development project of CD-DA (music CD; hereinafter simply referred to as "CD" insome cases) from 1980, and jointly engaged in the employee invention of errorcorrecting system CIRC, etc.
The First-instance Plaintiff was transferred from the technology laboratory to theinformation processing laboratory in April 1981 and was transferred to a research groupfor speech recognition in April 1982. However, as stated in (2) A. (B) below, the Firstinstance Plaintiff was requested by <B>, who was involved in the development projectof CD-ROMs, and jointly made Invention 1-5.
In November 1991, the First-instance Plaintiff was appointed as the Director of the
7

"ESPER Research Room." However, as stated in (3) A. (B) below, after having jointly
made Invention 2-1 from April to May 1995, the First-instance Plaintiff was transferredto the DVD Strategy Headquarters and was appointed as Director of the Technology
Strategy Department in April 1998, and then as Technical Director of the Technology
Development Headquarters in March 2006, and finally quit the First-instance Defendant
in March 2013.
(2) Patent 1-5
A. Details, etc. led to the invention(A) The First-instance Defendant and Philips reached an agreement on the joint
development of CD-DA in June 1979; after further deliberations on CD disc diameter,
sampling frequency, quantization bit rate, error-correcting system, modulation system,
etc. from August 1979 through June 1980, they standardized CD-DA by establishing awritten standard, RedBook, in 1981.
(B) The First-instance Defendant and Philips determined to deliberate on application to
the computer field after the introduction of CDs, and started meetings towards thedevelopment of the CD-ROMs in March 1983. <I>, <B>, <D>, etc. from the Firstinstance Defendant and <C> from Philips participated in the meetings and deliberations
were held on a continuing basis.
The First-instance Defendant recognized that even in the case of using CDs as
external storage media, the original error-correcting technology was not necessary since
there was CIRC; however, Philips proposed to the First-instance Defendant that if CDs
are used for computers to record digital data, CIRC alone would be insufficient andoriginal error-correction should be added. Therefore, <B> requested that the Firstinstance Plaintiff, who belonged to a different department from the technology
laboratory to which <B> belonged, examine the proposal.
The First-instance Plaintiff and <B> examined and deliberated on multiple
proposals that the First-instance Plaintiff created and, as a result, they conceived blockcompletion type error-correcting codes with two different direction systems, P system
and Q system, where 2352 bytes (including 2K bytes of user data) per sector (block)are divided into two planes, a high plane and low plane, and where each plane consistsof error-correcting codes on an 8-bit Galois extension field GF (28).
(C) The First-instance Defendant proposed the error-correcting system defined in (B)above at the discussion with Philips held on December 21, 1983. On the other hand,Philips proposed a format comprising error-correcting codes on a 16-bit Galois
extension field GF(2 16) in a single system (hereinafter referred to as "Philips16") and aformat where 2,352 bytes per block are divided every 98 bytes into a total of 24
8

segments, and (98.86) Reed-Solomon Codes with a minimum distance of 13 on a Galois
field GF(28 ) are comprised of 24 systems in the same direction system (hereinafterreferred to as "Philips8").
As a result of verification by comparing the performances of the two
aforementioned proposals of the First-instance Defendant and Philips by themselves, it
was proven that the First-instance Defendant's proposal was superior in performanceand an agreement was reached to accept it as a format.
B. Details, etc. led to the registration(A) According to the First-instance Defendant's Invention and Device Rules, there is aprovision that if an employee makes an employee invention, the employee shallimmediately report it to the superior before announcing it externally and shall transfer
the right to receive registration of industrial property rights to the First-instance
Defendant.
<E> determined the invention title to be "CD-ROM 'Super Heavy' Error Correction
Method (1)" as of October 23, 1983, and created and submitted a patent application
form (Exhibit Otsu 55) naming <E>, <D>, <J> as the inventors to the Patent Departmentof the First-instance Defendant (subsequently, a notice naming <E>, <D>, <B>, theFirst-instance Plaintiff, and <C> as the inventors was submitted.). In addition, <B>
determined the invention title to be "A method to use digital audio equipment as digital
data equipment" on February 2, 1984 and created and submitted a patent application
form (Exhibit Otsu 57) naming <B>, the First-instance Plaintiff, and <D> as theinventors to the Patent Department of the First-instance Defendant.
Around March 23, 1984, the First-instance Plaintiff, <E>, <D>, <B>, and <C>
transferred to the First-instance Defendant the right to receive patents concerning
inventions related to Patent 1-1 and Patent 1-2 and inventions related to Patent 1-5, etc.
that is the overseas patent of Patent 1-1 and Patent 1-2.
Applications for Patent 1-1 and Patent 1-2 were made by patent attorney <K> byproxy. However, a meeting before the procedures for Patent 1-1 was held among <E>,
<L>, and <M> and a meeting before the procedures for Patent 1-2 was held among <B>
and <M> respectively.
(B) The First-instance Defendant filed an application for Patent 1-3, for which Patent
1-1 and Patent 1-2 are the basis for the priority right, on March 22, 1985 naming fivepeople in total, i.e., <B>, the First-instance Plaintiff, <D>, <E>, and an employee ofPhilips <C>, as the inventors; however, around September 19, 1986, the First -instance
Defendant received a notice of grounds for refusal stating that disclosure of thedescription for Claims 13 through 16 was insufficient, from the US Patent and9Trademark Office. Therefore, the First-instance Defendant filed an application for
Patent 1-5 on August 5, 1987 as a continuation-in-part application of Patent 1-3.
However, Patent 1-3 had already become effective. The First-instance Defendantreceived grounds for refusal from the US Patent and Trademark Office stating that thefiling date of the application could not be retroacted. In order to avoid Patent 1 -5 frombeing refused due to double patenting of Patent 1-3, the First-instance Defendant added
a terminal disclaimer to waive the patent term of Patent 1-5 for the part exceeding July
14, 2004, until when Patent 1-3 would be valid.
Patent 1-5 was registered on March 5, 1991.
(C) The First-instance Defendant filed an application for Patent 1-4 in the U.S.A. as areissue patent of Patent 1-3 on July 13, 1989. Patent 1-4 was registered on November
27, 1990 and Patent 1-3, which was the original patent, was deemed to be waived on
the same day.
C. Technical meaning, etc. of Patent 1-5(A) Music signals have a high correlation among data and therefore, interpolation
processing may be conducted by interpolating the mean values of adjacent data points.
However, this interpolation processing cannot be conducted with digital data and there
was a problem where it was desirable to have a better error rate for reading datacompared to music signals.
Claim 1 of Patent 1-5 is an invention of an information transmitting device that cancorrect errors by the third Reed-Solomon Codes in addition to correcting errors by the
first and second Cross Interleave Reed-Solomon Codes (CIRC). The invention consistsof the following: where the third Reed-Solomon Codes adopt a block completion typethat detects and corrects errors by completing only with data in the predetermined block(sector), each user word is divided into a high symbol and a low symbol, the sector canconsist of "Planes," where the first plane of the sector receives a high symbol for thesector, and the second plane receives a low user symbol for the sector. Claim 5 of Patent
1-5 is an invention of a method concerning error-correcting coding of the third ReedSolomon coder and Claim 7 of said Patent is an invention of a method that has adecoding step for the first and second error-correcting codes respectively.
Consequently, Patent 1-5 corrects errors by the third Reed-Solomon codes in
addition to error-correction by CIRC; it detects and corrects errors by completing onlywith data in the predetermined block (sector); and thereby, it can decrease the error rate
in reading data and it enables CDs to be discs for digital data storage. Patent 1 -5 also
performs error-correction in parallel on the high plane and low plane and thereby makes
it possible to shorten processing time.
10The error-correction of Patent 1-5 can improve the error correction rate to 10 -12,
while the error correction rate of existing music CDs is 10 -9 to 10 -10 after correction;and it has increased data reliability and enabled CDs to be used as a data storage forcomputers.
(B) Japanese Industrial Standards (JIS) related to CD-ROMs (120mm read-only typeoptical discs) (Exhibit Ko 9) stipulate that "It must be noted that the following US
patents are particularly related to using this standard." and list US patent 4413340(patent related to CIRC), US patent 4680764 (Patent 1-3), and other patents.
In the "Annex A (Standards) Coding for error-correction by RSPC" of the JIS,
embodiment examples of Patent 1-5 (Figure 6 and Figure 7) are described. Theseembodiments have the same figures and explanations as those stated in "Re. Compact
Disc Digital Audio System License Agreement" that is attached to the patent appli cation
form as mentioned in B. (A) above (Exhibit Otsu 57) naming <B>, the First -instancePlaintiff, and <D> as the investors.
D. CD-ROM standardization and joint license(A) The First-instance Defendant and Philips established a written standard, Yellow
Book, in 1985 and standardized the CD-ROMs; disclosed a list of the patents, etc. heldby the First-instance Defendant and Philips that are necessary for the manufacturing
and selling of storage media conforming to standards related to optical discs and th eir
reading and writing devices; and started a licensing program (hereinafter referred to as
the "Joint License Program") to jointly license to licensee candidates the products, suchas CD-ROM standards, etc., and the patents necessary for selling in June 1990. As statedin (B) below, under the Joint License Program, Philips was to be in charge of negotiation
for agreements with licensees. As stated in (C) below, in a template of an agreement
related to CD-ROMs (Exhibit Otsu 152) presented by Philips to licensees, there areprovisions stating that the patents subject to licensing shall be "the patent right with theearliest filing date before January 1, 1985 or the patent right with the right of the earliest
filing date" and the patent rights specified as essential patents on the list, in addition to
the patent rights related to CD audios, and the patents subject to licensing shall belicensed non-exclusively. Patent 1-5 was listed as an essential patent under the
aforementioned license program, including Patent 1-1 and Patent 1-2 that are Japanese
patents serving as the basis for priority right, Patent 1-3 before the continuation-in-partapplication was filed, and Patent 1-4 that is a reissue patent of Patent 1-3.
The Joint License Program adopted a so-called open license policy, where a license
is granted under open and non-discriminatory conditions.
(B) Under the Joint License Program, it was determined that Philips would engage in11

administration, such as negotiations for agreements with licensees, receipt of royalties,
etc., and the allocation rate of the royalty would be determined in consideration of theadministration

fees.

However,●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●. Since it was agreed
that the allocation rate to the First-instance Defendant would be ●●●●● (seeAttachment 1 "Appendix 2" "Royalty Matrix" in Exhibit Otsu 51), Philips allocated theroyalties to the First-instance Defendant quarterly since January 1993.
Philips paid royalties to the First-instance Defendant after deducting court-related
costs for lawsuits against persons who manufactured and sold products based on the
CD-ROM standards without obtaining a license under the Joint License Program fromthe royalty allocation amount. For example, according to the report dated December 19,
2003 created by Philips (Attachment 1 in Exhibit Otsu 54), court-related costs (thecourt-related costs include those related to DVD standards as stated below) until 2002
were ●●●●●●●●●●●; the costs were deducted from total royalties for the
portion

to

be

paid

to

the

●●●●●●●●●●●●●●●;First-instanceandDefendant
theinremainingaquarter,amount,●●●●●●●●●●●●●●●, was paid as actual income from the royalties. In
addition, according to the report dated December 29, 2004 (Exhibit Otsu 190), courtrelated costs in 2003 were ●●●●●●●●●●●; the costs were deducted fromtotal royalties for the portion to be paid to the First-instance Defendant in a quarter,●●●●●●●●●●●●●●●;

and

the

remaining

amount,●●●●●●●●●●●●●●, was paid to the First-instance Defendant. In thesame way, according to the report dated December 21, 2005 (Attachment 2 in Exhibit
Otsu 54), court-related costs for full-year in 2005, ●●●●●●●●●●●, werededucted from total royalties for the First-instance Defendant from October throughDecember 2005, ●●●●●●●●●●●●●●●; and then, the remaining amount,●●●●●●●●●●●●●, was paid to the First-instance Defendant.
(C)●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●
12

●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●13

●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●(E) The First-instance Defendant received allocation of the amounts stated in thecolumns for royalties (worldwide) in Attachment 4-1 from Philips as royalties of patents
that the First-instance Defendant holds, including Patent 1-5, for the period from 1993
until 2005 when the patent term of Patent 1-5 expired, concerning the following productcategories: [i] CD-ROM disc, [ii] CD-ROM drive, [iii] CD-R disc, [iv] CD-R drive, [v]CD-RW disc, [vi] CD-RW drive, [vii] Video CD disc, and [viii] Video CD drive.
E. Dissemination of CD-ROMs, investment in CD-ROM-related business by the Firstinstance Defendant, etc.
(A) Concerning CD-ROM standards, the physical format was determined in Yellow
Book between the First-instance Defendant and Philips; however, a logical format was
not determined and CD-ROMs were not compatible. In 1985 and 1986, mainly the Firstinstance Defendant, Philips, Microsoft Corporation, Apple Inc., and other computer
manufacturers and software houses in Japan, U.S.A., and Europe started discussions
towards unification of logical formats. In 1988, the logical format (International
standard, ISO 9660) was unified.
(B) Concerning CD-ROMs, data transmission standards to connect personal computerswith peripheral devices, such as CD-ROM drives, etc., were unified as SCSI in 1986
and as ATAPI in 1998. It became therefore possible to attach a CD-ROM drive topersonal computers easily after the release of Windows 95, and the use of CD-ROMs
expanded for the enhancement of game software and as a supplement for magazines.
The First-instance Defendant built manufacturing factories for CD-ROM discs toreceive entrustment of manufacturing of discs in which these contents were recorded
proactively, prepared to increase production capacity of CD-ROM drive units, enhanced
the lineup of ICs for decoders to be used for reading CD-ROM data, released CD-ROM
search software as software for the e-publication market, manufactured and sold CDROMs on which photographs taken by professional photographers were stored, released14goods to be connected with IBM personal computers in order to enhance CD-ROM
business in the U.S.A., started to produce CD-ROMs by establishing a joint company
with a US company, and made other investments, and also facilitated alliances withcompanies in other business types equipped with CD-ROMs.
(C) The First-instance Defendant held licensee meetings, exhibited and advertised atelectronics shows, and made proactive approaches to the content industry as marketingpromotions concerning CD-ROMs, and also engaged in technical development ofdevices to disseminate standards and provided technical support to licensees.
(D) The First-instance Defendant engaged in research and development and promotions
to improve CD family standards, such as those for CD-Audios, CD-ROMs, CD-Rs, CDRWs, etc.
F. Release of PlayStation Series by SCE and its business development(A) The First-instance Defendant and Sony Music Entertainment (Japan) Inc.
(hereinafter referred to as "SME") established SCE through joint investment on
November 16, 1993. It engages in the development and selling of home video game
consoles and software and in licensing to software manufacturers. SCE became a wholly
owned subsidiary of the First-instance Defendant on April 1, 2004.
(B) On December 3, 1994, SCE released PlayStation Series PS1. Before this home video
game console was released, the "Family Computer" (commonly called, "Fami-con") of
Nintendo had monopolized the home video game console market. Fami-con of Nintendo
adopted a dedicated cartridge, mask ROM, as storage media; however, PS1 adopted a
CD-ROM as storage media which enabled it to process and store high-capacity images
and sounds, as well as to achieve a lower price than Fami-con with mask ROM.
In addition, PS1 increased operational performance (equipped with 32-bit RISC
processor), had a basic design specializing in 3D graphics using polygons (multilateraldata), and was equipped with calculation functions for polygon vertex operations andcoordinate transformations, etc. in its hardware, which made it possible to play 3D
video smoothly. The graphics technology adopted by PS1 was created using "System
G" technology, which the First-instance Defendant had developed for broadcastingstations, as a prototype.
In addition, PS1 had a different controller from existing gaming consoles (flat shapewith press buttons) and adopted a controller to be gripped by both hands so that thefingers of both hands could be used.
(C) SCE, as distinct from Nintendo, adopted an open method in relation to thedevelopment and supply of game software, provided development equipment at a low
price, and thereby made it easier for software manufacturers to newly enter the market.
15

In addition, concerning the distribution and selling of game software, SCE did not adopt
the indirect and multi-step distribution method that Nintendo had adopted, but adopted
a method to distribute software directly into the market in order to prevent pricecollapse and to enable appropriate inventory control.
These SCE strategies focused on software were successful and the new releases of"Dragon Quest," "Final Fantasy," and other popular software were made compatible
with PS1. As a result, 3 million units of PS1 were sold in Japan in 1996. PS1 accounted
for 45% of the market, and it achieved a shipping volume of 70 million units worldwide
in 1999.
In addition, SCE reduced the number of components and adopted cost -reduction
measures to lower the price of the gaming console body. It also sold popular editions
and low-end versions of the PS series and further increased the number of units sold(concerning the sales of PS2, they are as indicated in (3) F. (B) below.).
(D) On December 29, 1995, the First-instance Defendant agreed to [i] license to SCE
concerning patents (the patent rights (including Patent 1-5 and Patent 2-1) and utility
model rights (including rights in application procedures) that are helpful for the
manufacturing and selling of the "System" (home video game consoles and computersand relevant equipment thereto that are sold with the trademark, "PlayStation," homeuse application software that operates on the PlayStation and that is recorded on CD ROM media, devices, etc. for the development of said software) held by the First instance Defendant concerning the manufacturing, selling, or development, etc. of the"System"duringtheagreement

period

and

SCE

pays

●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●

ascompensation (hereinafter referred to as the "SCE License Agreement").
The First-instance Defendant received payment of royalties (for the portion in the
U.S.A.) as stated in Attachment 4-4 from SCE for the period from April 1, 1995 until
March 31, 2005 in the fiscal year including the day when the patent term of Patent 1-5
expired (March 22, 2005).
G. Payment of incentive remuneration for employee inventions by the First-instance
Defendant(A) The First-instance Defendant started manufacturing and selling of CD-ROM drives
to work the invention stated in Claim 7 of Patent 1-5 and CD-R drives to work theinvention stated in Claims 1 and 5 of said patent at least by around 1990.
16

(B) Around July 27, 2006, the First-instance Plaintiff submitted to the First-instance
Defendant a written recommendation (Exhibit Otsu 11) to seek payment of incentive
remuneration for employee inventions concerning Patent 1-5. In the First-instance
Defendant's Invention and Device Rules (Exhibit Otsu 37) and international regulations(Exhibit Otsu 46) at that time that were applied to the incentive remuneration for
employee inventions, there are provisions concerning the incentive remuneration for
employee inventions that, as a result of examination by scoring them based on thesummary,●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●,

when

the

Examination Committee determines that it fulfills the standards, incentive remunerationofemployeeinventions,●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●, is paid based on the total evaluation points; and [ii] concerning
employee inventions that became subject to the incentive remuneration in and after
fiscal

year

1997,

the

First-instance

Defendant●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●.
(C) As a result of examination based on the self-appointment by the First-instancePlaintiff, the First-instance Defendant evaluated the incentive remuneration for
employee inventions for Patent 1-5 to be Class 2 and paid to the First-instance Plaintiff●●● yen on December 18, 2006.
(3) Patent 2-1
A. Details, etc. led to the invention(A) In 1994 when the sale of DVDs began, standards and specifications for the productsof manufactures varied. Subsequently, there were movements towards the unificationof the standards and specifications, and in December 1994, MMCD (Multi-media
17Compact Disc) standards that the First-instance Defendant and Philips announced andSD (Super Density Disc) standards that Toshiba, etc. announced were competing. As anerror-correcting system for DVDs, the MMCD side, including the First-instance
Defendant, etc., supported the use of CIRC plus (improved CIRC to block -completiontype) and the SD side supported the use of block-completion type iterated codes.
The MMCD side and SD side agreed to hold a meeting towards the unification of
DVD standards on September 15, 1995 and the standards were unified by including thesuggestions of both sides. On December 8, 1995, unified DVD standards wereannounced as a joint proposal of both sides. The organization for the establishment ofthese standards was renamed to become the DVD Forum, including the First -instance
Defendant and Philips, etc., in August 1997.
(B) The First-instance Plaintiff was in the position of Director of ESPER Research
Room that had no relationship with DVDs at the time in 1995; however, since the
MMCD side was inferior in the competition for DVD standards, the First-instancePlaintiff looked ahead and considered not only use for videos, but also use forcomputers; considered that it would be necessary to create a format that can be achieved
using both CIRC plus under MMCD standards and block-completion type iterated codes
under SD standards; and conceived of a format where high-speed access was achievedby creating a sector structure with error-correction encoded addresses concerning theerror-correcting system, where multiple sectors were collected to form a block, errorcorrection was encoded by said unit, thereby making it possible to also correct burst
errors.
The First-instance Plaintiff held discussions concerning the idea with <G>, who was
engaged in the development of magneto-optical disk drives at the First-instance
Defendant at that time, and <F>, who was involved in MMCD standards, and compiled
six ideas including [i] a format that has a header in which the address signal is recorded
for each predetermined sector interval and the error-correction block can be divided foreach sector interval; [ii] a format where it is designed to synchronize with the frame sothat errors can be corrected and detected and error-correction is encoded by LCD codes;[iii] a format where address and data are deemed to be one block in wh ich address has
an error detection number that completes in one block and data has an error correction
block that is completed in multiple blocks; [iv] a format comprised of a header frame
where a sector consists of one frame and a data frame consisting of other multiple
frames; [v] a format that can share and switch CLV (constant linear velocity) and zone
CAV (constant angular velocity); and [vi] a format that is compatible with the existing
CD-ROM format. The First-instance Plaintiff was responsible for the creation and18submission of these invention reports for [i] and [ii], <F> was responsible for [iii]through [v], and <G> was responsible for [vi] respectively.
B. Details, etc. led to the registration(A) As stated in (2) B. (A) above, according to the regulations for the First-instance
Defendant's Invention and Device Rules, there is a provision that if an employee makes
an employee invention, the employee shall immediately report it to the superior before
announcing it externally and shall transfer the right to receive registration of industrial
property rights registration to the First-instance Defendant.
In April 1995, the First-instance Plaintiff submitted two invention reports related to(3) A. (B), [i] and [ii] above to the First-instance Defendant, and <F> submitted
invention reports related to [iii] through [v] (Invention Report 1 for [iii] and Invention
Report 2 for [v]) to the First-instance Defendant respectively. <G> did not complete an
invention report related to [vi] and therefore, <F> submitted Invention Report 3 to theFirst-instance Defendant on May 8, 1995. In the inventor column in Invention Report
1, Invention Report 2, and Invention Report 3 above, only the name of <F> was stated.
(B) Around May 1995, the First-instance Plaintiff received consultation from the person
in charge from the Patent Department of the First-instance Defendant concerning
Invention Report 1 that there was no inventive step in the details and the application
could not be filed. In order to clarify the difference from prior art, on May 15, 1995,
the First-instance Plaintiff created and submitted to the First-instance Defendant,
Invention Report 4 stating "Data recording method and media" in the column for theinvention title and "Data recording method that has a preformed header unit for eachpredetermined unit, forms error-correction encoded data with multiple pieces of the unit
as a block, switches the zone for each predetermined unit of the header unit, and offers
high-speed access and can achieve high-capacity recording, and storage media formedin that way" in the column for outline of the invention. In the inventor column in said
invention report, the First-instance Plaintiff was named as the lead inventor and then inorder of <G> and <F> at first. Then, it was amended to switch the order of the Firstinstance Plaintiff and <F> by adding a hand-written arrow to assign <F> as the leadinventor.
(C) On May 25, 1995, the First-instance Defendant combined Invention Report 1 with
Invention Reports 2, 3, and 4, and determined to file one patent application as aninvention titled "Optical disc record reading format." The First-instance Plaintiff, <F>,and <G> transferred the right to receive the patent for the inventions related to the
Patent filed in Japan in question (the "Patent Filed in Japan") and inventions related toPatent 2-1 and Patent 2-2 that are overseas patents for the Patent Filed in Japan around19

that time.
A meeting on the invention related to the Patent Filed in Japan was held on May 25,
1995 at the office of patent attorney <N> and the meeting was held with said patent
attorney as well as <F>, who was named as the lead inventor, and <O> from the Patent
Department.
(D) The First-instance Defendant filed a patent application (Patent Application No.
1995-136329) with the Japan Patent Office concerning an invention related to the Patent
Filed in Japan titled "Data recording disc" on June 2, 1995. The Patent Filed in Japan
included divisional applications (Patent Application No. 2003-312127, Patent
Application No. 2006-36416, and Patent Application No.2006-327318), but theapplication was refused on the grounds that it lacked an inventive step by using, as
reference, inventions stated in prior art documents (Unexamined Patent Application
Publication No. 1986-182676, Unexamined Patent Application Publication No. 1994195878, and Unexamined Patent Application Publication No. 1995-130092, etc.).
Therefore, the First-instance Defendant filed an appeal against the examiner's decision
concerning the original application and part of the divisional applications; however, theFirst-instance Defendant received the examiner's decision of refusal, and said decisionbecame final and binding.
(E) On May 29, 1996, the First-instance Defendant filed a patent application related toPatent 2-1 with the US Patent and Trademark Office using the Patent Filed in Japan as
the basis for priority right, and on April 11, 1997, the First-instance Defendant filed apatent application related to Patent 2-2 using the divisional application for Patent 2-1.
Patent 2-1 was registered on September 8, 1998 and Patent 2-2 was registered on
October 12, 1999.
C. Technical meaning, etc. of Invention 2-1(A) Invention 2-1 responds to a problem to realize a data recording disc resistant toburst errors and capable of rapid access without decreasing disc recording capacity, andincludes the following in the particulars for identifying the invention: the invention
related to Claims 1, 4, and 5 is characterized by the fact that the first code to detect anaddress error is completed in the first field and that the second code to correct a data
error is completed in multiple sectors; and the invention related to Claims 2, 3, 6, and
7 is a zone CAV method recording disc or data recording device.
Patent 2-1 achieves high-speed access and high-error correction capacity that is
resistant to burst error, etc. and it is a format optimized for both computer and video
use and it can be achieved not only in recording media, but also in read -only media.
(B) The claims related to Patent 2-1 contain a statement that enables data recording20

discs and their recording devices, etc. to belong broadly to the technical scope of thepatent. As stated in D. below, Patent 2-1 is subject to the licensing of various DVD
standards.
In addition, the first-instance Defendant disclosed Patent 2-1 on a website as an
essential patent for the following product categories: [i] DVD-ROM, DVD-Audio, [ii]DVD-R/-RW/RAM/+R/+RW Drive, and [iii] DVD-R/-RW/RAM/+R/+RW Disc.
In light of these circumstances, although application for Patent 2-1 was refused asa Japanese patent, it is found to be an essential patent for DVD standards.
D. License programs(A) 3C License Programa. On November 24, 1997, the First-instance Defendant concluded a joint licenseprogram (hereinafter referred to as "3C License Program") with Philips to license
jointly with Pioneer Corporation the patent related to DVD standards held by the First instance Defendant and Philips. Under this license program, the patent subject tolicensing held by the First-instance Defendant would be licensed to Philips with the
sub-licensing right; however, Patent 2-1 was listed as a patent subject to licensing forthe following product categories: DVD+R disc, DVD+RW disc, DVD+RW/+R recorder,
DVD-R disc, DVD-RW disc, DVD-R/-RW recorder, and DVD-video/ROM disc. In
addition, under the 3C License Program, from among royalties that licensees paid,●●●●●●●● per DVD-ROM disc was allocated from Philips to the Firstinstance Defendant as royalties for the standard essential patent held by the Firstinstance Defendant (see Attachment 1 "DVD-Video and DVD-ROM Agreement,""Article 3," in Exhibit Otsu 231).
In the same way as the Joint License Program as defined in (1) E. (A) above, the 3C
License Program adopted the so-called open license policy, where a license is granted
under the open and non-discriminatory conditions.
b. Under the 3C License Program, in the same way as the Joint License Program definedin (1) D. (B) above, Philips deducted the court-related costs concerning lawsuits against
persons who manufactured and sold products related to DVD standards withoutobtaining a license under the 3C License Program, from the royalty allocation amountand made payments to the First-instance Defendant (the amounts required for courtrelated costs are stated in the columns for "DVD Video/ROM player" and "DVD Video/ROM disc" of Attachment 1 "Litigation costs regarding DVD" in Exhibit Otsu
54 for fiscal year 2003, and of Attachment 2 "the costs of litigation related to the sharefor Sony Corporation ... regarding:" in Exhibit Otsu 54 for fiscal year 2005, and in thecolumns for DVD standards listed in "Litigation costs in EUR regarding:" in Exhibit21

Otsu 190 for fiscal year 2004 respectively).
c. The First-instance Defendant received allocation of the amounts stated in the column
for "Royalties (worldwide)" in Attachment 4-3 "3C License Program" for the following
product categories: [i] "DVD-ROM Disc," [ii] "DVD Video Disc," [iii] "DVD
Recordable Disc," and [iv] "DVD Recordable Drive" as the royalty allocation amountof subject patents, including Patent 2-1, from Philips concerning 3C License Program
for the period from 1999 through June 2016.
(B) One-Red License Programa. One-Red, LLC started providing joint patent license of DVD products on July 1, 2012and started providing joint patent license of DVD software products on October 15,
2012 (hereinafter referred to as the "One-Red License Program"). Under this licenseprogram, Patent 2-1 was listed as a patent subject to the licensing of product categories
of DVD-ROM disc and DVD-Video disc.
b. The First-instance Defendant received allocation of the amounts stated in the column
for "Royalties (worldwide)" in Attachment 4-3 "One-Red License Program" for thefollowing product categories: [i] "DVD-ROM Disc" and [ii] "DVD Video Disc" as theroyalty allocation amount of subject patents, including Patent 2-1, from One-Red LLC
concerning One-Red License Program for the period from 2012 through June 2016.
(C) One-Blue License Programa. One-Blue, LLC started to provide joint patent license, including essential patent, etc.
for Blu-ray Disc (hereinafter referred to as 'BD') products on July 1, 2011 as a patentpool formed by more than ten licensers, including the First-instance Defendant(hereinafter referred to as "One-Blue License Program"). Under this license program,
Patent 2-1 was listed as patent subject to product categories of DVD-RAM, DVD-RW,
DVD+RW, DVD+R, and DVD-R.
b. The First-instance Defendant received allocation of the amounts stated in the column
for "Royalties (worldwide)" in Attachment 4-3 "One-Blue License Program" for thefollowing product categories: [i] "BD Recorder" and [ii] "BD Recorder Drive" asroyalty allocation amount of subject patents, including Patent 2-1, from One-Blue, LLC
concerning One-Blue License Program for the period from 2012 through June 2016.
E. Dissemination of DVD standards and investment in DVD standard-related businessby the First-instance Defendant(A) The DVD Forum is divided into working groups for DVD video application, DVDROM physical standards, DVD-RAM physical standards, DVD-R/RW physicalstandards, etc. Many companies from Japan, Europe, and the U.S.A., including theFirst-instance Defendant, participated in the forum and held technical discussions, and22

established standards. The DVD Forum established DVD-ROM physical standards, aswell as physical formats of DVD-R (1997), DVD-RAM (1997), and DVD-RW (1999)
respectively.
(B) In March 2001, with the initiative of Philips, seven companies, including the Firstinstance Defendant, organized "DVD+RW Alliance" that is different from the DVD
Forum and started to promote new standards for rewritable DVDs (DVD+RW). In
addition, the "DVD+RW Alliance" established the DVD+R standards as standards forrewritable DVDs.
(C) The First-instance Defendant and its affiliated companies made a large amount ofinvestment in overseas production bases, such as the U.S.A., Malaysia, Taiwan,
Australia, Mexico, Hungary, etc., in addition to Japan, in order to respond to expanding
demand for DVDs mainly in North America and Europe; and also built new factories
for red semiconductor lasers to be used for DVD players, etc.
Along with Taiyo Yuden Co., Ltd., the First-instance Defendant developed DVD-R;
sold optical pickups for DVDs and portable DVD players; released DVD-RW methodcompatible personal computers; produced and released DVD video players compatible
with both DVD-RW and DVD+RW; developed a large-scale integrated (LSI) circuitcompatible with MPEG2, which is an international standard for compression andelongation of videos, where video calculation functions and compression devices arecompiled into one chip, a large-scale integrated (LSI) circuit that output sound, whichis called "5.1 channel," from DVD, etc., and a semiconductor that emits two types oflasers necessary for DVD recording and reading from one chip; and also entered theDVD recorder business on a full scale.
In addition, in 1998, the First-instance Defendant engaged in activities with SME,
which is a group company of the First-instance Defendant, for the promotion of DVD
standards, such as engaging in the entrusted business of creating DVD-ROMs, etc. thatcan be used for the sales promotion of new products and company guide, et c.
F. Release of PlayStation 2 (PS2) by SCE and its business development(A) In April 1999, the First-instance Defendant and SCE invested 120 billion yen andestablished a joint company with Toshiba to produce processors towards thedevelopment of the next generation of PS. In addition, SCE cooperated with the Firstinstance Defendant, invested 70 billion yen, and established a new company to produce
graphics chips for the next generation devices.
(B) SCE released PS2 on March 4, 2000 (on October 26, 2000 in North America). PS2
can use DVD-ROMs in addition to CD-ROMs on which existing games are stored; as
it is equipped with a DVD-Video player, it can also be used for viewing movies. In
23

addition, PS2 has an IEEE1394 (iLINK) terminal, in addition to USB and PC card TypeIII slot; it is compatible with the next generation network; and it can respond to thedigital market, such as DVDs and internet distribution. An affiliated company of theFirst-instance Defendant (Sony Computer Entertainment of America) started to provide
online games in the U.S.A. on August 27, 2002.
CPU (Emotion Engine) mounted on PS2 is equipped with 300Mhz RISC processor,
which was jointly developed with Toshiba. Its data transmission speed is 3.2GB/sec.
and a drawing performance of 75,000,000 polygons/sec. was achieved thanks to thedevelopment of a chip on which 4 megabytes DRAMs are integrated jointly with
Toshiba for its graphic chip.
More than 150 software manufacturers expressed their entry into the market related
to PS2 on the announcement of release of PS2 and, in July 2001, a game software for
PS2, "Final Fantasy X," reached sales of more than 2 million pieces. 10 million unitsof PS2 main body were shipped throughout the world by March 2001. Its shipping
quantity in the world reached more than 20 million units by October 2001 and 40 million
units by September 2002.
(C) SCE released a portable gaming console, PSP, on December 12, 2004 (on March 24,
2005 in North America). Games can be enjoyed on a PSP by using dedicated UMD anddownload games are digitally distributed.
PSP adopted a 4.3-inch mobile ASV liquid crystal display and UMD memory stick
PRO Duo interface, which draws graphics with a quality close to PS2, and is equippedwith a multimedia viewing function, Wi-Fi, and a web browser, and therefore, it
succeeded in securing its position as a multimedia terminal.
PSP's UMD disc belongs to the technical scope of Patent 2-1.
(D) The First-instance Defendant received payment of royalties (for the portion in the
U.S.A.) as stated in Attachment 4-4 from SCE based on the SCE License Agreement
for the period from April 1, 1998 until March 31, 2017, which is the fiscal year
including the day when the patent term of Patent 2-1 expired (May 29, 2016).
G. Payment of incentive remuneration for employee inventions by the First-instance
Defendant(A) The First-instance Defendant started manufacturing and selling a DVD-RAM
recorder, in which the invention stated in Claims 1 through 7 of Patent 2 -1 is worked
no later than October 9, 2004.
(B) In the First-instance Defendant's Invention and Device Rules (Exhibit Otsu 32) andinternal rules (Exhibit Otsu 44) at the time in October 2004,
concerning

incentive

remuneration
24

forthere were provisions

employeeinventions,

●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●
based on summary ….
(C) The First-instance Defendant evaluated incentive remuneration for Patent 2-1 to be●● and paid ●●● yen to the First-instance Plaintiff on December 17, 2004.
2. Patent 1-5(1) The amount of profit that the First-instance Defendant should receive fromInvention 1-5 (Issue 1-1)
A. Joint License Program(A) Royalty allocation amountUnder the Joint License Program, the royalties that the First-instance Defendantreceived are as stated in No. 2, 2. (5) A. (B) of the judgment in prior instance (after
correction) related to the citation.
a. From fiscal year 1993 through fiscal year 2002
In the Joint License Program, there are the following provisions (hereinafterreferred

to

as

the

"Provisions")●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●
25

●●●●●●●●●●●●●●●●●●●●●●●●●●●●●● (1. (2) D.
(C) above). According to the Provisions, the royalties that licensees pay under the Joint
License Program can be considered to be compensation for the use of patents subject tolicensing in the world.
Based on the above, it is necessary to identify patents subject to licensing in theworld; however, as stated below, the analysis and work therefor are difficult and it is
impossible to identify the patents accurately. In other words, in the list of patents subject
to CD-ROMs (corresponding to (ii) in Attachment 2 of "1.21 Subject Patents") in theagreement on the Joint License Program (Exhibit Otsu 152) that was used from around1991 through 2002, as patents related to error-correction, Patent 1-1 and Patent 1-2 arelisted as base patents for priority right and Patent 1-3 and Patent 1-4 as US patents
respectively (Exhibits Otsu 153 and 154); and patents other than the above for which
Patent 1-1 and Patent 1-2 are the basis for priority right (hereinafter these patents
outside Japan for which Patent 1-1 and Patent 1-2 are the basis for priority right arereferred to as "family patents" in some cases) are not listed (in the aforementioned lists,
there is a note that "All patent family applications, patent applications, divisional
applications, continuation applications, and reissue based on any patent applications orpatent rights on this list are included as essential parts of this list." there are the samestatements on the list in 2003 and after as stated below) and, therefore, Patent 1 -5, which
is a continuation-in-part application of Patent 1-3 is a subject patent). On the other hand,in the list of patents subject to CD-ROMs in the agreement used in 2003 and after(Exhibits Otsu 161 and 162), Patent 1-1 and Patent 1-2 that are Japanese patents, andPatent 1-4 and Patent 1-5 that are US patents are listed (on the list of Exhibit Otsu 161,
Patent 1-2 and Patent 1-4 are listed); and, at least, UK patents ("Grant NR2156555" of"Country GB" (Exhibit Ko 127)), Canadian patent ("Grant NR125771" of "CountryCA" (Exhibit Ko 128)), and Australian patent ("Grant NR584833" of "Country AU"(Exhibit Ko 129)), for which Patent 1-1 and Patent 1-2 are the basis for priority right,
are listed; and there are statements of titles of the same patents in the columns forAustria, Belgium, Brazil, Switzerland, Czech, Denmark, France, Hong Kong, Italy,
South Korea, Holland, Sweden, Singapore, Slovakia, and Ukraine. Therefore, they arepresumed to be patents for which Patent 1-1 and Patent 1-2 are the basis for priority
right. As mentioned above, it is presumed that the list of subject patents under the Joint
License Program adopted either a method where the US patent is used as arepresentative patent (approximately from 1991 through 2002) or a method to list Patent
1-1, Patent 1-2, and their family patents exhaustively to an extent (in 2003 and after);however, it is difficult to identify specific subject patents throughout the period.
26

In addition, in an agreement under the Joint License Program used for the period
approximately from 1991 through 2002, concerning CD-ROM players, the standard
essential patents that are stated in the list of Attachment 2 of said agreement ([a]) andpatents related to CD audio players as stated in Attachment 1 of said agreement ([b])
are included. However, there are provisions stating that the patents are not limited
thereto ([c]) (there are the same provisions for other standards) and patents related to[c] are not stated in the list. Therefore, it is extremely difficult to analyze the numberof patents corresponding to [c]. In this regard, the First-instance Defendant alleged
before that the number of patents related to [b] and [c] is 2,509 that were extracted bya search using IPC categories; however, many patents that are not related to music CDs
are included by this method (see Exhibit Ko 236) and it is difficult to adopt theallegation. In this instance, the First-instance Defendant also alleged by listing patents
that possibly fall under [c] as stated in Attachment 1 of this judgment by limiting themto US patents. Therefore, there is no way to identify the number of patents throughout
the world.
Meanwhile, since Patent 1-5 is a US patent, it is true that the royalty allocation
amount must be limited for the portion in the U.S.A. If it is possible to ascertain thenumber of patents including CD-related patents in the U.S.A. as patents subject to thelicensing of CD-ROMs and the royalties for the portion in the U.S.A. according to the
purport of the Provisions, it should be said that the adoption of the theory to cons ider
US patents as a standard is not against the purport of the Provisions. In particular, inconsideration of the aforementioned circumstances in this case, it is found to be themost appropriate calculation method in this case to adopt the theory to cons ider US
patents as a standard, identify patents subject to licensing in the U.S.A., and estimate
the royalty allocation amount for Patent 1-5 based on the percentage that Patent 1-5
contributed to said subject patents. The first-instance Defendant also does not argue
about dividing the royalties (worldwide) allocated to the First-instance Defendant byPhilips into the portion for manufacturing and the portion for selling, and 15% of theformer portion and 25% of the latter portion are to be presumed to be the portion in the
U.S.A.
b. Next, Philips paid royalties to the First-instance Defendant after deducting the courtrelated costs concerning persons who manufactured and sold products conforming to
the CD-ROM standards without obtaining a license from the royalty allocation amount,as a part of the administration under the Joint License Program (1. (2) D. (B) above).
Therefore, the court-related costs must be deducted from the royalties. However, since
they were matters a long time ago and all data was not prepared, when calculating the27specific amount, it is reasonable to estimate the percentage of court-related costs ineach fiscal year by referring to the percentage of court-related costs in fiscal years forwhich data was submitted.
Based on the above, as stated in 1. (2) D. (B) above, [i] the court-related costs forfiscal year 2002 were ●●●●●●●●●●● and total royalties of the Firstinstance Defendant for the period from October through December 2002 were●●●●●●●●●●●●●●●, and therefore, the percentage of court-related
costs converted on an annual basis is ●●●●; [ii] the court-related costs for fiscal
year 2003 were ●●●●●●●●●●● and total royalties of the First-instance
Defendant

for

the

periodfrom

Octoberthrough

December

2003

were

●●●●●●●●●●●●●●●, and therefore, the percentage of court-related
costs converted on an annual basis is approximately ●●●●●; and [iii] the courtrelated costs for fiscal year 2005 were ●●●●●●●●●●● and total royalties of
the First-instance Defendant for the period from October through December 2005 were●●●●●●●●●●●●●●●, and therefore, the percentage of court-related
costs converted on an annual basis is approximately ●●●●●.
In light of these circumstances, it is reasonable to estimate that the court -related
costs accounted for the royalties from fiscal year 1993 through fiscal year 2002 are●● and that in fiscal year 2003 and after are ●● and to deduct them from the totalroyalty for the First-instance Defendant in each fiscal year.
c. Based on the above, royalties that the First-instance Defendant received for eachproduct category are as shown in the column for "Outstanding amount after deductionof court-related costs" in Attachment 4-1.
(B) Contribution percentage of Patent 1-5
a. From fiscal year 1993 through fiscal year 2002
Agreements that were used from fiscal year 1993 through fiscal year 2002
concerning the Joint License Program had provisions concerning CD-ROM players thatstandard essential patents that are stated in the list of Attachment 2 (omitted theattachment) ([a]) and patents related to CD audio players listed in Attachment 1(omitted the attachment) ([b]) are included; however, they are not limited to patents
listed in Attachment 1 ([c]), and there are the same provisions for other standards, suchas those for discs, etc. (1. (2) D. (C) above).
There are no disputes between the parties concerning the number of US patents ([a])
from among standard essential patents for CD-ROM discs, CD-ROM players, CD-R
discs, CD-R drives, CD-RW discs, CD-RW drives, Video CD discs, and Video CD
players that are included in the list of Attachment 2 of each agreement, and the number28

of US patents ([b]) from among patents related to CD audios (players, etc., discs) for
each standard listed in Attachment 1 (the lists of CD audio-related patents for eachproduct standard: Exhibits Otsu 153 through 159); however, there are disputes between
the parties as stated in Attachment 1 of this judgment concerning patents that are notincluded in the list in Attachment 1 ([c]). According to the tenor of the license
agreement, the patents related to [c] need to be related to CD audios. As stated in thecolumn for "Judgment of this court" in said Attachment 1, concerning No. 5 "Releasable
cover locking device" (US4412320A) and No. 8 "Optical reproducing apparatus"(US4592038A) from among patents that the First-instance Defendant alleged to fallunder [c], they are expected to be worked or are able to be worked for CD audio players
and therefore, they are determined to fall under [c]. However, other patents are notrelated to CD audios.
Based on the above, the contribution percentage of Patent 1-5 by product category
is examined below. As it is found in 1. (2) A. above, CD-ROM discs and theirderivatives, i.e., CD-R discs, etc., are based on the standards for music CDs andstandards for patents related to discs have been established. Accordingly, it is presumed
that most patents related to [b] which are related to CD audio (discs) are patents related
to formats that have no other choice. Therefore, it is reasonable to consider that patents
related to [a], which are the standard essential patents for CD-ROM discs, etc., and thepatents related to [b], which are related to CD audio (discs), have the same value.
On the other hand, concerning CD-ROM players and their derivatives, i.e., eachdrive-related product, the EFM patents related to the modulation system (US patent
4501000) and CIRC patents related to error-correction (US patent 4413340), fromamong patents related to [b] for CD audio (players, etc.), are also essential patents f or
the drives and have major value. However, patents related to other drives are different
from discs and most of them are presumed to include selectable patents at each company.
The patents related to [a] for CD-ROM drives, etc. and the EFM patents and CIRC
patents, from among patents related to CD audios (players, etc.) ([b]), have the samevalue as patents under the license; however, it is reasonable to calculate the contribution
percentage by considering that other patents in [b] have 0.5 of the value of standard
essential patents for CD-ROM drives, etc. and that patents related to [c] have 0.1 of thevalue of patents of [a], etc. since all the patents related to [c] are patents that are worked
or have possibility to be worked only.
The First-instance Plaintiff alleged that Patent 1-5 has high technical value to theextent that it achieved high error-correction that was not achieved with CIRC and madeit possible to use CD-ROMs as computer storage and, therefore, the patent subject to29

licensing has a value of three times more than the contribution percentage that was
obtained through correction as stated above. However, all standard essential patents are
related to the technology that has no choice due to the product standards and there is noevidence to find that Patent 1-5 alone has higher technical value than other standard
essential patents.
Based on the above, the contribution percentage of Patent 1-5 for each productcategory is shown in the table below.
Product category

PatentContribution
percentage

CD-ROM Disc

CD-ROM Drive

CD-R Disc

CD-R Drive

CD-RW Disc

CD-RW Drive

Video CD Disc

Video CD Player[a]

3 cases[b]

6 cases[c]

0 cases[a]

4 cases[b]

75 cases[c]

2 cases[a]

6 cases[b]

6 cases[c]

0 cases[a]

5 cases[b]

64 cases[c]

2 cases[a]

8 cases[b]

4 cases[c]

0 cases[a]

5 cases[b]

64 cases[c]

2 cases[a]

6 cases[b]

7 cases[c]

0 cases[a]

9 cases[b]

72 cases[c]

2 casesb. From fiscal year 2003 through fiscal year 2005

30

1/9

1/42.7

1/12

1/38.2

1/12

1/38.2

1/13

1/46.2

Concerning the Joint Program, in the agreement used with licensees in fiscal year
2003

and

after,●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●● the number of subject patents in each product category in fiscal year 2003
and after include patents in [a] alone in the table above, and patents in [a] are standard
essential patents in each product category, and therefore, as explained in a. above, theyshould be considered to have the same value as Patent 1-5.
(C) Summary
Based on the above, the results of multiplying the outstanding amount after the
deduction of court-related costs by the contribution percentage of Patent 1-5 are asstated in the column for "Exclusive profit from Patent 1-5" in Attachment 4-1.
B. SCE License Agreement(A) As stated in 1. (2) F. (B) above, PS1 gaming console main body is equipped with a
CD-ROM player and its game disc is a CD-ROM disc. Therefore, PS1 gaming console
main body and game discs for PS1 games are products subject to licensing under the
Joint License Program. In addition, as stated in 1. (3) F. (B) above, PS2 gaming console
main body can also read CD-ROM game discs. Therefore, PS2 gaming console main
body is a product subject to licensing under said license program.
Article 35, paragraph (4) of the Former Patent Act stipulates that the amount of
reasonable compensation for employee inventions shall be determined in considerationof the "amount of profits that the employer, etc. should receive" from the invention andthe contribution degree of the employer, etc. for achievement of the invention. The
expression, "amount of profits that the employer, etc. should receive" provided for bysaid paragraph refers to the amount of profits that are objectively expected for theemployer, etc. when succeeding to the rights and it is understood that this is not limited
to the profits actually received by working the invention, but includes cases of self working, etc. and refers to exclusive profits that the employer, etc. could have received
originally.
Based on the above, it is examined as follows. SCE is a company that the First instance Defendant and SME jointly invested and established (1. (2) F. (A) above). If
the First-instance Defendant concluded a cross-license agreement with Philips forpatents held by each party concerning the manufacturing and selling of the PlayStation
series, SCE would have become an affiliated company of the First-instance Defendantthat does not have to pay royalties again under the Joint License Program, and the
profits that the First-instance Defendant received under the cross-license agreement31

would have been "the amount of profits that the employer, etc. should receive."
However, even examining all articles of evidence in this case, it is insufficient to findthat the First-instance Defendant concluded a cross-license agreement with Philips
concerning the manufacturing and selling of the PlayStation Series. It is rather foundthat the First-instance Defendant concluded a license agreement (SCE License
Agreement) with SCE for licensing patent rights, etc. (including Patent 1-5 and Patent2-1) held by the First-instance Defendant that are helpful for manufacturing, selling,developing, or otherwise handling the PlayStation Series, gave favorable treatment to
SCE over other licensee companies, and received compensation from SCE.
In this way, since the First-instance Defendant treats SCE not as an affiliatedcompany under the Joint License Program, but as a licensee concerning the
manufacturing and selling of the PlayStation Series that are products subject tolicensing under said program, which is operated jointly with Philips, according to thefact that the program adopts a so-called open policy to grant licenses under open andnon-discriminatory conditions (1. (2) D. (A) above), the exclusive profits that the First instance Defendant could have received for the manufacturing and selling of PS1
gaming console main body and game discs and PS2 gaming console main body shoul dbe the amount calculated based on the royalty amount that is obtained by multiplying
the amount calculated by the royalties determined under said license program by theallocation rate for the First-instance Defendant (hereinafter referred to as the "Virtual
Accumulation Method") based on the assumption that SCE received a license for the
manufacturing and selling of the PlayStation Series from Philips. Therefore, said
exclusive profits do not have be limited to the profits that the First -instance Defendantactually received under the SCE License Agreement.
In addition, the First-instance Defendant alleged that even if the Virtual
Accumulation Method is adopted, in cases where patents are licensed to groupcompanies that have a capital relationship, in comparison with the relationship with athird party (including competitors) that has no capital relationship, it is natural thatgroup companies are treated favorably to an extent, in terms of royalties and otherconditions, and the royalties under the Joint License Program are not applied to the SCE
License Agreement without making any changes. In response to this allegation, theFirst-instance Plaintiff alleged not to dispute to the extent of multiplying royalties by
80%. In consideration of the fact that SCE has a capital relationship with the Firstinstance Defendant, this court also considers that the degree of favorable treatment on
the conditions to this extent is not unreasonable and calculates the profits as follows.
a. The prices of PS1 gaming consoles for each subject period from the release date of32

PS1 until the expiration date of Patent 1-5 are as stated in the left column of Attachment
3, Table 1-1 "PS1 gaming console main body prices" (Exhibit Ko 295). Said prices arestated in US dollars. The prices of said console in yen based on the average foreignexchange rate during said period (Exhibit Ko 296) are as stated in the right column ofsaid table "PS1 gaming console main body prices." There are no disputes between theparties that the percentage of the number of PS1 gaming console main bodies sold in
the U.S.A. during the subject period (Exhibit Ko 297) from which the portions in
Canada and Mexico are excluded is estimated to be 89%. Accordingly, the number of
PS1 gaming console main bodies sold during the subject period is as stated in thecolumn for "The number of PS1 gaming console main bodies sold in North America(10,000 units) × 89% (sales volume in the U.S.A.)" in said table. In addition,●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●● the royalty amount that the Firstinstance Defendant should receive is as stated in the column for "Royalties that shouldbe paid to the First-instance Defendant" in said table; however, as stated above, theamount equivalent to 80% of said amount is the royalty amount that the First -instance
Defendant should receive during each subject period (see the column for "[i] Profitsthat the First-instance Defendant should receive" in Attachment 4-2 "PS1 gaming
console (related to Invention 1-5)").
The contribution percentage of Patent 1-5 under the Joint License Agreement fromamong subject patents for CD-ROM players is, as stated in the column for "CD-ROM
Drive" in A. (B) above, 1/42.7 (technically, for the period corresponding to fiscal year
2003 and fiscal year 2004 (from April 1, 2003 through December 31, 2004) from among
the column for "2002.7.1 to 2004.12.31" in Attachment 4-2 "PS1 gaming console(related to Invention 1-5)," 1/4 should be used for calculation; however, the Firstinstance Plaintiff calculated by setting the contribution percentage concerning royalties
for the period of "July 1, 2002 through December 31, 2004" to be 3/13.4 collectively inthe same way as that for the period until fiscal year 2002 (see the Appeal of the First instance Plaintiff, 12th brief, page 61); however, it is difficult to identify the sales
volume in this period by dividing as of April 1, 2003 and it is not a disadvantageous
calculation to the First-instance Defendant; therefore, the First-instance Plaintiff's
calculation method is adopted for the calculation.). When multiplying said contribution
percentage, the exclusive profits that the First-instance Defendant should receive are as
33

stated in the column for "[ii] Profits that the First-instance Defendant should receivefor Patent 1-5" in Attachment 4-2 "PS1 gaming console (related to Invention 1-5)."On the other hand, the First-instance Defendant alleged that PS1, including PS2 asstated below, has multiple functions as a gaming console and the function to read CD ROM discs or DVD-ROM discs is very limited among overall gaming consoles, andtherefore, it is not appropriate to calculate royalties of the gaming console by setting
the

net

sale

price

as

2%;

however,●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●
Even though functions other than reading CD-ROMs or DVD-ROMs are added to PS1
gaming consoles or PS2 gaming consoles, it cannot be said that the aforementioned
calculation method has a problem (the point that PS1 gaming consoles and PS2 gaming
consoles have multiple functions other than reading CD-ROM discs or DVD-ROM
discs is to be considered based on the contribution degree of the Fi rst-instance
Defendant in the exclusive profits of the First-instance Defendant).
In addition, the First-instance Defendant alleged that when calculating the royalties
for PS1 gaming console main bodies and game discs by using the royalty rate under the
Joint License Program, the licensing standards of Philips around 1992, including thosefor PS2 gaming consoles as stated below, were not always maintained in relationships
with individual licensees, and there were circumstances where the pressure to reduc e
the price was always added, and therefore, calculations based on the aforementioned
standards have a problem. However, under the Joint License Program, licenses were
granted under non-discriminatory conditions, and as long as there is no specificevidence that the aforementioned standards were revised, it is appropriate to makecalculations based on the aforementioned standards.
b. The prices of PS2 gaming consoles for each subject period from the release date ofPS2 until the expiration date of Patent 1-5 are as stated in the left column of Attachment
3, Table 1-2 "PS gaming console main body prices" (Exhibit Ko 295). Said prices arestated in US dollars. The prices of said console in yen based on the average foreignexchange rate during said period (Exhibit Ko 296) are as stated in the right column ofsaid table "PS2 gaming console main body prices." There are no disputes between theparties that the percentage of the number of PS2 gaming console main bodies sold in
the U.S.A. during the subject period (Exhibit Ko 298) from which the portions in
Canada and Mexico are excluded is estimated to be 89%. Accordingly, the number ofPS2 gaming console main bodies sold during the subject period is as stated in thecolumn for "The number of PS2 gaming console main bodies sold in North America
34

(10,000 units) × 89% (sales amount in the U.S.A.)" in said table. In the same way as
PS1 gaming consoles, under the Joint License Program, concerning CD-ROM players,
the royalties for products other than products subject to each license that can read CDV
discs with outside diameter of 130mm or more (PS2 gaming console falls under thiscategory) is ●● of the "Net sale prices of products subject to licensing" (1. (2) D. (C)above) and the royalty allocation rate for the First-instance Defendant is ●●●●●(1. (2) D. (B) above). Therefore, the royalty amount that the First-instance Defendant
should receive is as stated in the column for "Royalties to be paid to the First -instance
Defendant" in said table. As stated in (A) above, the amount equivalent to 80% of theroyalty amount is the royalty amount that the First-instance Defendant should receive
during each subject period (see the column for "[i] Profits that the First -instance
Defendant should receive" in Attachment 4-2 "PS2 gaming console (related to Invention1-5)").
The contribution percentage of Patent 1-5 under the Joint License Agreement fromamong subject patents for CD-ROM players is, as stated in the column for "CD-ROM
Drive" in A. (B) above, 1/42.7 until fiscal year 2002, and 1/4 in fiscal year 2003 andafter (technically, for the period corresponding to fiscal year 2003 (from April 1 2003
through March 31, 2004) (meaning from April 1, 2003 through July 31, 2003) fromamong the column for "2002.5 to 2003.7" in Attachment 4-2 "PS2 gaming console(related to Invention 1-5)," 1/4 should be used for calculation; however, the Firstinstance Plaintiff calculated by setting the contribution percentage concerning royalties
for the period of "2002.5 to 2003.7" to be 3/13.4 collectively in the same way as thatfor the period until fiscal year 2002 (see the Appeal of the First-instance Plaintiff, 12th
brief, page 61); however, it is difficult to identify the sales volume in this period bydividing as of April 1, 2003 and it is not a disadvantageous calculation to the Firstinstance Defendant; therefore, the First-instance Plaintiff's calculation method isadopted for the calculation.). When multiplying said percentage, the exclusive profitsthat the First-instance Defendant should receive are as stated in the column for "[ii]Profits that the First-instance Defendant should receive for Patent 1-5" in Attachment
4-2 "PS2 gaming console (related to Invention 1-5)."On the contrary, the First-instance Defendant alleged that most PS2 software is adisc based on DVD-ROM standards and CD-ROM standard discs are very limited andtherefore, contribution of CD-ROM standards to PS2 gaming consoles is nil or thepercentage is very limited if any. However, the PS2 gaming console is compatible not
only with DVD-ROM standards, but also CD-ROM standards (1. (3) F. (B) above) andtherefore, it cannot be exempted from royalties of ●●● for the "net sale prices" of35

PS2 gaming consoles.
In

addition,theFirst-instance

Defendant

allegedthat●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●● and therefore,royalties for patents related to CD audios and CD-ROM drives cannot be claimed
independently. However, putting aside the purport of provisions of the agreement, thisagreement seems to be a template for license agreements for DVD video players around2004. No evidence was submitted to clearly indicate that a license agreement was
actually concluded according to this template for the period from October 26, 2000,
when PS2 was released. until March 22, 2005, when Patent 1-5 expired, and thatroyalties for DVD players include royalties for CD-ROM players. Therefore, it isdifficult to adopt the aforementioned allegation of the First-instance Defendant (asmentioned above, "the amount of profits that the employer, etc. should receive," whichis to be considered when calculating reasonable compensation for employee inventions,refers to the amount of profits that is objectively expected for employers, etc. whensucceeding to the rights; in light of the fact that this is not limited to the profits actually
received by working inventions, even if royalties were paid based on the
aforementioned provisions, it is difficult to find that the First-instance Plaintiff's rightto claim reasonable compensation for the CD-ROM play function is limited naturally
based on said fact).
c. Concerning PS1 game discs, the sales volume in North America in each subject period
from the release date of PS1 until the expiration date of Patent 1-5 is 371 million units
for the period from September 9, 1995 until December 31, 2004 (Exhibit Ko 300). For
the period from January 1, 2005 until March 22 2005, sales volume is calculated on a
per diem basis based on the sales volume in North America of one million units for theperiod from January 1 through March 31, 2005 (Exhibit Ko 300), and it is 900,000 units.
There is no dispute between the parties to estimate the percentage of the portion in the
U.S.A., excluding those in Mexico and Canada, to be 89%, and the sales of the portionin the U.S.A is as stated in the left column of Appendix 3, Table 2 -1.
●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●● When multiplying the average foreign exchange
rate during said period (Exhibit Ko 296), it is as stated in the column for "Royalties tobe paid to the First-instance Defendant" in said table. As stated above, the amountequivalent to 80% of said amount is the royalty amount to be paid to the First -instance36Defendant (see the column for "[i] Profits that the First-instance Defendant should
receive" in Appendix 4-2 "PS1 game disc (CD-ROM disc) (related to Invention 1-5)").
The contribution percentage of Patent 1-5 under the Joint License Agreement fromamong subject patents for CD-ROM players is, as stated in the column for "CD-ROM
Disc" in A. (B) above, 1/9 until fiscal year 2002 and 1/3 in fiscal year 2003 and after(technically, for the period corresponding to fiscal year 2003 and fiscal year 2004 (from
April 1, 2003 through December 31, 2004) from among the column for "1995.9.9 to
2004.12.31" in Attachment 4-2 "PS1 game disc (CD-ROM disc) (related to Invention
1-5)," 1/3 should be used for calculation; however, the First-instance Plaintiff calculated
by setting the contribution percentage concerning royalties for the period of "1995.9.9
to 2004.12.31" to be 3/6.6 collectively in the same way as that for the period until fiscal
year 2002 (see the Appeal of the First-instance Plaintiff, 12th brief, page 61); however,
it is difficult to identify the sales volume during this period by dividing as of April 1,
2003 and it is not a disadvantageous calculation to the First-instance Defendant;
therefore, the First-instance Plaintiff's calculation method is adopted for the
calculation.). When multiplying said percentage, the exclusive profits that the First instance Defendant should receive are as stated in the column for "[ii] Profits that theFirst-instance Defendant should receive for Patent 1-5" in Attachment 4-2 "PS1 gamedisc (CD-ROM disc) (related to Invention 1-5)."(B) To make sure, the decision of this court on the First-instance Plaintiff's Alternative
Allegations 1 and 2 is indicated below.
a. Alternative Allegation 1 is as stated in No. 3, 1. (1) (Allegation of the First -instancePlaintiff) B. (B) above, and the First-instance Defendant demands to receive its
exclusive profits by seeking the contribution percentage of Patent 1-5 in the royalties
that the First-instance Defendant received based on the SCE License Agreement.
It is true that, in the calculation process, since SCE is a company specialized ingames related to the PlayStation Series and US patents held by SCE are strongly
presumed to be related to game-related business, it is reasonable to narrow down the
IPC categories of patents held by SCE in the U.S.A. from among the US patents heldby the First-instance Defendant and to estimate the number of patents related to games.
SCE holds 6,206 patents; however, in consideration of the fact that SCE is a company
established in 1993, it cannot be said to be unreasonable to estimate the average numberof patents held by SCE for the period from 1995 through 2013 to be 3,103 patents.
However, concerning SCE's "working rate" that the First-instance Plaintiff uses, noobjective evidence supporting that the rate is correct has been submitted and it is notpossibletopresume

the

rate
37

easily.

Inaddition,

●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●. Also from this point, it is not appropriate to presume
exclusive profits of the First-instance Defendant by narrowing down patents held by theFirst-instance Defendant based on the concept of "working rate" of SCE and obtaining
the contribution percentage of Patent 1-5.
b. Alternative Allegation 2 is as stated in No. 3, 1. (1) (Allegation of the First -instancePlaintiff) B. (C) above. Based on the assumption that the royalties that the First-instance
Defendant received are "balancing amounts" for the difference between the number of
US patents related to games that are held by the First-instance Defendant and that of
the US patents held by SCE, the royalties that the First-instance Defendant received are
divided by the difference between the average of the number of patent rights related togames from among US patents held by the First-instance Defendant for the period from1995 through 2003 and the average of that of the US patents held by SCE during thesame period, both of which were estimated by the same method as a. above, (6975.36
patents) ([i]); however, the patents related to the patents held by the First -instance
Defendant, which consist of said difference, are almost unnecessary for SCE.
Accordingly, standard essential patents, such as Patent 1-5, are worth 45 times more intechnical value than the calculated amount ([ii]) and therefore, the relevant royalties
should be obtained by multiplying the amount in [i] by the figure in [ii].
However, in this method, substantially, the original evaluation percentage is used
for the technical value of Patent 1-5 in lieu of the concept of working percentage of
SCE in Alternative Allegation 1. It is true that PS1 and PS2 are equipped with thefunction to read a CD-ROM, which is a game disc, and therefore, Patent 1-5, which isstandard essential patent of CD-ROMs, has higher technical value than other patents.
Nevertheless, PS1 and PS2 have operational performance and excellent graphic
performance, and PS1 uses System G that was developed for broadcasting stations by
the First-instance Defendant, and PS2 is equipped with a processor that was jointly
developed with Toshiba (1. (2) F. (B), (3) F. (A), (B) above)) and other cutting-edge
technologies are incorporated in addition to CD-ROMs and DVD-ROMs (there may be
the possibility that these are not patents held by the First-instance Defendant, but in any
case, it is difficult to concretely analyze the working of patents held by the Firstinstance Defendant in PS1 and PS2, including during the development stage). And, it isdifficult to find that the technical value of Patent 1-5 (and Patent 2-1) is significantly
higher than the patents held by the First-instance Defendant, as alleged by the Firstinstance Plaintiff (it cannot be found that it is worth at least five times more than the38

patents held by the First-instance Defendant; when calculating the exclusive profits that
the First-instance Defendant received from Patent 1-5 in relation to the SCE License
Agreement by the calculation method in Alternative Allegation 2, as shown in thefollowing formula, it is 9,327,905 yen; however, it does not exceed the amountcalculated based on the principal allegation as stated above).
[Calculation formula]●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●(C) Based on the above, concerning the SCE License Agreement, it is reasonable tocalculate the amount of exclusive profits that the First-instance Defendant received
from Patent 1-5 as stated in column of "[ii] Profits that the First-instance Defendant
should receive for Patent 1-5" in each of Attachment 4-2 "PS1 gaming console (related
to Patent 1-5)," "PS2 gaming console (related to Patent 1-5)," and "PS1 game disc (CDROM disc) (related to Patent 1-5)."(2) Degree of the First-instance Defendant's contribution related to Invention 1-5 (Issue
1-2)
A. Joint License Program(A) Invention 1-5 is an error-correction technology making it possible to apply music
CDs to the computer field. While the existing error-correction rate of music CDs was
10-9 to 10-10 after correction, Invention 1-5 improved the rate to 10 -12, and thus increased
the data reliability and enabled music CDs to be used as data storage for a computer (1.
(2) C. (A) above). Patent 1-5 is deemed to have high technical value, such as being usedas the standard essential patent for CD-ROMs, etc. (1. (2) C. (B) above).
On the other hand, Invention 1-5 includes particulars for identifying the invention
that make it possible to perform error-correction by the third Reed-Solomon Codes, inaddition to the error-correction by the first and second Cross Interleave/Reed-Solomon
Codes (CIRC) (1. (2) C. (A) above). CIRC was invented in the process of research anddevelopment of music CDs jointly by the First-instance Defendant and Philips (1. (1)above). It cannot be denied that part of these prior arts accumulated by the First -instance
Defendant is used for Invention 1-5. In addition, during the procedures to establish theright for Invention 1-5, including the procedures related to Patent 1-1 and Patent 1-2
that are the basis for priority right, there was no contribution of the First -instancePlaintiff. The procedures were commissioned to the office in the U.S.A. The Intellectual
Property Department of the First-instance Defendant made considerable contributions,
including having taken appropriate actions for the grounds for refusal received from the
US Patent and Trademark Office (1. (2) B. above).
39

In addition, the First-instance Defendant and Philips adopted an open license policythat is non-discriminatory and open, and provided licensing opportunities broadly (1.
(2) D. (A) above). The First-instance Defendant and Philips also took the initiative andcreated not only the physical format of CD-ROMs, but also unified the logical format
of CD-ROMs and provided compatibility (1. (2) E. (A) above). In addition, they
achieved unified transmission data standards to connect peripheral devices of personal
computers (1. (2) E. (B) above), thereby making CD-ROMs broadly used as personal
computers or gaming software.
Furthermore, the First-instance Defendant established manufacturing factories forcontract production of CD-ROM discs, prepared to increase production capacity of CDROM drive units, engaged in the planning and development of various goods using CDROMs, and established alliances, etc. with companies in other business categories (1.
(2) E. (B) above). As a marketing promotion, the First-instance Defendant organizedlicensee meetings, proactively approached the content industry, developed thetechnology of devices to disseminate the standards, and provided technical support tolicensees (1. (2) E. (C) above). Therefore, it is found that the First -instance Defendantengaged in research and development and promotion for improvement of not only CD ROM standards, but also CD-Family standards, such as CD-Rs, etc.
In consideration of the aforementioned circumstances, concerning the exclusive
profits that the First-instance Defendant received under the Joint License Program, it isreasonable to consider that the contribution degree of the First-instance Defendant is
95%.
(B) On the other hand, the First-instance Plaintiff alleged that he/she examined fromconceiving of the idea until completion of specific formats by him/herself concerning
Invention 1-5, conducted simulations, and completed the invention during non-working
hours without using company facilities of the First-instance Defendant, and he/shestated and alleged to that effect (Exhibit Ko 165). However, concerning the details until
completion of the invention as stated by the First-instance Plaintiff in person, it has
little objective evidence to support it and, at the same time, there are relevant articles
of evidence, such as the written statement, etc. of <B> denying the First-instancePlaintiff's statement (Exhibit Otsu 132). Therefore, it is not reasonable to makedeterminations based only on the statement, etc. of the First-instance Plaintiff in person
beyond the degree of involvement of the First-instance Plaintiff, which was found in 1.
(2) A. above.
In addition, the First-instance Plaintiff alleged that Invention 1-5 and CIRC weredifferent technologies and Invention 1-5 was not completed by using prior art. However,40

in Invention 1-5, the third Reed-Solomon coder is placed in addition to the first andsecond Reed-Solomon coders (CIRC). Even if there are technical differences from
CIRC, it cannot be denied that Invention 1-5 is completed using prior art.
(C) On the other hand, the First-instance Defendant alleged that Invention 1-5 is a patent
for which a terminal disclaimer to waive part of the patent term of Patent 1 -3 was
submitted in order to avoid a double patent. Patents with a terminal disclaimer ca nnot
be transferred by separating them and Patent 1-3 is deemed to be waived by registrationof Patent 1-4, which is the reissue patent of Patent 1-3. Therefore, Patent 1-4 and Patent
1-5 substantially protect the same invention and Patent 1-5 has no technical value andhas no unique contribution to license, etc.
The terminal disclaimer is a system where a patentee waives part of the duration of
the patent term in order to avoid refusal on the grounds of a double patent and to matchthe end of the patent term of a patent with the expiration date of another patent. Patents
for which a terminal disclaimer is submitted cannot be transferred by separating themand the right can only be exercised when they are held by the same, identical person(Exhibit Ko 222, and Exhibits Otsu 257 and 258). Although there are specified
restrictions on the patent duration term and exercise of rights, it cannot be said that
Invention 1-5 has no technical value. Therefore, the allegation of the First -instance
Defendant has no grounds.
B. SCE License Agreement
The exclusive profits that the First-instance Defendant received from the workingof Patent 1-5 under the SCE License Agreement are related to the gaming console main
body of PS1 and PS2 and CD-ROM discs of PS1. PS1 and PS2 are proud of their highoperational performance and graphic performance (1. (2) F. (B) and (3) F. (B) above)and system G technology that the First-instance Defendant developed for broadcastingstations is used for the graphics technology adopted by PS1 (1. (2) F. (B) above), andPS2 is equipped with a processor that was jointly developed with Toshiba (1. (3) F. (A),(B) above), etc. Cutting-edge technologies are incorporated in them in addition to CDROMs and DVD-ROMs.
The First-instance Defendant, jointly with affiliated companies, established SCE,
which engages in the development of gaming consoles, such as PS1, etc., and inlicensing business with software manufacturers (1. (2) F. (A) above), and made asignificant investment to develop gaming consoles of PS1 and PS2 in which cuttingedge technologies of the time are incorporated. In addition, SCE proactively encouraged
new software manufacturers to enter the market, made it possible for various kinds ofgame software to be played on PS1 and PS2 and adopted direct marketing for software41

to enable appropriate inventory management (1. (2) F. (C) above). In addition, SCE
released low-end versions of the gaming console main body (same as above) anddeveloped PS2 compatible with the next generation network (1. (3) F. (B) above). TheseSCE acts led PS1 and PS2 to acquire dominant position in the game market and resulted
in increases in exclusive profits that the First-instance Defendant received under the
SCE License Agreement. These marketing efforts and investment activities, etc. by SCE
should be included in the contribution degree of the side of the First-instance Defendantthat is a joint investment company.
In addition to the contribution degree of the First-instance Defendant that is
explained related to the Joint License Program as stated in A. above, when adding thecontribution degree of the First-instance Defendant and SCE concerning the PlayStation
Series, it is reasonable to determine the contribution degree of the First -instance
Defendant to be 97% concerning exclusive profits that the First-instance Defendantreceived under the SCE License Agreement.
C. Summary
As mentioned above, it is reasonable to determine that the contribution degree ofthe First-instance Defendant concerning the exclusive profits that the First-instance
Defendant received under the Joint License Program is 95%, and the contribution
degree of the First-instance Defendant concerning the exclusive profits that the Firstinstance Defendant received under the SCE License Agreement is 97%. Therefore, theamounts based on the above are as stated in the columns for "Contribution degree ofthe First-instance Defendant" in Attachments 4-1 and 4-2 respectively.
(3) Degree of the First-instance Plaintiff's contribution among co-inventors of Invention
1-5 (Issue 1-3)
The inventors of Invention 1-5 are, in light of details leading to the invention related
to Patent 1-5 and details leading to the registration thereof as mentioned in 1. (2) A. and
B. above, five persons, namely the First-instance Plaintiff, <B>, <D>, <E>, and <C>,
and the 4 persons excluding <C> are employees of the First-instance Defendant.
The contribution degree in the joint invention between inventors is found to be equal
unless there are special circumstances; however, according to what was found in 1. (2)A. and B. above, the First-instance Plaintiff made multiple options at the request of <B>
and held exhaustive deliberations and consultations with <B>, and as a result, Invention
1-5 was completed along with invention reports naming <E>, etc. as the inventors. The
First-instance Plaintiff is found to have fulfilled a certain role for Invention 1 -5;
however, there is not enough evidence to find that the First-instance Plaintiff took
initiatives or had an important role. In this regard, the First-instance Plaintiff alleged
42that he contributed from conceiving of the idea until completion of the invention byhimself; however, as stated in (2) A. (B) above, there is little objective evidence tosupport these allegations. Therefore, the allegations of the First-instance Plaintiff
related to the contribution degree among co-inventors based on the above is groundless.
Rights were established for Invention 1-5 based on the patent application form
(Exhibit Otsu 55) naming <E>, <D>, and <J> as the inventors (however, a noticenaming <E>, <D>, <B>, the First-instance Plaintiff, and <C> as the inventors was
submitted subsequently) and the patent application form (Exhibit Otsu 57) naming <B>,
the First-instance Plaintiff, and <D> as the inventors (1. (2), B. (A) above). In the"Annex A (Standards) Coding for error-correction by RSPC" for the CD-ROM
standards, examples of embodiment of Patent 1-5 (Figure 6 and Figure 7) are stated.
These examples of embodiment are the same figures, etc. attached to the patentapplication form (Exhibit Otsu 57) naming <B>, the First-instance Plaintiff, and <D>
as the inventors (1. (2) C. (B) above), and it is presumed that they are based on multiple
drafts that the First-instance Plaintiff created at the request of <B> (1. (2) A. (B) above).
Therefore, it is found that the contribution of the First-instance Plaintiff forstandardization of the error-correcting system of CD-ROMs is greater than that of <E>,
etc.
Consequently, it is considered that there are special circumstances where thecontribution degree of the First-instance Plaintiff among co-inventors of Patent 1-5
exceeds the equal percentage, and it is reasonable to consider the First -instancePlaintiff's contribution degree to be one-third.
(4) The amount of reasonable compensation for Invention 1-5 (Issue 1-4)
The amount of reasonable compensation for Invention 1-5 under the Joint License
Program is calculated based on (1) through (3) above and, as stated in the column for"Amount of reasonable compensation" in Attachment 4-1, total amount is●●●●●●●●● yen. The amount of reasonable compensation for Patent 1-5
under SCE License Agreement is 4,514,677 yen in total, as stated in column for"Amount of reasonable compensation" in each of Attachment 4-2 "PS1 gaming console(related to Invention 1-5)," "PS2 gaming console (related to Invention 1-5)," and "PS1
game disc (CD-ROM disc) (related to Invention 1-5)."
Since the First-instance Defendant paid 200,000 yen as incentive remuneration forInvention 1-5, the outstanding amount is 22,672,260 yen.
3. Patent 2-1(1) The amount of profits that the First-instance Defendant should receive fromInvention 2-1
43

A. License programs(A) 3C License Programa. Royalty allocation amountUnder the 3C License Program, the royalties that the First-instance Defendantreceived are as stated in No. 2, 2. (6) A. (A) (after correction) of the judgment in priorinstance related to the citation. Patent 2-1 is a US patent and when calculating theexclusive profits, the portion in the U.S.A. should be calculated from among theroyalties. There is no dispute between the parties on determining the royalty allocation
amount for the portion in the U.S.A. to be 25%. Royalties for each product category
based on this are as stated in the column for "Royalties (U.S.A.)" in Attachment 4 -3
"3C License Program (related to Invention 2-1)."
Next,

under

the

3C

LicenseProgram,●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●. Therefore,

thecourt-

related costs need to be deducted from the royalties. However, since they were mattersa long time ago and all data was not prepared, it is reasonable when calculating thespecific amount to refer to the percentage of court-related costs in fiscal years for whichdata was submitted and to estimate the percentage of court-related costs in each fiscal
year.

Based

on

the

above,●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●.
Based on the above, royalties that the First-instance Defendant received for eachproduct category are as stated in the column for "Outstanding amount after deductionof court-related costs" in Attachment 4-3 "3C License Program (related to Invention 21)."b. Contribution percentage of Patent 2-1
Under the 3C License Program, there is no dispute between the parties that the
numbers of US patents for each product category are 8 patents for the DVD-ROM discs,
23 patents for the DVD video discs, 19 patents for the DVD recordable discs, and 25
patents for the DVD recordable drives. They are standard essential patents and it is44reasonable to consider them as having equal value when calculating the contrib ution
percentage of Patent 2-1 in royalties.
Based on the above, the exclusive profits that the First-instance Defendant received
from Patent 2-1 are as stated in the column for "Exclusive profits from Patent 2 -1" inAttachment 4-3 "3C License Program (related to Invention 2-1)" for each productcategory.
(B) One-Red License Programa. Royalty allocation amountUnder the One-Red License Program, the royalties that the First-instance Defendantreceived are as stated in No. 2, 2. (6) A. (B) (after correction) of the judgment in priorinstance related to the citation. Patent 2-1 is a US patent and when calculating theexclusive profits, the portion in the U.S.A. should be calculated from among theroyalties. There is no dispute between the parties on determining the royalty allocation
amount for the portion in the U.S.A. to be 25%. Based on this, royalties for each productcategory are as stated in the column for "Royalties (U.S.A.)" in Attachment 4 -3 "OneRed License Program (related to Invention 2-1)."
b. Contribution percentage of Patent 2-1
Under the One-Red License Program, there is no dispute between the parties thatthe numbers of US patents for each product category are 3 patents for the DVD -ROM
discs and 15 patents for the DVD video discs. They are standard essential patents andit is reasonable to consider them as having equal value when calculating thecontribution percentage of Patent 2-1 in royalties.
Based on this, the exclusive profits that the First-instance Defendant received from
Patent 2-1 are as stated in the column for "Exclusive profits from Patent 2-1" inAttachment 4-3 "One-Red License Program (related to Invention 2-1)" for each productcategory.
(C) One-Blue License Programa. Royalty allocation amountUnder the One-Blue License Program, the royalties that the First-instance
Defendant received are as stated in No. 2, 2. (6) A. (C) (after correction) of the judgmentin prior instance related to the citation. Patent 2-1 is a US patent and when calculating
the exclusive profits, the portion in the U.S.A. should be calculated from among theroyalties. There is no dispute between the parties on determining the royalty allocation
amount for the portion in the U.S.A. to be 25%. Based on this, royalties for each productcategory are as stated in the column for "Royalties (U.S.A.)" in Attachment 4-3 "OneBlue License Program (related to Invention 2-1)."
45

b. Contribution percentage of Patent 2-1
Under the One-Blue License Program, there is no dispute between the parties thatthe numbers of US patents for each product category are 255 patents for the BD
recorders (including 5 patents for Patent 2-1) and 132 patents for the BD recorder drives(including 5 patents for Patent 2-1). They are standard essential patents and it isreasonable to consider them as having equal value when calculating the contribution
percentage of Patent 2-1 in royalties.
Based on this, the exclusive profits that the First-instance Defendant received from
Patent 2-1 are as stated in the column for "Exclusive profits from Patent 2-1" inAttachment 4-3 "One-Blue License Program (related to Invention 2-1)" for each productcategory.
B. SCE License Agreement(A) As stated in 1. (3) F. (B) above, PS2 game discs are also compatible with DVD ROM discs and the DVD-ROM disc is a product subject to licensing under the 3C
License Program. In addition, PSP game disc is a UMD disc using the DVD -ROM
standards. It is not defined in the program category under said license program; however,
it is reasonable to treat PSP game discs as equivalent to products subject to licensing
under said license program.
The "amount of profits that the employer, etc. should receive" as defined in Article
35, paragraph (4) of the Former Patent Act refers to the amount of profits that are
objectively expected for an employer, etc. when succeeding to the rights and it isunderstood that this is not limited to the profits actually received by the working of theinvention, but includes cases of self-working, etc. and refers to exclusive profits thatthe employer, etc. could have received originally, as stated in 2. (1) B. (A) above.
Under the 3C License Program, patents subject to licensing held by the First instance Defendant are licensed to Philips with sub-license (1. (3) D. (A) a. above).
Therefore, if SCE had received a license under the 3C License Program from Philips
when manufacturing and selling PS2 and PSP, SCE would not have to pay royalties
again to the First-instance Defendant. The royalties to be allocated to the First-instance
Defendant by Philips can be the "amount of profits that the employer, etc. should
receive." However, after examining all the articles of evidence in this case, there is noevidence to find that SCE received a license for the manufacturing and selling of PS2
or PSP. Rather, it is found that the First-instance Defendant concluded the SCE License
Agreement on the assumption that SCE had not received a license, gave more favorable
treatment to SCE, which is an affiliated company of the First-instance Defendant, thanto other licensees, and obtained compensation from SCE.
46

In this way, since the First-instance Defendant treats SCE as a licensee that has notreceived a license from Philips concerning the manufacturing and selling of PS2 or PSP,
based on the fact that the 3C License Program adopts a so-called open policy to grant
licenses under open and non-discriminatory conditions (1. (3) D. (A) a. above), theexclusive profits that the First-instance Defendant could have received originally forthe manufacturing and selling of PS2 or PSP game discs should be the amountcalculated based on the royalties specified by said license program (the Virtual
Accumulation Method) on the assumption that SCE had received a license under said
license program, and it is not necessary for said exclusive profits to be limited to the
profits that the First-instance Defendant actually received under the SCE License
Agreement.
In addition, in light of the fact that SCE is in a capital relationship with the First instance Defendant, it is reasonable to calculate royalties that the First-instance
Defendant could have received by multiplying the royalty that was cumulated based on
the Virtual Accumulation Method by 80%, in the same manner as 2. (1) B. (A) above.
Calculation is implemented below based on this assumption.
a. Concerning PS2 game discs, the sales volumes of game discs in North America foreach subject period during the period from the release date of PS2 (October 26, 2000)
through the patent term expiration date of Patent 2-1 (May 29, 2016) are [i] for theperiod from October 26, 2000 through March 31, 2007, 565 million pieces (Exhibit Ko301); [ii] for the period from April 1, 2007 through March 31, 2012, 135.55 million
pieces, which is estimated by multiplying the worldwide sales volume of 297.5 million
pieces (Exhibit Ko 302) by the percentage of sales volume in North America (565
million pieces) against cumulative worldwide sales volume (1,240 million pieces) as ofMarch 31, 2007; and [iii] for the period from fiscal year 2012 and after, since there are
no data, the sales volume of the game discs in North America in each fiscal year isestimated as follows based on the assumption that the decrease ratio of the worldwide
sales volume in fiscal year 2010 and fiscal year 2011 (48%) continued in fiscal year
2012 and after, by multiplying the worldwide sales volume in fiscal year 2011 (7.9
million pieces) by said percentage and then by the percentage of sales volume in North
America against the worldwide sale volume as stated in [ii] above: in fiscal year 2012
(from April 1, 2012 through March 31, 2013): 1.73 million pieces; in fiscal year 2013
(from April 1, 2013 through March 31, 2014): 0.83 million pieces; in fiscal year 2014
(from April 1, 2014 through March 31, 2015): 0.40 million pieces; and in fiscal year
2015 (from April 1, 2015 through March 31, 2016): 0.19 million pieces respectively. In
addition, there is no dispute between the parties to estimate the percentage of the sales
47

volume for the portion in the U.S.A., excluding those in Mexico and Canada, to be 89%.
Therefore, total sum of sales volume in the U.S.A. is as stated in the column for [A](703,700,000 pieces × 0.89) in Attachment 3, Table 3-1. Next, the royalty for DVDROM discs under the 3C License Program is 1.76 cents (1. (3) D. (A) a. above). When
it is multiplied by the average foreign exchange rate during said period (Exhibit Ko296), the result is as stated in the column for "Royalties that the First -instance
Defendant should receive" in said table. As stated above, the amount equivalent to 80%
of said amount is the royalty amount that the First-instance Defendant should receive
during each subject period (see the column for "Profits that the First-instance Defendant
should receive" in Attachment 4-2 "PS2 game disc (related to Invention 2-1)).
The contribution percentage of Patent 2-1 from among subject patents for DVDROMs under the 3C License Program is one-eighth, as stated in A. (A) b. above. Whenmultiplying by this percentage, the exclusive profits that the First-instance Defendant
should receive are as stated in the column for "Profits that the First-instance Defendant
should receive for Patent 2-1" in Attachment 4-2 "PS2 game disc (related to Invention
2-1)."
b. Next, concerning UMD discs, the sales volumes of game discs in North America foreach subject period during the period from the release date of PSP (March 24, 2005)
through the patent term expiration date of Patent 2-1 (May 29, 2016) are as follows: [i]for the period from March 24, 2005 through March 31, 2007: 43.2 million pieces(Exhibit Ko 305); [ii] for the period from April 1, 2007 through March 31, 2012: 94.78
million pieces, which is estimated by multiplying the worldwide sales volume of 228.8
million pieces by the percentage of sales volume in North America (43.2 million pieces)against cumulative worldwide sales volume (101.4 million pieces) as of March 31, 2007
(Exhibit Ko 305); and [iii] for the period from fiscal year 2012 and after, since there
are no data, the sales volume of game discs in North America in each fiscal year isestimated as follows based on the assumption that the decrease ratio of the worldwide
sales volume in fiscal year 2010 and fiscal year 2011 (69%) continued in fiscal year
2012 and after, by multiplying the worldwide sales volume in fiscal year 2011 (32.2
million pieces) by said percentage and then by the percentage of sales volume in North
America against the worldwide sale volume as stated in [ii] above: in fiscal year 2012
(from April 1, 2012 through March 31, 2013): 9.47 million pieces; in fiscal year 2013
(from April 1, 2013 through March 31, 2014): 6.53 million pieces; in fiscal year 2014
(from April 1, 2014 through March 31, 2015): 4.51 million pieces; and in fiscal year
2015 (from April 1, 2015 through March 31, 2016): 3.11 million pieces respectively. In
addition, there is no dispute between the parties to estimate that the percentage of the48

sales volume for the portion in the U.S.A., excluding those in Mexico and Canada, tobe 89%. Therefore, total sum of sales volume in the U.S.A. is as stated in the column
for [A] (164,300,000 pieces × 0.89) in Attachment 3, Table 3-2. Next, the royalty for
DVD-ROM discs under the 3C License Program is 1.76 cents. When it is multiplied by
the average foreign exchange rate during said period (Exhibit Ko 296), the result is as
stated in the column for "Royalties that the First-instance Defendant should receive" insaid table. As stated above, the amount equivalent to 80% of said amount is the royalty
amount that the First-instance Defendant should receive during each subject period (seethe column for "Profits that the First-instance Defendant should receive" in Attachment
4-2 "UMD disc (related to Invention 2-1)).
The contribution percentage of Patent 2-1 from among subject patents for DVDROMs under the 3C License Program is one-eighth, as stated in A. (A) b. above. Whenmultiplying by this percentage, the exclusive profits that the First-instance Defendant
should receive are as stated in the column for "Profits that the First-instance Defendant
should receive for Patent 2-1" in Attachment 4-2 "UMD disc (related to Invention 21)."(B) Alternative Claims 1 and 2 of the First-instance Plaintiff are as stated in No. 3, 2(1) (Allegation of the First-instance Plaintiff) B. (B) and (C) above. The points at issue
are as explained in 2. (1) B. (B) a. and b. above (based on the assumption that thetechnical value of Patent 2-1 is worth 5 times more, the exclusive profits that the Firstinstance Defendant received from Patent 2-1 concerning SCE License Agreement arecalculated

by

the

calculation

methodin

Alternative

Claim

2

and

are

●●●●●●●●● yen as shown in the following formula; it does not exceed theamount calculated based on the principal allegation.).
[Calculation formula]●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●(C) Based on the above, concerning the SCE License Agreement, it is reasonable tocalculate the amount of exclusive profits that the First-instance Defendant received
from Patent 2-1 as stated in column for "Profits that the First-instance Defendant should
receive for Patent 2-1" in each of Attachment 4-2 "PS2 game disc (related to Invention2-1)" and "UMD disc (related to Patent 2-1)."(2) Degree of the First-instance Defendant's contribution related to Invention 2-1 (Issue
2-2)
A. License programs(A) Invention 2-1 achieved high-speed access and high-error correction capacity that is49

resistant to burst errors, etc.; it is a format optimized for both computer and video use,and can be achieved not only in recording media, but also in read-only media as well.
Since it is an essential patent for DVD standards, including DVD-ROMs, etc., its
technical value is considered to be high (1. (3) C. (A) and (B) above).
On the other hand, the statement in the patent claims related to Patent 2-1 enables
data recording discs and their recording devices, etc. belonging broadly to the technicalscope (1. (3) C. (B) above) and there is not enough evidence to find that the First instance Plaintiff contributed to procedures to establish rights for Patent 2-1, including
those for the Patent Filed in Japan. The Intellectual Property Department of the First instance Defendant made considerable contributions, including establishing rights for
said wide range of claims.
In addition, it can be said that the DVD standards spread more broadly as the DVD
forum and the DVD+RW Alliance, in which the First-instance Defendant also
participated, established various standards for physical formats (1. (3) A. (A), E. (A)and (B) above) after an agreement was reached between the SD side that was announced
by Toshiba, etc. and the First-instance Defendant's MMCD side, and standards were
uniformed/unified.
Looking at the licensing aspect, Patent 2-1 is a patent subject to license of products
using DVD standards under the 3C License Program, One-Red License Program, and
One-Blue License Program. Under the 3C License Program, the First-instance
Defendant and Philips adopted a non-discriminatory and open license policy, provided
broad licensing opportunities, and strove to disseminate DVD standards (1. (3) D. (A)above). The First-instance Defendant established One-Red, LLC. and One-Blue, LLC.
jointly with other companies and started licensing programs in which ten or morecompanies participated (1. (3) D. (B) and (C) above). Through these joint licensing
activities with other companies, it can be valued that the First-instance Defendantendeavored to disseminate DVD standards.
In addition, it is found that, in order to respond to the expansion of dem and forDVDs, the First-instance Defendant established production bases not only in Japan, butalso overseas and made a large investment, developed DVD-R with other companies,
planned and sold various goods using DVD standards, and newly commenced the DVD
recorder business, in addition to engaging in promotion activities through contract
production business of DVD-ROMs that can be used for sales promotion of new
products and for company guides, etc., jointly with its group company, SME (1. (3) E.
(C) above).
In consideration of the aforementioned circumstances, concerning the exclusive50

profits that the First-instance Defendant received under each license program, it isreasonable to determine the contribution degree of the First-instance Defendant to be
95%.
(B) On the other hand, the First-instance Plaintiff emphasized the contribution of theFirst-instance Plaintiff's side by stating that completion of Invention 2-1 by the Firstinstance Plaintiff and other members created a situation where the SD side had to accept
Patent 2-1 as the license patent and the First-instance Defendant was able to establish
a position as a licenser for DVD standards as well.
It is true that, according to the written statement of employee <P> of the First instance Defendant (Exhibit Otsu 197), under the 3C License Program and One-Red
License Program, patents subject to the DVD standards of the First-instance Defendant
and Philips, which were adopted after competition over standards with the SD side, arefound to be the patents related to the modulation system, called EFM modulation plus,
and Patent 2-1. It is also stated that it is not that the details of Patent 2-1 were proposed
as standards and were eventually adopted as standards. Therefore, it cannot be said that
the First-instance Defendant was able to ensure the position of a licenser thanks to
Patent 2-1.
(C) On the other hand, the First-instance Defendant alleged that, as was judged in theexaminer's decision of refusal for the corresponding Patent Filed in Japan, the essential
features of Patent 2-1 were disclosed in the invention stated in Unexamined Patent
Application Publication No. 1986-182676 (Exhibit Otsu 66), its technical value is not
significant, and it has poor monopoly power. However, Patent 2-1 was not invalidated
in the U.S.A. The First-instance Defendant rather published externally that Patent 2-1
is an essential patent for DVD standards (1. (3) C. (B) above). Therefore, the fact thatthe examiner's decision of refusal for the Patent Filed in Japan became final and binding
cannot be a circumstance to be taken into consideration when deciding the contribution
degree of the First-instance Defendant.
B. SCE License Agreement
Under the SCE License Agreement, the exclusive profits that the First -instance
Defendant received from the working of Patent 2-1 are related to PS2 game discs (DVDROM)s and PSP game discs (UMD discs). As stated in 2. (2) B. above, PS2 is proud of
its high operational performance and graphic performance, and is equipped with theprocessor that was developed jointly with Toshiba. In this manner, cutting-edge
technologies, in addition to DVD-ROMs, are incorporated in PS2. In addition, as it isalso stated in 2 (2) B. above, SCE proactively facilitated the entry of new software
manufacturers to make it possible to offer a variety of game software and enable51

appropriate inventory management, and it developed PS2 to be compatible with next
generation networks. These marketing efforts and investment activities, etc. by SCE
should be included in the contribution degree of the side of the First-instance Defendantthat is a joint investment company.
In addition, a portable gaming console that SCE developed, PSP, is a multimedia
terminal that draws graphics with a quality close to PS2 and is also equipped withmultimedia viewing, Wi-Fi, and web browser (1. (3) F. (C) above). These technology
developments by SCE should be included in the contribution degree of the First instance Defendant.
In addition to the contribution degree of the First-instance Defendant that is
explained related to license programs explained in A. above, when adding thecontribution degree of the First-instance Defendant and SCE related to the PlayStation
Series, concerning exclusive profits that the First-instance Defendant received under
the SCE License Agreement, it is reasonable to determine the contribution degree of theFirst-instance Defendant to be 97%.
(3) Degree of the First-instance Plaintiff's contribution among co-inventors of Invention
2-1 (Issue 2-3)
The inventors of Invention 2-1 are found to be three persons, including the Firstinstance Plaintiff, <F>, and <G>, in light of 1. (2) A. and B. above.
The contribution degree between inventors in a joint invention should be found tobe equal unless there are special circumstances. As stated in 1. (2) A. and B. above,
Invention 2-1 was found to be completed after discussions on the idea were held
between <F> and <G> based on the format that the First-instance Plaintiff conceivedof; however, concerning the degree of contribution to the invention, <G> had a lower
contribution degree than the First-instance Plaintiff and <F>, for example <G> did notprepare the invention report for which <G> was in charge. In light of thesecircumstances, there are special circumstances to find that the First-instance Plaintiff
made special contributions to the completion of the invention related to Patent 2 -1. In
addition, in light of processes, etc. for the completion of the invention, the contribution
degree of the First-instance Plaintiff and <F> are considered to be at the same level andthat of <G> is half of theirs. It is reasonable to determine that the contribution degreeof the First-instance Plaintiff is two-fifths.
In this regard, the First-instance Defendant alleged on the grounds that it is <F>
who was named as the inventor in Invention Reports 1 and 3, which are reports serving
as the basis for Invention 2-1, from among invention reports related to Invention 2-1,
that the First-instance Plaintiff's contribution degree among co-inventors does not52exceed 5%. However, the statement in the written statement of the First-instancePlaintiff concerning the processes from conceiving of the idea to registration of
Invention 2-1 (Exhibits Ko 175 and 195) are concretely supported by the details ofstatements, etc. of the invention reports, and the First-instance Defendant did not submit
written statements, etc. of <F> and <G> that are against these details. Therefore, it isreasonable to recognize the processes for the invention along with the statement of theFirst-instance Plaintiff, to the extent it is supported by invention reports, etc. As statedin 1. (2) B. (C) above, an application for Invention 2-1 was filed by integrating
Invention Reports 2, 3, and 4 into Invention Report 1. Even though there is no statementof the First-instance Plaintiff's name in Invention Reports 1 and 3, it cannot be
determined that the involvement of the First-instance Plaintiff in the completion of
Invention 2-1 is low. Therefore, the aforementioned allegation of the First-instance
Defendant is groundless.
(4) The amount of reasonable compensation for Invention 2-1 (Issue 2-4)
When the amount of reasonable compensation is calculated based on (1) through(3) above, the amount of reasonable compensation for Invention 2-1 under the 3C
License Program is 6,320,824 yen as stated in the column for "Amount of reasonable
compensation" in Attachment 4-3 "3C License Program (related to Invention 2-1)"; theamount of reasonable compensation for Invention 2-1 under the One-Red License
Program is 1,838,159 yen as stated in the column for "Amount of reasonable
compensation" in Attachment 4-3 "One-Red License Program (related to Invention 21)"; the amount of reasonable compensation for Invention 2-1 under the One-Blue
License Program is 328 yen as stated in the column for "Amount of reasonable
compensation" in Attachment 4-3 "One-Blue License Program (related to Invention 21)"; and the amount of reasonable compensation for Invention 2-1 under the SCE
License Agreement is 1,717,102 yen in total as stated in the column for "Amount of
reasonable compensation" in each of Attachment 4-2 "PS2 game disc (related toInvention 2-1)" and "UMD disc (related to Invention 2-1)."
Since the First-instance Defendant paid ●●● yen as incentive remuneration forInvention 2-1 (1. (3) G. (C) above), when said amount is deducted, the outstanding
amount is 9,376,413 yen.
4. Whether the period of extinctive prescription for the right to demand payment of
reasonable compensation for Invention 1-5 and Invention 2-1 has expired(Issue 3)(1) Starting point of prescription
A. In cases where there are employment regulations, etc. stipulating that the employer,
53

etc. shall succeed to the rights, etc. to receive patents of employee inventions ,employees, etc. acquire the right to receive payment of reasonable compensation
pursuant to the employment regulations, etc. when the employer, etc. succeeds to theright, etc. to receive patents. However, if the payment time of the compensation is
stipulated in the employment regulations, etc., there are legal impediments when
exercising the right to receive payment of reasonable compensation until the payment
time pursuant to the provisions of the employment regulations, etc. comes. The payment
time should be construed to be the starting point of the extinctive prescription of theright to receive payment of reasonable compensation (see the judgment of the Third
Petty Bench of the Supreme Court on April 22, 2003, Minshu Vol. 57, No. 4, at 477).
B. The right to receive a patent for the invention related to Patent 1-5 was transferredto the First-instance Defendant around March 23, 1984 (1. (2) B. (A) above). The Firstinstance Defendant's Invention and Device Rules at that time (Exhibit Otsu 4) had thefollowing provisions: "If particularly prominent achievements were made by working
or licensing an invention for which industrial property rights were registered, they are
examined annually and the inventor in question may receive a special award." and "Thespecial award as defined in the preceding paragraph is examined in a management
meeting for an invention that has been registered for the industrial property right andthat has been worked or licensed."Then, the starting point of the extinctive prescription of the right to demand paymentof reasonable compensation for Invention 1-5 is when the establishment of Patent 1-5
was registered or when the invention was worked or licensed, whichever comes later.
Patent 1-5 was registered on March 5, 1991 (1. (2) B. (B) above), while the Firstinstance Defendant manufactured and sold CD-ROM drives that worked the invention
stated in Claim 7 of Patent 1-5 by around 1990 at the latest and started manufacturing
and selling CD-R drives that worked the invention stated in Claims 1 and 5 of Patent 15 (1. (2) G. (A) above). Therefore, the starting point of extinctive prescription of theright to demand payment of reasonable compensation for Invention 1-5 is the time of
its registration, March 5, 1991.
C. Next, the right to receive the patent for Invention 2-1 was transferred to the Firstinstance Defendant around May 1995 (1. (3) B. (A) above). In the First -instance
Defendant's Invention and Device Rules at that time (Exhibit Otsu 27), there were thesame provisions as the Invention and Device Rules mentioned in B. above. Therefore,
the starting point of extinctive prescription of the right to demand payment of
reasonable compensation for Patent 2-1 is when the establishment of Patent 2-1 wasregistered or when the invention was worked or licensed, whichever comes later. Patent54

2-1 was registered on September 8, 1998 (1. (3) B. (E) above), while the First -instance
Defendant started manufacturing and selling DVD-RAM recorders for which theinvention stated in Claims 1 through 7 of Patent 2-1 was worked by October 9, 2004 at
the latest (1. (3) G. (A) above). Therefore, the starting point of extinctive prescriptionof the right to demand payment of reasonable compensation for Invention 2-1 is October
9, 2004, which is the working date of the invention.
(2) Existence of acknowledgment of debt or loss of the right of invocation
A. Concerning the provisions on extinctive prescription of the claim, based on thetransitional measures pursuant to Article 10 of the Supplementary Provisions of the
Civil Code amended by Act No. 44 of 2017, the Civil Code before amendment is applied
to claims that arose before the enforcement date and therefore, determinations are madebased on that fact hereinafter.
B. As stated in (1) above, the starting point of extinctive prescription of the right todemand payment of reasonable compensation for Invention 1-5 is March 5, 1991, andtherefore, said right of claim extinguishes due to prescription by the passage of March
5, 2001 unless there are grounds for a renewal of the prescription. The starting point of
extinctive prescription of the right to demand payment of reasonable compensation forInvention 2-1 is October 9, 2004 and therefore, the right of claim extinguished due toprescription by the passage of October 9, 2014 unless there are grounds for a renewalof the prescription.
In this regard, the First-instance Defendant paid to the First-instance Plaintiff [i]200,000 yen as incentive remuneration related to Invention 1-5 on December 18, 2006
(hereinafter referred to as the "Payment in 2006"), [ii] 500,000 yen as incentive
remuneration related to Invention 2-1 on December 17, 2004 (hereinafter referred to as
the "Payment in 2004") respectively (1. (2) G. (C) and (3) G. (C) above). The First instance Plaintiff alleged that, concerning [i], it was paid as partial performance of theright to demand payment of reasonable compensation for Invention 1-5 and it falls
under acknowledgment of debt after completion of prescription, and therefore, the Firstinstance Defendant lost the right to invoke the extinctive prescription of the right todemand payment of reasonable compensation for Invention 1-5; concerning [ii], it was
paid as partial performance of the right to demand payment of reasonable compensation
for Invention 2-1 and therefore, the prescription was renewed due to acknowledgmentof debt; as payment was demanded within ten years from the end of the grounds forrenewal of the prescription, and a demand by litigation was made, extinctive
prescription has not yet completed. Therefore, it is examined below.
Concerning an employee, etc. who transferred the right to receive patents to an55

employer pursuant to employment regulations, etc., in cases where the employment
regulations, etc. have provisions related to the compensation that the employer, etc.
should pay to the employee, etc., if the amount of compensation thereof is less than theamount of compensation that is determined in accordance with the provisions of Article
35, paragraph (4) of the Former Patent Act, it is construed that the employee, etc. may
demand payment of the amount of compensation equivalent to the amount in shortfall
based on the provisions of paragraph (3) of said Article (see the judgment of theSupreme Court above). In short, the compensation specified in employment regulations,etc. is only part of reasonable compensation as determined by paragraph (3) andparagraph (4) of said Article unless it meets the purport and details of paragraph (4) of
said Article.
Looking at the First-instance Defendant's Invention and Device Rules related toincentive remuneration for employee inventions applied for the Payment in 2006, there
are

the

following

provisions

(1.

(2)

G.

(B)

above):●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●. In addition, looking at the Firstinstance Defendant's Invention and Device Rules related to incentive remuneration for
employee inventions applied for the Payment in 2004, there are the following provisions
(1.

(3)

G.

(B)

above):●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●. However, under these Invention and Device Rules, even in cases
where the amount of profits that the employer, etc. should receive from employee
inventions is a large amount, only the amount corresponding to the class unproportional56

to the profits is paid. Therefore, it does not meet the purport and details of Article 35,
paragraph (4) of the Former Patent Act.
As mentioned above, in particular, in cases where profits that employer, etc. should
receive from employee inventions are a large amount, the First-instance Defendant's
Invention and Device Rules are not deemed to meet the purport and details of Article
35, paragraph (4) of the Former Patent Act. Therefore, the compensation for employee
inventions to be paid based on said rules is only part of the reasonable compensation
specified in paragraph (3) and paragraph (4) of said Article.
In addition, the First-instance Defendant, which is a listed company and required tocomply with laws and regulations, should have known the explanation of theaforementioned judgment of the Supreme Court. At the time of the Payment in 2006,
Patent 1-5 was a standard essential patent for CD-ROMs. It brought to the First-instance
Defendant an allocation of a large amount of royalties, ●●●●● yen (worldwide),as a patent subject to licensing under the Joint License Program, including otherderivative standards, and also a large amount of royalties, approximately 17 billion yen,paid by SCE as compensation for working, including Patent 1-5, since CD-ROMs wereadopted in PS1 and PS2 gaming consoles and game discs. Therefore, the First-instance
Defendant has naturally acknowledged that said amounts are less than the amount of
reasonable compensation specified in accordance with the provisions of Article 35,
paragraph (4) of the Former Patent Act. In the same way, at the time of the Payment in
2004, Patent 2-1 was a standard essential patent for DVD-ROMs. It brought to the Firstinstance Defendant an allocation of a large amount of royalties, ●●●● yen(worldwide), as a patent subject to licensing under the 3C License Program, including
their derivative standards, and also a large amount of royalties, approximately 7.7
billion yen, paid by SCE as compensation for working, including Patent 2-1, since
DVD-ROMs were adopted in PS2 game discs. Therefore, the First-instance Defendant
has naturally acknowledged that said amount is less than the amount of reasonable
compensation specified in accordance with the provisions of Article 35, paragraph (4)of the Former Patent Act.
Based on the above, the Payment in 2004 and Payment in 2006 correspond to partial
performance of the right to demand payment of reasonable compensation for Invention
1-5 and Invention 2-1 and fall under acknowledgment of debt.
C. The First-instance Defendant alleged that, according to the First-instance
Defendant's Invention and Device Rules at that time, the Payment in 2006 and Payment
in 2004 are incentive remunerations for the contributions related to the profits obtained
until said fiscal years, but not the acknowledgment of debt of the right to demand57

payment of reasonable compensation related to the profits obtained in the following
fiscal year and after. However, the First-instance Defendant's Invention and Device
Rules have no provisions to limit the subject of evaluation for incentive remuneration
to the contribution by the time of the examination, including the provisions for re examination, but they stipulated review of the evaluation when the contribution of theinvention significantly increased over the original projection (those related to regranting incentives in 2010, although it is different in time). Therefore, theaforementioned allegation of the First-instance Defendant is groundless.
D. Based on the above, the Payment in 2006 (Patent 1-5) falls under the
acknowledgment of debt after completion of prescription. Therefore, the First-instance
Defendant lost the right to invoke prescription concerning the right to demand paymentof reasonable compensation related to Patent 1-5 under the principle of good faith.
In addition, the Payment in 2004 (Patent 2-1) falls under the acknowledgment ofdebt before completion of prescription and therefore, it falls under grounds for renewalof prescription and extinctive prescription started on December 18, 2004. However, theFirst-instance Plaintiff demanded payment by the First-instance Defendant based on theright to demand payment of reasonable compensation for Invention 2-1 (Exhibit Ko176) and filed the principal action on April 28, 2015, within six months from thedemand (salient fact to this court). Therefore, it should be said that extinctive
prescription has not expired.
5. Conclusion
Based on the above, since the First-instance Plaintiff's claim has grounds to theextent of demanding payment of 32,048,673 yen and the amount of dela y damages
accrued thereon at the rate of 5% per annum as prescribed by the Civil Code for theperiod from May 13, 2015 until the completion of the payment, the claim is granted tothis extent and the rest are groundless and should be dismissed.
Consequently, the judgment in prior instance, which differs from the above, ispartially inappropriate and therefore, the judgment in prior instance is altered as statedabove based on the appeal of the First-instance Plaintiff and the First-instance
Defendant's appeal is groundless and dismissed. The judgment is rendered as stated in
the main text.
Intellectual Property High Court, Fourth Division
Presiding judge: KANNO Masayuki
Judge: NAKAMURA Kyo
Judge: OKAYAMA Tadahiro
58

(Attachment 1)
No. ofAttachment 7(see Exhibit
Otsu 192) ofFirst-instance
Defendant's
Brief (8)No. of Firstinstance
Defendant's
Brief (14)

2404

1

2409

2

2441

3

2449

4

2451

5

2466

6

2469

7

Title of the invention
Possibility to fall(Translation by the Firstunder CD audio disc- Possibility to fall under CD
instance Plaintiff)
relatedpatents (10th audio player-related patents
Allegation of the First-instance Defendant (First-instance
Outline of the scope of independent claims (U.S. patent)
Judgment of this court
U.S. Application/Patent No.
Brief for Appeal of(10th Brief for Appeal of
Defendant's Brief (14))(Corresponding Japanesethe First-instancethe First-instance Plaintiff)
Publication No.)
Plaintiff])
Recording medium and (Claim 1) A recording disc with an uninterrupted spiral groove No possibility
No possibility
This patent relates to a recording disc with a groove having a This patent has the following matters required to identify the invention: "aprocess of manufacturing wherein the groove is substantially in the shape of a Gaussian CD audio discs have This invention is an constant width and a process of manufacturing the same, and recording disc with an uninterrupted spiral groove" (Claims 1 and 2), "athe same recording medium distribution curve.
neither uninterrupted invention of a recording disc Claim 1 is as follows. "In a recording disc that has an recording disc in the shape of a Gaussian distribution curve" (Claim 3), and "awith a groove having a (Claim 2) A recording disc with an uninterrupted spiral groove spiral groove nor that oraprocessof uninterrupted spiral groove, which has a constant pitch opening, recording disc with an uninterrupted spiral groove in the shape of a Gaussianconstant width
wherein the depth shape of the groove is prescribed by dx.
the groove has the manufacturing the same and on the surface of the disc to express recorded information distribution curve" (Claim 6). In response to the allegation of the First-instance
US1976710098A/US41527 (Claim 3) A process of manufacturing a recording disc with a shape of a Gaussian has no relation to CD audio wherein the depth of the groove changes along the latter; said Plaintiff that CD audio discs do not have such uninterrupted spiral groove and26Agroove that is substantially in the shape of a Gaussian distribution distribution curve.
players.
groove has an inverted bell-shaped cross section that changes the groove has the shape of a Gaussian distribution curve, the First-instance(Unexamined
Patent curve.
In the first place, thisaccording to changes in said depth of the groove so as to ensure Defendant only counter-argues that a "groove" is provided on a CD disc. It
Application Publication No. (Claim 6) A replayable recording disc with an uninterrupted spiral invention
wasthat the width of the groove at the opening of the groove is cannot be said that this patent falls under patents related to [c] in the Joint
1976-104801)
groove that is in the shape of a Gaussian distribution curve.
developed for analog
substantially uniform, irrespective of said depth of the groove. License Program on the grounds that CD audios are also standardized products(Exhibit Otsu 395)
video discs and has no
The groove is substantially in the shape of a Gaussian and are abstractly operable. In addition, as this patent relates to a recording
relation to digital CD
distribution curve." Regarding optical discs, including CD discs, disc or a process of manufacturing the same, it has no relation to CD audio
audio discs.
a groove is also provided on the surface of a disc, and at least players, and it cannot be said that this patent falls under patents related to [c]when the contract of Exhibit Otsu 152 was used (around 1990), in the Joint License Program.
it was impossible to look into standards that would be created as
standards derived from CD-Audio standards and CD-ROM
standards, and there was the possibility that this patent would be
related to standards that might be created in the future.
Optical video reproducer (Claim 1) A device for optically reproducing information which has No possibility
No possibility
This patent is for an optical video reproducer with tracking This patent has the following matter required to identify the invention: "awith tracking control and a means, etc. of correcting the time axis by using a time axis This invention is an CD audio players do not use control and TBC and is a patent that can be related to tracking device for optically reproducing information which has a means, etc. ofTBC
correction mirror adjacent to an objective lens.
invention of a device a time axis correction technology (laser light control technology) for reproducers. As correcting the time axis by using a time axis correction mirror adjacent to an
US1977797140A/
for
optically mirror. Time axis correction stated in Claim 1 ("in a device for optically reproducing objective lens." It is thus an invention of a "device" for optical reproduction.
US4136362A
reproducing
is not necessary for digital information signals recorded on the recording track on the Therefore, it is clear that this patent cannot be considered to be related to CD(Unexamined
Patentinformation and has audio discs (it is necessary surface of a recording medium"), this patent is a patent related audio discs. Next, the First-instance Defendant alleges that this patent is a
Application Publication No.
no relation to CD in the case of an analog to optical discs, including CD-Audio discs and CD-ROM discs. patent related to optical CD audio discs and other optical discs based on the
1977-141608)
audio discs.
process). Incidentally, thisfact that Claim 1 includes the following matter required to identify the(Exhibit Otsu 396)
invention was developed forinvention: "a device for optically reproducing information signals recorded on
analog video discs and has
the recording track on the surface of a recording medium." The First-instanceno relation to CD audio
Defendant also alleges that the time axis correction mirror (time baseplayers.
correction mirror) is not used for CD audio players and that correction of thetime axis is necessary in the case of an analog process but is not necessary for
digital audio. In response to this allegation, the First-instance Plaintiff has not
submitted any rebuttal evidence regarding adoption of such technology in CD
audio standards. Therefore, it cannot be said that this patent falls under patents
related to [c] in the Joint License Program.
Optical reproducing head
(Claim 1) An optical reproducing head characterized in that it has a No possibility
No possibility
This patent is for an "optical reproducing head," that is, As this patent is for an invention related to an "optical reproducing head," it is
US1980189577A/
semiconductor laser source, a first off-axis hologram lens that has This invention is an CD audio players do not use technology relating to optical pickup, and the subject field is the clear that this patent cannot be considered to be related to CD audio discs.
US4458980A
parallel beam come out by the incoming of beam coming out from inventionofa an optical reproducing head field of optical discs. An optical pickup means an active optical Next, although the "optical reproducing head" of this patent is one that has a(Unexamined
Patent said semiconductor laser source, and a second off-axis hologram reproducing head and that has a first off-axis part comprising a laser source, a light receiving component, and first off-axis hologram lens and a second off-axis hologram lens, the FirstApplication Publication No. lens that has focused beam to be applied to an optical recording has no relation to CD hologram lens and a second a precision mechanism component for reproducing information instance Defendant only alleges that this patent is for technology relating to
1981-047933)
medium come out by the incoming of parallel beam coming out audio discs.
off-axis hologram lens, and from optical discs and recording information thereon when an optical pickup and that the subject field is the field of optical discs and does
(Exhibit Otsu 398)
from said off-axis hologram lens 1.
this invention has no optical disc media, such as a CD (compact disc) and DVD not make a specific allegation in relation to CD audio-related technology.
relation to CD audio players. (digital versatile disc), is loaded in an optical disc drive or player. Therefore, it cannot be said that this patent falls under patents related to [c] in
the Joint License Program.
Process of manufacturing (Claim 1) A process of manufacturing inline hologram lens, which No possibility
No possibility
This patent is for a "process of manufacturing inline hologram As this patent is for an invention related to a process of manufacturing inline
inline hologram lenscomprises a step of producing coherent diffracted wave beam by a This invention is an This invention is an lens" and relates to a process of manufacturing inline hologram hologram lens, it is clear that this patent cannot be considered to be related to
US1981261728A /diffraction means, a step of producing coherent spherical wave invention of a process invention of a process of lens used in 3. above.
CD audio discs. In addition, although the First-instance Defendant alleges that
US4393126A
beam by an objective lens means different from said diffraction of
manufacturing manufacturing
hologram
this patent relates to a process of manufacturing inline hologram lens used in(Examined
Patent means, a step of having said diffracted wave beam come in a light- hologram lens and has lens and has no relation to
3. above, as stated in 3. above, there is no sufficient evidence to find that the
Application Publication No. sensitive layer as reference wave beam that is vertically provided, no relation to CD CD audio players.
patent pertaining to 3. is for CD audio-related technology. Therefore, this1989 -050910)
and a step of having said spherical wave beam vertically come in audio discs.
patent also cannot be considered to fall under patents related to [c] in the Joint(Exhibit Otsu 399)
said light-sensitive layer through said diffraction means as subject
License Program.
wave beam, etc. at the same time as the immediately previous
process, etc.
Releasable cover locking (Claim 1) A releasable cover locking device of a recording and/or No possibility
No possibility
This patent is for a "releasable cover locking device," and as As this patent relates to a cover locking device of a reproducing device, it isdevicereproducing device suited for the movement of a recording medium This invention is an CD audio players do not use understood from the statement of the claims, this patent relates clear that this patent cannot be considered to be related to CD audio discs. On
US1981296492A/
with electricity being supplied to the device, which has a first invention of a cover the cover locking device to a cover locking device of a disc reproducing device as the other hand, there is no statement suggesting the fact of working of thisUS4412320A
release means that is released when electricity is supplied and the locking device and has defined in this invention. In hardware, and it is naturally an invention that is also applicable invention in a magazine covering "CD-63" manufactured by Marantz (Exhibit(Unexamined Utility Model moving speed of a disc is below the prescribed value and a second no relation to CD the first place, this invention to optical disc reproducing devices. (In fact, a lid opening and Otsu 433) and a catalog of "CD-ROM DISCMAN" manufactured by the FirstApplication Publication No. release means that is released when supply of electricity is cut off. audio discs.
was developed for a closing system had been adopted in a type of CD player instance Defendant (Exhibit Otsu 434), both of which were submitted by the
1982-04970)(Claims 8, 9, and 10) A releasable cover locking device of amechanism for releasing a manufactured by Nippon Marantz, "CD-63." In addition, a First-instance Defendant as the working examples of this invention.
(Exhibit Otsu 400)
recording and/or reproducing device for which Claim 1 is definedlocking mechanism of a lid system in which a lid is opened and closed like the Patent had Nevertheless, it is considered possible to mount a first release means that isin detail from a mechanical perspective.
that is provided on an analog been adopted in a type of portable CD-ROM drive (player) that released when the moving speed of a CD audio disc is below the prescribedvideo disc player in a way the First-instance Defendant had manufactured and sold.)value and a second release means that is released when supply of electricity isthat it covers the top of acut off on CD audio players. Therefore, it is reasonable to count this patent as
disc, and it has no relation to
one related to CD audio players.
CD audio players.
Opticalrecordingand (Claim 1) An information recording and reproducing device which No possibility
No possibility
As it is clear from the title of the invention pertaining to this As this patent relates to an optical recording and reproducing device, it is clear
reproducing device with records optical information on a recording medium and reproduces This invention is an This invention is an patent, "Optical recording and reproducing device with that this patent cannot be considered to be related to CD audio discs. Next, as
improved focus control
it from said recording medium, wherein, at the time of recording, inventionofa invention of a recording and improved focus control," this patent relates to a process of CD audio discs have no recording means, this patent also cannot be considered
US1982401016A/
information is recorded on said recording medium by main beam recording
and reproducing device for reproducing an optical disc (recording and reproducing device to fall under patents related to [c] in the Joint License Program in relation to
US4547872A
and the focus of said recording medium by said main beam is reproducing
device recording and reproduction for optical discs). Specifically, at the time of recording, focus is CD audio players.
(Unexamined
Patent controlled based on difference between outputs detected by the first and has no relation to which is characterized in its controlled by side beam, and at the time of reproduction,
Application Publication No. and second
accessory light detectors, and at the time of CD audio discs.
focus control, and it has no tracking is controlled by using side beam.
1983-019744)
reproduction, reproduced signals are obtained from said main light
relation to CD audio players(Exhibit Otsu 401)
detector by scanning the recording track of said recording medium
without recording function.
with said main beam and the transverse tracking of said main beamon the recording track is controlled by the detected outputs of saidfirst and second accessory light detectors.
Light modulating device(Claim 1) A light modulating device for use with a recording means No possibility
No possibility
As it is clear from the title of the invention pertaining to this As this patent relates to a light modulating device, it is clear that this patent
US1982428070A/
for recording information signals on a recording medium, which This invention is an This invention is an patent, "Light modulating device," this patent is a patent for an cannot be considered to be related to CD audio discs. In this regard, the FirstUS4477821A
has an oscillator means for producing high-frequency carrier invention of a light invention of a light invention related to a light modulating device (meaning a device instance Defendant alleges that this patent uses a light modulating device like
(Unexamined
Patent signals and an amplitude modulation means for controlling the modulating
device modulating device for use in that changes the wavelength, intensity, phase, etc. of light mainly this patent in the process of manufacturing CDs and other discs. However, theApplication Publication No. amplitude of high-frequency carrier signals, etc.
and has no relation to a recording means and has by electric signals) (see Claim 1). This patent is for an invention First-instance Defendant has not submitted any evidence supporting such
1983-062630)
CD audio discs.
no relation to CD audio related to a light modulating device. In the process of allegation. Therefore, the allegation of the First-instance Defendant is not(Exhibit Otsu 402)
players without a recording manufacturing CDs and other discs, a light modulating device acceptable. Next, as CD audio players have no recording means, this patentmeans.
like this patent is used when modulating laser light to be also cannot be considered to fall under patents related to [c] in the Jointdelivered to the master based on data to be recorded.
License Program in relation to CD audio players.

59

2483

8

2485

9

2486

10

Optical reproducing device (Claim 1) An optical reproducing device wherein first, second, and No possibility
There is the possibility.
The title of this patent is "Optical reproducing device." This As this patent relates to an optical reproducing device, it is clear that this patent
US1983535850A/
third light detectors are arranged while leaving a space from a This invention is an Tracking control methods patent relates to an optical pickup device as it is clear from the cannot be considered to be related to CD audio discs. On the other hand,
US4592038A
semiconductor laser source and an objective lens, a phase shape invention of an optical are roughly divided into the following statement of the claims: with "a concave lens for regarding CD audio players, the First-instance Plaintiff also alleges that it is(Unexamined
Patent diffraction grating, which separates laser beam from the reproducing
device three-beam method, the making diffracted beams diverge," "the concave lens is attached impossible to deny the possibility that a tracking error signal pertaining to thisApplication Publication No. semiconductor laser source into 0, +1, and -1 diffracted beams, is and has no relation to push-pull method, and DPD between said light detector and said beam splitter and makes it patent is worked in some of early CD audio players. Therefore, it is reasonable
1984-058637)
arranged between said semiconductor laser and a beam splitter, and CD audio discs.
method, etc. This invention easy to determine the position of said light detector so as to to count this patent as one related to CD audio players.
(Exhibit Otsu 404)
a tracking error signal is obtained based on difference between
pertains to the three-beam ensure that a tracking error signal can be obtained by calculating
outputs detected by the second and third light detectors which
method and is an invention difference between outputs detected by said second and third
receive reflected beams, which are said +1 and -1 diffracted beamsof one approach of that light detectors."
from an optical recording medium that are reflected by said beam
method.
splitter.
It is impossible to deny thepossibility that the means ofdetecting a tracking error
signal of this invention has
been worked in some ofearly CD audio players.
Information
recording (Claim 1) An information recording medium, which has a light No possibility
No possibility
The title of the invention pertaining to this patent is "Information This patent is for an invention related to an information recording medium. As
mediumtransmissive substrate, a recording layer that is formed on said This invention is an This invention is an recording medium," and as it is clear from the statement of the CD audio discs have no recording layer, this patent cannot be considered to be
US1983549741A/
substrate and has the property of changing optical property when inventionofan invention of a recording claims, the invention pertaining to this patent is an invention related to CD audio discs. In addition, as this patent is for an invention related
US4525412A
incoming recording light is converted into heat therein, a protective information recording medium and has no relation related to an "information recording medium" comprising a to a recording medium, it is clear that this patent cannot be considered to be(Unexamined
Patent layer that is coated on said recording layer and has optical medium that has a to CD audio players.
"light transmissive substrate," a "recording layer," a "protective related to CD audio players. Therefore, this patent cannot be considered to fall
Application Publication No. absorption property as arranged as follows, and plane layers that recording layer inlayer," and "plane layers." Therefore, regarding recordable under patents related to [c] in the Joint License Program in relation to both CD
1984-090248)
absorb said recording light passing through said recording layer, are accordance with heat
optical discs before the emergence of CD-R standards, audio discs and players.
(Exhibit Otsu 405)
stacked on said protective layer, and can inhibit mechanical changes and has nocompanies had carried forward examination of various
deformation of said recording layer.
relation to CD audio
possibilities based on such structure.
discs
withouta
recording layer.
Optical recording medium (Claim 1) A reflective optical recording medium wherein recording No possibility
No possibility
The title of the invention pertaining to this patent is "Optical This patent is for an invention related to a reflective optical recording medium
US1983551083A/
materials, for which energy reflection coefficient of the recording This invention is an This invention is an recording medium," and as the claims contain the term, wherein recording materials are provided in layers on the surface where a track
US4606018A
part is increased by recording of information, are provided in layers invention of an optical invention of a recording "reflective optical recording medium" (Claim 1), the invention guide groove is formed. There is no sufficient evidence to find that such track(Unexamined
Patent on the surface where a track guide groove is formed, for which the recording
medium medium and has no relation is an invention related to an optical disc. Then, this patent is for guide groove is provided on CD audio discs. In addition, CD audio discs have
Application Publication No. depth, etc. of the track guide groove are given by the prescribed whereinrecording to CD audio players.
an invention intended to achieve "improved efficiency" by no recording means. Therefore, at any rate, it cannot be said that this patent
1984-096546)
equations.
materials are provided
meeting parameters limited in the claims.
relates to CD audio discs. Moreover, as this patent is for an invention related(Exhibit Otsu 406)
in layers on a track
to a recording medium, it is clear that this patent cannot be considered to be
guide groove, and it
related to CD audio players. Therefore, this patent cannot be considered to fall
has no relation to CD
under patents related to [c] in the Joint License Program in relation to both CDaudio discs that haveaudio discs and players.
neither a track guidegroove nor a recording
part.

60

(Attachment 2)

From fiscal year 1993 through fiscal year 2002
Exclusive profits (including subject patents other than Patent 1 -Contribution

5)

percentage ofRoyalty allocation amount under the Joint License Program

Patent 1-5

Subtotal

Subject product[i] CD-ROM Disc[ii] CD-ROM Drive[iii] CD-R Disc[iv] CD-R Drive[v] CD-RW Disc[vi] CD-RW Drive[vii] Video CD Disc[viii] Video CD Player
From fiscal year 2003 through fiscal year
2005
Exclusive profits (including subject patents other than Patent 1 -Contribution

5)

percentage ofRoyalty allocation amount under the Joint License Program

Patent 1-5

Subject product[i] CD-ROM Disc[ii] CD-ROM Drive[iii] CD-R Disc[iv] CD-R Drive[v] CD-RW Disc[vi] CD-RW Drive[vii] Video CD Disc[viii] Video CD Player

61

Subtotal(Attachment 3) Table 1-1: Royalties to be paid to the First-instance Defendant by SCE－For PS1 gaming console main bodies (products compliant with CD-ROM
player standards) sold in the U.S.A.
PS1 gaming console main body prices
Number of PS1 gaming console Royalties to be
US dollars (first line)
main bodies sold in North
paid to the FirstYen (first line)
Period (second line)
America (10,000 units)
instance
Average foreign[Exhibit Ko 295]
Defendant
exchange rate × ●●● (sales amount in the[A] × [B]during said period
U.S.A) (first line)
Subject period(second line)●●●●●
Subject period (second line)*1
Sep. 9, 1995 to Mar. 22,[Exhibit Ko 296]
[Exhibit Ko 297](yen)2005 *2
[A]
[B]
[C]
299
Sep. 9, 1995 to Apr. 1996199
May 1996 to Mar. 2, 1997
149
Mar. 3,1997 to Aug. 31, 1998
129
Sep. 1,1998 to Aug. 22, 1999
99
Aug. 23, 1999 to Jun. 30,
2002*349*3Jul. 1, 2002 to Dec. 31, 2004
49
Jan. 1, 2005 to Mar. 22, 2005
Total sum
*1: Date of start of sales of PS1 (Exhibit Ko 295)
*2: Date of expiration of the right for Patent 1-5*3: In response to the revision of the price of "PS one" to " ●●●" in May 2002, the entire sales
amount on and after July 1, 2002 was considered as that for "PS one" for convenience of
calculation.
*4: This foreign exchange rate is the average of the average foreign exchange rates during the
subject period, 1995 and 1996 (the period of sales in ●●●●) (Exhibit Ko 296). The same
applies to others.
*5: Although the period of sales in ●●●●●● is "Sep. 9, 1995 to Apr. 1996," the period ofsales at the same price was set as "Sep. 9, 1995 to Mar. 31, 1996" when using the aggregateddata of Exhibit Ko 297 (adjustment toward making royalties calculated become lower). The same
applies to others.
*6: The result "0" (10,000 units) was calculated by dividing the number of PS1 gaming console main
bodies sold in North America (●●●●●●●●●●●●) during the period from "Jan. 1,
2005 to Mar. 31, 2005" (90 days) by 81 (the number of days during the period from "Jan. 1, 2005
to Mar. 22, 2005").

62

Table 1-2: Royalties to be paid to the First-instance Defendant by SCE－For PS2 gaming console main bodies (products compliant with CD-ROM player
standards) sold in the U.S.A.
PS2 gaming console main body prices
US dollars (firs line)
Period (second line)[Exhibit Ko 295]

Subject period
Oct. 26, 2000 *1 to Mar. 22,
2005 *2

Number of PS2 gaming

Yen (first line)
Average foreignexchange rate during
said period (secondline)[Exhibit Ko 296][A]

console main bodies sold in
North America (10,000
units)
× ●●● (sales amount in
the U.S.A) (first line)
Subject period (second line)[Exhibit Ko 298]
[B]

Royalties to be
paid to theFirst-instance
Defendant[A] ×[B]
●●●●●
(yen)
[C]

299
Oct 26, 2000 to Apr. 2002199
May 2002 to Jul. 2003
179
Aug. 2003 to Apr. 2004149
May 2004 to Dec. 31, 2004
149
Jan. 1, 2005 to Mar. 22, 2005
Total sum
*1: Date of start of sales of PS2 (Exhibit Ko 295)
*2: Date of expiration of the right for Patent 1-5*3: The result "●" (10,000 units) was calculated by dividing the number of PS2 gaming console
main bodies sold in North America (●●●●●●●●●●● (10,000 units)) during theperiod from "Jan. 1, 2005 to Mar. 31, 2005" (90 days) by 81 (the number of days during theperiod from "Jan. 1, 2005 to Mar. 22, 2005").

63

Table 2-1: Royalties to be paid to the First-instance Defendant by SCE－For PS1 game discs (products compliant with CD-ROM disc standards) sold in the
U.S.A.
Number of PS1 game discs soldin North America (10,000 units)
× ●●● (sales amount in the
U.S.A.)[Exhibit Ko 300]

Subject period

Average foreignexchange rate
[Exhibit Ko

Royalties to be paid to the First-instance
Defendant[A] × [B] × ●●●●●●● (yen)296]

Sep. 9, 1995 *1 to Mar. 22,
2005 *2
[A]

[B]

[C]

[Sep. 9, 1995 to Dec. 31, 2004][Jan. 1, 2005 to Mar. 22, 2005]*1: Date of start of sales of PS1 (Exhibit Ko 295)
*2: Date of expiration of the right for Patent 1-5*3: The result "●" (10,000 units) was calculated by dividing the number of PS1 game discs soldin North America (●●●●●●●●●●●●) (10,000 units) during the period from "Jan.
1, 2005 to Mar. 31, 2005" (90 days) by 81 (the number of days during the period from "Jan.
1, 2005 to Mar. 22, 2005").

64

Table 3-1: Royalties to be paid to the First-instance Defendant by SCE－For PS2 game discs (products compliant with CD-ROM disc standards) sold in the
U.S.A.
Number of PS2 game discs sold in North
America (10,000 units)

Percentage of× ●●● (sales amount in the U.S.A.)

products[Exhibit Ko 301] [Exhibit Ko 302]

compliant with
CD-ROM disc

Subject period

standards

Averageforeignexchange
rate

Royalties to be paid to
the First-instance
Defendant[A] × [B] × [C]
× ●●●●● (yen)Oct. 26, 2000 *1 to Mar. 31, 2016 *2
[A]

[B]

[C]

[D]

(Oct. 26, 2000 to Mar. 31, 2007)(Apr. 1, 2007 to Mar. 31, 2012) *3(Apr. 1, 2012 to Mar. 31, 2013) *4(Apr. 1, 2013 to Mar. 31, 2014)(Apr. 1, 2014 to Mar. 31, 2015)(Apr. 1, 2015 to Mar. 31, 2016)(Apr. 1, 2014 to Mar. 31, 2015)*1: Date of start of sales of PS2 (Exhibit Ko 295)
*2: For convenience of calculation, the end of the period was set as before the d ate of expirationof the right for Patent 2-1 (May 29, 2016).
*3: The result "●●" (10,000 units) was calculated by multiplying the total for the period fromfiscal 2007 to fiscal 2011 (Apr. 1, 2007 to Mar. 31, 2012), ●● (10,000 units) (= "●●●●●●●●●●●●●●●●●●●●●●●●"; Exhibit Ko 302), by "●●●●●●●"
as the portion sold in North America. Incidentally, "●●●●●●●" is the percentage ofthe accumulated number of PS 2 game discs produced and shipped in "North America"
among the accumulated number of PS2 game discs produced and shipped "worldwide" as ofMar. 31, 2007 (Exhibit Ko 301).
*4: The result "●●" (10,000 units) was calculated based on the rate of change in the number ofunits sold ("worldwide") between fiscal 2010 (Apr. 1, 2010 to Mar. 31, 2011) and 2011
(Apr. 1, 2011 to Mar. 31, 2012) (48% compared with the previous year (= "●●●●●●●": Exhibit Ko 302)) ("●●●●●●●●●●●●●●" [North America]). The same
applies thereafter.

65

Table 3-2: Royalties to be paid to the First-instance Defendant by SCE－For PSP game discs (products compliant with UMD disc standards) sold in the U.S.A.
Number of PSP game discs sold in North
America (10,000 units)
× ●●% (sales amount in the U.S.A.)[Exhibit Ko 305] [Exhibit Ko 306]

Royalties to be paid to the
Average foreign

First-instance Defendantexchange rate

[A] × [B] × ●●●●
(yen)

Subject period
Mar. 24, 2005 *1 to Mar. 31, 2016 *2
[A]

[B]

[C]

(Mar. 24, 2005 to Mar. 31, 2007)(Apr. 1, 2007 to Mar. 31, 2012) *3(Apr. 1, 2012 to Mar. 31, 2013) *4

102 yen/dollar(Apr. 1, 2013 to Mar. 31, 2014)(Apr. 1, 2014 to Mar. 31, 2015)(Apr. 1, 2015 to Mar. 31, 2016)*1: Date of start of sales of PSP (Exhibit Ko 295)
*2: For convenience of calculation, the end of the period was set as before the d ate of expirationof the right for Patent 2-1 (May 29, 2016).
*3: The result "●●●●" (10,000 units) was calculated by multiplying the total for the period
from fiscal 2007 to fiscal 2011 (Apr. 1, 2007 to Mar. 31, 2012), ●●● (10,000 units) (=●●●●●●●●●●●●●●●●●●●●●●●●●●; Exhibit Ko 306), by ●●●●●●●● as the portion sold in North America. Incidentally, ●●●●●●● is thepercentage of the accumulated number of PSP game discs produced and shipped in "North
America" among the accumulated number of PSP game discs produced and shipped"worldwide" as of Mar. 31, 2007 (Exhibit Ko 305).
*4: The result "●●●" (10,000 units) was calculated based on the rate of change in the numberof units sold ("worldwide") between fiscal 2010 (Apr. 1, 2010 to Mar. 31, 2011) and 2011
(Apr. 1, 2011 to Mar. 31, 2012) (●●% compared with the previous year (= ●●●●●●●●: Exhibit Ko 306)) (●●● × ●● × ●●●●●●●●● [North America]). The
same applies thereafter.

66

(Attachment 4-1)
Joint License Program (related to Invention 1-5)
(From fiscal year 1993 to fiscal year 2002)

Product
category

Degree of
Outstanding
the FirstExclusive Degree ofamount after
instance
the FirstAmount of
profits
Royalties Royalties
deduction of
Plaintiff's
instance
reasonable(worldwide) (U.S.A.)
from
court-related
Defendant's contribution contribution
Patent 1-5
contribution among cocosts
inventors

CD-ROM
Disc
CD-ROM
Drive
CD-R Disc
CD-R
Drive
CD-RW
Disc
CD-RW
Drive
Video CD
Disc
Video CD
Drive
Total

Joint License Program (related to Invention 1-5)
(From fiscal year 2003 to fiscal year 2005)

Product
category

Degree of
Outstanding
the FirstExclusive Degree ofamount after
instance
the FirstAmount ofRoyalties Royalties
profits
deduction of
Plaintiff's reasonableinstance(worldwide) (U.S.A.)
from
court-related
Defendant's contribution contribution
Patent 1-5
contribution among cocosts
inventors

CD-ROM
Disc
CD-ROM
Drive
CD-R Disc
CD-R
Drive
CD-RW
Disc
CD-RW
Drive
Video CD
Disc
Video CD
Drive
Total

67

(Attachment 4-2)
PS1 gaming console (related to Invention 1-5)

Subject period[i] Profits that the Firstinstance Defendant should
receive(Column [C] in Table1-1 ×
0.8)[ii] Profits that the
Degree of theFirst-instanceFirst-instance
Defendant should
Defendant's
receive for Patent 1contribution
5

Degree of theFirst-instancePlaintiff's
contribution
among coinventors

Amount ofreasonable
compensation

1995.9.9 to 1996.4
1996.5 to 1997.3.2
1997.3.3 to 1998.8.31
1998.9.1 to 1999.8.22
1999.8.23 to
2002.6.30
2002.7.1 to2004.12.31
2005.1.1 to 2005.3.22
Total

PS2 gaming console (related to Invention 1-5)
Subject period[i] Profits that the Firstinstance Defendant should
receive(Column [C] in Table 1-2 ×
0.8)[ii] Profits that the
Degree of theFirst-instanceFirst-instance
Defendant should
Defendant's
receive for Patent 1contribution
5

Degree of theFirst-instancePlaintiff's
contribution
among coinventors

Amount ofreasonable
compensation

2000.10.26 to 2002.4
2002.5 to 2003.7
2003.8 to 2004.4
2004.5 to 2004.12.31
2005.1.1 to 2005.3.22
Total* Regarding the periods colored yellow, the amount obtained by multiplying the figure stated in [i] corresponding to each perio dby, which is the contribution percentage of CD-ROM drive, is the amount stated in [ii].
Regarding the periods colored blue, the amount obtained by multiplying the figure stated in [i] corresponding to each periodby, which is the contribution percentage of CD-ROM drive, is the amount stated in [ii].
* Regarding subject periods for which only year and month are indicated, the first day of the calculation is the 1st of the rel evant
month and the closing day is the last day of the same month.

PS1 game disc (CD-ROM disc) (related to Invention 1-5)
Subject period[i] Profits that the First[ii] Profits that the
Degree of the Degree of the Firstinstance Defendant shouldFirst-instanceAmount ofFirst-instance instance Plaintiff's
receive
Defendant should
reasonable
Defendant's contribution among(Column [C] in Table 2-1 × receive for Patent 1compensation
contribution
co-inventors
0.8)
5

1995.9.9 to
2004.12.31
2005.1.1 to 2005.3.22
Total* Regarding the period colored green, the amount obtained by multiplying the figure stated in [i] corresponding to each periodby, which is the contribution percentage of CD-ROM disc, is the amount stated in [ii].
Regarding the period colored orange, the amount obtained by multiplying the figure stated in [i ] corresponding to each periodby, which is the contribution percentage of CD-ROM disc, is the amount stated in [ii].

PS2 game disc (related to Invention 2-1)
Subject period

Profits that theProfits that the First-instance
Degree of the Degree of the FirstFirst-instanceAmount of
Defendant should receive
First-instance instance Plaintiff's
Defendant should
reasonable(Column [C] in Table 3-1 ×
Defendant's contribution among
receive for Patent 2compensation
0.8)
contribution
co-inventors
1

682000.10.26 to2016.3.31

UMD disc (related to Invention 2-1)
Subject period

Profits that the First-instance Profits that the First- Degree of the Degree of the FirstAmount of
Defendant should receive instance Defendant First-instance instance Plaintiff's
reasonable(Column [C] in Table 3-2 × should receive for Defendant's contribution among
compensation
0.8)
Patent 2-1
contribution
co-inventors

2005.3.24 to2016.3.12

69

(Attachment 4-3)
3C License Program (related to Invention 2-1)
Outstanding
Degree ofamountDegree of the FirstExclusive
after
the FirstinstanceAmount ofRoyalties Royalties
profits
Product category
deduction
instance
Plaintiff's reasonable(worldwide) (U.S.A.)
fromof courtDefendant's contribution compensation
Patent 2-1
relatedcontribution among cocosts
inventors
DVD-ROM DiscDVD Video Disc
DVD
RECORDABLE
DiscDVD
RECORDABLE
Drive
Total

One-Red License Program (related to Invention 2-1)

Product category

Degree of theDegree of the First-instanceExclusive
Amount ofRoyalties Royalties
First-instance Plaintiff's
profits fromreasonable(worldwide) (U.S.A.)
Defendant's contribution
Patent 2-1
compensation
contribution among coinventors

DVD-ROM DiscDVD-Video Disc
Total

One-Blue License Program (related to Invention 2-1)

Product category

Degree of theDegree of the First-instanceExclusive
Amount ofRoyalties Royalties
First-instance Plaintiff's
profits fromreasonable(worldwide) (U.S.A.)
Defendant's contribution
Patent 2-1
compensation
contribution among coinventors

BD Recorder
BD Recorder Drive
Total

70

(Attachment 4-4)

SCE License Agreement
Fiscal year

Royalties(U.S.A.)

1995

●●●●●

1996

●●●●●

1997

●●●●●●

1998●●●●●●

1999●●●●●●

2000●●●●●●

2001●●●●●●

2002●●●●●●

2003●●●●●●

2004●●●●●●

2005●●●●●●

2006●●●●●●

2007●●●●●●

2008●●●●●●

2009●●●●●●

2010●●●●●●

2011●●●●●●

2012●●●●●●

2013●●●●●●

2014●●●●●●

2015●●●●●●

2016●●●●●●
Total ●●●●●●●*Years refer to fiscal years (from April 1st until March 31st of the following year) .

(See Exhibit Otsu 244)71