Patent
Right

Date
Case number

June 7, 20192018(Ne)10063

CourtIntellectual Property
High Court, GrandPanel- A case in which the court has determined that in principal an amount of profit earnedby an infringer due to an infringing act as provided in Article 102, paragraph (2) ofthe Patent Act is a total amount of profit earned by the infringer, and a presumption
under the paragraph covers such a total amount of profit.
- A case in which the court has determined that an amount of profit earned by an
infringer due to an infringing act of Article 102, paragraph (2) of the Patent Act is anamount of marginal profit in which only an additional cost that was necessary anddirectly related to manufacture and sales of infringing products by an infringer isdeducted from sales figures of the infringing products, and the burden of proof is ona patentee's side.
- A case in which, with regards to the rebuttal to the presumption under the provisionof Article 102, paragraph (2) of the Patent Act, the court has determined that it is an
infringer who should bear the burden of proving circumstances hindering a legally
sufficient cause between the infringer’s profit and the patentee’s damages, similar to
Article 102, paragraph (1) of the Patent Act. The court also held that circumstances
rebutting the presumption of Article 102, paragraph (2) may include, for example, [i]a difference between patentee’s business and infringer’s business (non-identity of themarket); [ii] the presence of competing products in the market; [iii] marketing efforts
of infringer (branding, advertisement); and [iv] performance of infringing products(features other than patent invention including function and design)- A case in which the court has determined that the main principle in calculating
damages under the provision of this paragraph should be on a sales figure basis of
infringing products by multiplying the sales figure by a royalty rate to be paid for the
implementation.
- A case in which the court has ruled that a royalty rate to be paid for the
implementation of a patent which constitutes a basis for calculating damages under
the provision of Article 102, paragraph (3) of the Patent Act should be determined asa reasonable royalty rate by comprehensively taking into account the following
circumstances appearing in a lawsuit: [i] a royalty rate set in the actual license
agreement for the patent, or if it is indefinite, an average royalty rate in the industry;[ii] the value of the patent; i.e., the technical content or significance of the patentinvention, and the substitutability with alternative technology; [iii] contributions of
the patent to sales and profits and a manner of infringement; and [iv] a competi tive
relationship between patentee and infringer as well as a business policy of thepatentee.
Case type: Injunction, etc.
Result: Appeal dismissed
References: Article 102, paragraphs (2), (3) of the Patent Act, Article 709 of Civil Code
Number of related rights, etc.: Patent No. 4659980, Patent No. 4912492
Summary of the Judgment
1. This is a case in which the Appellee who owns two patent rights (Patents) concerningⅰ

an invention entitled "Carbon Dioxide-Containing Viscous Composition" sought
compensation for damages and the payment for delinquent charge on the basis of a
tortious act of patent right infringement against the Appellant, alleging that the
carbonate pack cosmetics (Defendant's Products) produced and sold by the Appellant
fall within a technical scope of the invention according to the above patent rights.
The issues are whether or not Defendant’s Products fall within a technical scopeof Patents; validity of Patents; and an amount of damages. Since the judgment in priorinstance acknowledged a part of a claim for compensation for damages against theAppellant, the Appellant has appealed and challenged it.
2. The court decision has ruled, as set forth, below and dismissed the appeal by theAppellant with respect to the amount of damages on the Appellee, alleging that
Defendants' Products fall within the technical scope of the patent invention and it did
not recognize that there is any reason for the invalidation of the patents.
(1) Amount of profit earned by an infringer due to an infringing act as provided in
Article 102, paragraph (2) of the Patent Act
A. In principle, an amount of profit earned by an infringer due to an infringing act
as provided in Article 102, paragraph (2) of the Patent Act is a total amount of profit
earned by an infringer and a presumption under the paragraph covers such a total
amount of profit.
An amount of profit earned by an infringer due to an infringing act as provided forin Article 102, paragraph (2) of the Patent Act should be construed as an amount of"marginal profit" in which only an additional cost that was necessary and directly
related with the manufacture and sales of infringing products by an infringer is deductedfrom the sales figures of infringing products by an infringer, and the bu rden of proof ison a patentee's side.
For example, the raw material costs, purchase costs and shipping costs for infringing
products correspond to additional expenses that were necessary and directly relatedwith the manufacture and sales of infringing products. In contrast, for example, an
employment cost in a management section, as well as traveling and communication
costs do not correspond to additional expenses.
B. In this case, the court recognized that among a variety of costs alleged byAppellant, a part of experiment and research costs, promotion and advertising costs
were necessary and directly related with the manufacture and sales of Defendants'
Products, and thus these costs are deductible. However, the court held that there is noevidence that the remaining costs were considered as additional expenses on the part ofDefendants' Products, and thus they are non-deductible.
ⅱ

(2) Ground for rebuttal to presumption under Article 102, paragraph (2) of the
Patent Act
A. It is construed that an infringer should bear the burden of proving circumstances
which rebut the presumption under Article 102 paragraph (2) of the Patent Act byhindering a legally sufficient cause between the infringer’s profit and the patentee’s
damages, similar to Article 102, paragraph (1) of the Patent Act. For example, thefollowing circumstances may be considered as the rebuttal to presumption under Article
102, paragraph (2) of the Patent Act, similar to the circumstances of the proviso to
Article 102, paragraph (1) of the Patent Act: [i] a difference between patentee’sbusiness and infringer’s business (non-identity of the market); [ii] the presence ofcompeting products in the market; [iii] marketing efforts of infringer (branding,advertisement); and [iv] performance of infringing products (features other than patentinvention including function and design). Further, even in a case where a patentinvention is implemented for only a part of the infringing products, these facts may betaken into consideration as the rebuttal to presumption. However, mere fact that thepatent invention is implemented for only a part of the infringing products doesn’t
directly lead to the rebuttal of the presumption. It is necessary to comprehensively take
into account the circumstances such as the importance of a part of an infringing productwhere the patent invention is implemented and the appealing power of the patentinvention for customers.
B. It is construed that a competing product should compete with the infringing
products in the market. Further, should there be circumstances where an infringing
product causes effects superior to the products of patentee or an infringing product is
an implemented product of the other patent invention, it would not directly lead to therebuttal to presumption.

There should be circumstances where the superior effects andthe implementation of the other patent invention contribute to the sales of the infringing
product.
In this case, in the facts for the rebuttal to the presumption, none of th e presence ofcompeting products, business efforts by the Appellant, and the particularly significant
performance of Defendants' Products is recognized, nor is there recognized a fact that
Defendants' Products are the implemented products of the patent invention by one
person of the Appellant, let alone circumstances where such a fact contributes to thesales of the infringing products. Further, the remaining facts for the rebuttal topresumption by the allegations of the Appellant have nothing to do with the damage on
the Appellee, and thus are not material facts for the rebuttal to the presumption.
Therefore, the presumption under Article 102, paragraph (2) of the Patent Act has notⅲbeen rebutted.
(3) Amount to be paid under the provision of Article 102, paragraph (3) of the PatentAct
A. Article 102, paragraph (3) of the Patent Act statutorily specifies a minimal
amount of damage that a patentee can claim against a patent right infringement.
The main principle in calculating damages under the provision of this paragraph should
be on a sales figure basis of infringing products by multiplying the sales figure by aroyalty rate to be paid for the implementation.
B. Regarding "an amount corresponding to an amount to be paid for the
implementation of the patent invention" as provided in Article 102, paragraph (3) of the
Patent Act, the paragraph stipulated before the amendment by 1998 Law No. 51 that"an amount corresponding to an amount to be paid usually for the implementation of
the patent invention,". However, after receiving the opinion that the phrase "an amountto be paid usually" might result in benefitting infringement, the word "usually" wasdeleted by the amendment.
In a license agreement of the patent invention, a royalty rate is det ermined inadvance in a situation where it is usual to be subjected to various contractual restrictions,e.g. a licensee is required to pay a minimum guarantee in a situation where there is
uncertainty as to whether or not the licensee's product might fall within a technicalscope of the patent invention or whether or not the patent should be invalidated, and it
is impossible to seek a refund of the paid royalty fee even if the patent should beinvalidated. On the other hand, there is no such contractual restrictions in a case where
court confirms the validity of the patent and finds patent infringement. Additionally, inview of the aforementioned history of the amendment of the Patent Act, in calculating
damages on the basis of the Article 102, paragraph (3), there is no necessity todetermine a royalty rate based on normal rate in the license agreement for the patentright. A royalty rate to be paid for the implementation would inevitably become a higher
one compared to a normal royalty rate as determined post facto for a person who
infringed a patent right.
Therefore, in a infringement lawsuit, a royalty rate to be paid for the implementation
should be determined as reasonable by comprehensively taking into account thefollowing circumstances appearing in a lawsuit: [i] a royalty rate set in the actual license
agreement for the patent, or if it is indefinite, an average royalty rate in the industry;[ii] the value of the patent; i.e., the technical content or significance of the patentinvention, and the substitutability with alternative technology; [iii] contributions of thepatent to sales and profits and a manner of infringement; and [iv] a competitiveⅳ

relationship between patentee and infringer as well as a business policy of the patentee.
C. In this case, it is reasonable to find that a royalty rate which is determined post
facto for a person who infringed a patent right as remuneration for the implementationof Patents, would not fall below 10% by taking into account the following
circumstances appearing in a lawsuit: [i] Although the royalty rate of the actual license
agreement of Patents is not presented in this lawsuit, an average royalty rate in recent
statistics of a technical field to which Patents pertain is 5.3% in a result of questionnaire
for domestic businesses, and 6.1% in the determination by judgements of courts, andthere is a case where a settlement money was found to be 10% of sales figure withregards to the infringement of Appellee’s patent which is in the same field; [ii] Patents
have considerable importance, and no alternative technology is present; [iii] the
implementation of Patents contributes to the sales and profits of the Defendants'
Products; and [iv] the Appellee and the Appellant have a competitive relationship.

ⅴ

Judgment rendered on June 7, 20192018 (Ne) 10063 Appeal case of seeking injunction against patent infringement (courtof Prior Instance: Osaka District Court, 2015 (Wa) 4292)
Date of conclusion of oral argument: April 24, 2019
Judgment
Appellant: NeoChemir inc.
(Hereinafter referred to as "Appellant NeoChemir")Appellant's representative Attorney at Law

TAKAHASHI Jun

Appellant: COSMEPRO CO., LTD.
(Hereinafter referred to as "Appellant Cosmepro")Appellant: Airica(Hereinafter referred to as "Appellant Airica")
Appellant Chiara Macchiato(Hereinafter also referred to as "Appellant Chiara Macchiato")
Appellant: Wingsense Co., Ltd.
(Hereinafter referred to as "Appellant Wingsense")
Appellant: Cosme Bose
(Hereinafter referred to as "Appellant Cosme Bose")
Appellant: Clear noir
(Hereinafter referred to as "Appellant Clear noir")
A litigation representative of the above 6 parties, Attorney at Law
MATSUMOTO Norio
Appellee: Medion Research Laboratories Inc.
Appellee's representative Attorney at Law
1

YAMADA IichiroAppellee's representative Attorney at Law

MATSUMOTO Kyoko

Appellee's representative Attorney at Law

SHIBATA Kazuhiko

Appellee's representative patent attorney

MIZUTANI Keiya

Assistant in court, patent attorney
Assistant in court, patent attorney

TANAKA Junya
SAKODA Kyoko

Main text
1.

The entirety of the appeal shall be dismissed.

2.

The costs in connection with the trial shall be borne by Appellants.

3.

A part directed to the Appellants in the main text of the judgment in priorinstance Nos. 1 to 5, 8 to 10, 12 to 18, 21 to 23, 25 and 26 ceases to be effective due
to withdrawal of the action by the Appellee.
Facts and reasonsNo. 1 Gist of the Appeal
1. A part where the Appellants were defeated in the judgment in prior instanceshall be rescinded.
2. All of the Appellee's claims according to the above rescinded part shall bedismissed.
No. 2 Outline of the case (abbreviated names are in accordance with those of thejudgment in prior instance, unless otherwise specified.)
1. This case is a case in which the Appellee, who owns two patent rights
according to the invention titled "carbon dioxide-containing viscous composition"(Patent No. 4659980 and Patent No. 4912492; hereinafter called Patent right 1 andPatent right 2) sought an injunction of the production and sales of the respective
Defendant's products and granules under the provision of Article 100, paragraph (1)of the Patent Act against Appellant, and demanded the disposal of the respective
Defendant's products and granules under the provision of Article 100, paragraph (2)of the Patent Act and, as per the attachment "List of Claims", and claimed acompensation for damage from the date of patent registration to the date described ineach items on the grounds of tortious acts and claimed for the payment of any default
2charges for the compensation in a proportion of 5 percent per year prescribed in the
Civil Code for a period from the date of patent registration to the date described ineach item, alleging that: [i] carbonate pack cosmetics described in the attachment of
the judgment in prior instance "List of Defendants' products", which have been
produced and sold by the Appellant, fall within the technical scopes of the inventions
according to the above respective patent rights (each Invention), and the acts ofproduction and sales thereof correspond to direct infringing acts of the above
respective patent rights; and [ii] the act of Appellant NeoChemir's production andsales of granules to be used for a part of the respective Defendants' products
corresponds to an indirect infringing act of the above respective patent rights (Article
101, item (i) or item (ii) of the Patent Act).
2. The judgment in prior instance accepted an Appellee's claim for injunctive
relief and disposal against the Appellants and accepted a part of a claim forcompensation for damage against the Appellants, and dismissed the remaining claims.
In response, Appellants have appealed.
Appellee has withdrawn a claim for injunctive relief and disposal against
Appellants in this proceeding, and amended the day on which the computation ofdelinquent charge began for a claim for compensation for damage against a part ofAppellants (restriction to a claim), and Appellants have agreed with this.

Further,Appellee has amended the day on which the computation of delinquent charge began
as a final date of tortious act by a part of Appellants (expansion to a claim) ( a claim
after amendment is as per described in items 7, 12, 14 and 17 of the attachment "Listof Claims" (a claim after amendment in this proceeding).).
3. Facts used as premise
The facts used as premise are as per described in No. 2-2 of the judgment in priorinstance "Facts and reasons" (the judgment in prior instance, page 4, line 7 to page 10,line 26), except for the addition of "(hereinafter the filing date on the basis of whichpriority of the respective patents is claimed is referred to as 'the priority date'.)" at theend of page 6, line 16 of the judgment in prior instance, and thus it is incorporated
herein by reference.
4. Issues and Allegation of the Issues by the Parties
Except for the issues and allegations of the issues from the parties are corrected asin the following, and except that the supplemental argument in this proceeding is
added as in the item 5 below, the judgment in prior instance "Facts and reasons" No.
2-3 and No. 3 (Judgment in the prior instance, page 11, line 1 to page 57, line 18)
shall apply as is.

Thus it is incorporated herein by reference.
3

(1) Each usage of "main reference" of the judgment in prior instance, page 11, line
11 and line 13, page 24, line 19, page 33, line 22 shall be replaced with "main citedreference".
(2) "Main cited invention" of the judgment in prior instance, page 35, lines 5 to 6
shall be replaced with "main cited reference".
(3) "(A)" of page 51, line 13 of the judgment in prior instance shall be deleted.
(4) The description of the top of page 51, line 26 to the end of page 52, line 14
shall be deleted.
(5) Add as below with a carriage return to the end of page 52, line 26 of thejudgment in prior instance:"Partial adiposeness improving effects reduce fat for a part of body.

The sales ofcarbonate pack cosmetics for the partial dissolution of adiposeness violate the law andregulation such as Pharmaceutical Affairs Law.

Thus it is hardly believed thatcosmetics manufacturers produce and sell such illegal products.
The respective Defendants' products have an effect of early recovery of muscle
fatigue and a muscle promoting effect due to the discharge of oxygen associated withtransdermal absorption of carbonate gas.

This effect causes a facial contour

slimming effect.

This is different from the partial adiposeness improvement that

reduces facial fat.

Consumers would not purchase carbonate pack cosmetics for the

purpose of partially solving adiposeness.

Further, Appellants do not promote parti aladiposeness improving effects through transdermal absorption of carbon dioxide in
the form of bubbles, nor do they make it a differentiating factor.

Thus the partial

adiposeness improving effects of the respective inventions do not at all contribute to
the sales of the respective Defendants' products."
5. Supplemental argument in this proceeding(1) Issue 1-1 (whether the respective Defendants' products fall within the technicalscopes of the respective inventions (Constituent features 1-1C and 2-1C))[Appellee's allegation]
The technical meaning of the constituent element of "capable of retaining carbon
dioxide in the form of bubbles" lies in suppressing the diffusion of generated carbon
dioxide into air to retain carbon dioxide in the form of bubbles in an aqueous viscouscomposition.

Therefore, Constituent features 1-1C and 2-1C are satisfied as long as

an aqueous viscous composition has a viscosity to the extent that can retain carbon
dioxide in the form of bubbles for a certain period of time.
[Appellants' allegation]
The respective descriptions disclose that the respective inventions cause alleged4effects in the descriptions such as the prevention of various diseases and theimprovement of cosmetic problems by improving transdermal absorption efficiency ofcarbon dioxide.

Thus "capable of retaining carbon dioxide in the form of bubbles"of the constituent features 1-1C and 2-1C means that carbon dioxide is retained in theform of bubbles to the extent that causes various alleged effects in the descriptions
such as the prevention of various diseases and the improvement of cosmetic problems
via the improvement of the transdermal absorption of carbon dioxide.
In the respective Defendants' products, there is no evidence to show that carbon
dioxide is retained in the form of bubbles to the extent that uses the above various
effects via the improvement of the transdermal absorption of carbon dioxide.

Thus itcannot be said that the respective Defendants' products fall within the tech nical scopesof the respective inventions.
(2) Issue 1-2 (Whether the respective Defendants' products fall within the technicalscopes of the respective inventions, and whether or not they constitute an indirect
infringement (the sufficiency of Constituent feature 1-1A, etc.))[Appellee's allegation]
The respective Defendants' products satisfy Constituent features 1 -4A and 1-5A.
In the prior instance, Appellant NeoChemir alleges that, with regard to therespective Defendants' products, [i] a gel contains 2 weight% or more of sodium
alginate, and [ii] a gel contains 87 weight% or more of water, and Appellants otherthan Appellant NeoChemir (hereinafter referred to as "Appellant Cosmepro et al.")also fail to present positive counterargument or counter evidence with regard to thesufficiency of Constituent features 1-4A and 1-5A.

Thus the admission or deemed

admission is established.
[Appellants' allegation]
The respective Defendants' products only contain less than 87 weight% water in
an aqueous viscous composition.

Thus it does not satisfy Constituent feature 1 -5A.

Further, the respective Defendants' products other than the Defendant's products 5, 8
and 15 only contain less than 2 weight% sodium alginate in an aqueous viscouscomposition.

Thus it does not satisfy Constituent feature 1-4A.

The allegation of the constitution of the respective Defendants' products byAppellant NeoChemir in the prior instance is incorrect.
(3) Issue 2 (Whether the respective Defendants' products cause the functions andeffects of the respective inventions)[Appellants' allegation]
According to the experimental results of Exhibit Otsu A3, there is no significant
5difference in an amount of transdermal absorption (sustainability) of carbon dioxide
30 minutes after the completion of stirring operation between a kit comprising anaqueous viscous composition which dissolves sodium alginate into water in advanceand a kit comprising an aqueous viscous composition which does not dissolve sodium
alginate into water in advance.
products is 30 minutes.

A normal use time of the respective Defendants'Thus, as long as the use time of the respective Defendants'

products serves as a standard, there seems to be no significant difference between theabove two kit compositions in an amount of transdermal absorption of carbon dioxide(sustainability).
It is obvious from this that the respective Defendants' products do not cause
effects peculiar to the respective inventions.
[Appellee's allegation]
The function and effect of the respective inventions is to cause carbon dioxide to
be contained in a composition as bubbles, and the carbon dioxide to be retained in theform of bubbles, and to be released in a sustained manner so as to supply carbon
dioxide to a subcutaneous tissue in a sustained manner.

It is obvious that therespective Defendants' products cause such function and effect.
The experimental result of Exhibit Otsu A3 is irrelevant to a problem as towhether the respective Defendants' products cause function and effect of therespective inventions.
(4) Issue 3-4 (lack of inventive step over a main cited reference of Example 9 of
Kanebo's publication (Kanebo example invention))[Appellants' allegation]
A. Problem to be solved by the Invention
The dissolution rate of sodium alginate is slow, whereas a rate of generating
carbon dioxide in the form of bubbles by the reaction of a carbonate and an acid isvery fast.

Therefore, carbon dioxide in the form of bubbles generated before

exerting bubble stabilizing effects and trapping effects of sodium alginate collapses or
diffuses in the Kanebo example invention.

Therefore, a person ordinarily skilled in

the art would recognize that the Kanebo example invention has a problem of "further
improved sustainability of bubbles".
Further, it is necessary to rapidly dissolve sodium alginate in order to solve thisproblem.

As one cause that prevents rapid dissolution of sodium alginate, there is aproblem of forming lumps of sodium alginate.

Regarding the prevention or solutionof forming lumps of sodium alginate, Japanese Unexamined Patent Application
Publication No. 1986-252231 (Exhibit Otsu A199) discloses a method of coating
6

powders as means for the prevention of forming lumps; however, the document
discloses that such a method is not a substantial solution, but has a problem ofviscosity variation.
B. Whether the different feature was easily conceivable(A) According to the description of the sustainability of bubbles in the Kanebo
publication ("stable bubbles are formed by viscosity to promote the retaining abilityof carbonate gas (page 1, right column, line 11 and below)), the Kanebo publicationsuggests that the gas retaining ability is improved as a result of preventing the
diffusion of carbonate gas into air by uniformly imparting viscosity in an earlier stage
to an aqueous solution.
Consequently, a person ordinarily skilled in the art who read the Kanebo
publication would be strongly motivated to take the common general knowledge ofthe trapping effects of sodium alginate into account, for a purpose of uniformly
imparting viscosity in an earlier stage to an aqueous solution, preliminarily dissolving
a second agent comprising sodium alginate insoluble or hard to be dissolved or hardly
soluble to an acidic aqueous solution with water to modify the constitution with "anaqueous viscous composition comprising carbonate and sodium alginate", and to makean acid of the first agent a solid type.
(B) In a case of aiming to cause two components such as an acid and a base(Component A and Component B) to react in the present of water and a thickener, it isnecessary to avoid the contact of Component A, Component B, and water for avoiding
the reaction before the mixture when in use.

Such a configuration is realized by fourcombinations: [i] Component A, Component B+water+thickener; [ii] A composite ofComponent

A

A+water+thickener,andComponent

Component

A+Component B+thickener, water.

B;

B,

water+thickener;

and

[iv]

A

[iii]

compositeofComponent
Component

Further, sodium alginate is used as a thickener,

and in a case of cosmetics that generate carbon dioxide when in use, a person
ordinarily skilled in the art would fundamentally not use a constitution other than theconstitution [iii] with a first agent of a gel and a second agent of powders.
Consequently, there is a strong motivation to change an agent including "acarbonate and a water soluble polymer of sodium alginate" in the Kanebo example
invention into "an aqueous viscous composition comprising a carbonate and sodium
alginate", and use a solid acid.
(C) A combination of a gel and powders is a commonly used art in generalcosmetics or cosmetics to apply to a skin for cosmetic purpose (Exhibit Otsu A103,
141 to 143, 146, 148 to 150).

Thus it is easy without any particular motivation to7

apply this to the Kanebo example invention.

This is because a person ordinarily

skilled in the art who read prior art generally tries to apply commonly used art from aviewpoint of the enrichment of technology and a motivation to seek for a better
technique.
[Appellee's allegation]
A. The Kanebo publication shows that the Kanebo example invention has
excellent stability over the days by use of a two-pack type, and the retaining ability ofcarbonate gas may be promoted by gradually generating carbonate gas bubbles andproducing stable bubbles by the viscosity of sodium alginate during the mixture whenin use with a first agent of citric acid aqueous solution and a second agent of sodium
alginate and sodium hydrogen carbonate covered with polyethyleneglycol that is solid
at a room temperature.
Consequently, a person ordinarily skilled in the art would not recognize that the
Kanebo example invention has a problem of "further improved sustainability o f
bubbles" or a problem of forming lumps as Appellants allege.
B. Appellants allege on the grounds of Exhibit Otsu A199 that a covering with
polyethyleneglycol may not overcome a problem of forming lumps when dissolving
sodium alginate into water; however, the Kanebo publication fails to describe theoccurrence of a problem such as the inhibition of properties of sodium alginate bycovering sodium alginate with polyethyleneglycol or the variation in viscosity of aviscous fluid, as described in Exhibit Otsu A199.

Therefore, it cannot be recognizedthat the Kanebo example invention has a problem of forming lumps when dissolving
sodium alginate with water.
(5) Issue 3-5 (lack of inventive step over a main cited reference of Comparative
Example 2 of the Kanebo publication (Kanebo comparative example invention))[Appellants' allegation]
The Kanebo comparative example invention has a problem of "having
significantly poor gas retaining ability".

The cause is a rapid generation of carbonategas by the reaction of an aqueous solution including an acid with a solid including acarbonate, which results in the collapse of bubbles of, or the diffusion into air ofgenerated carbon dioxide before exhibiting the effects of trapping bubbles of carbon
dioxide due to the viscosity of sodium alginate dissolved into water.
Further, if the Kanebo example invention described in the Kanebo publication
should be adopted for solving this problem, the Kanebo example invention has aproblem of "further improved sustainability of bubbles", as per the aforesaid (4)[Appellants' allegation].

Therefore, a person ordinarily skilled in the art would
8

recognize that a problem of "significantly poor gas retaining ability" in the Kanebo
comparative example invention would not be completely solved even if theconfiguration of the Kanebo example invention should be adopted.
If the constitution of adding sodium alginate to an aqueous solution should be
preliminarily adopted, without covering a solid comprising a carbonate with
polyethyleneglycol, carbon dioxide bubbles are trapped due to the viscosity of sodium
alginate before carbon dioxide bubbles collapse and diffuse into air.

Therefore, aperson ordinarily skilled in the art could have easily conceived of applying a
combination of a gel and powders as commonly used art for solving the above
problem of the Kanebo comparative example invention, taking into account thedescription of "stable bubbles are formed by viscosity" of the Kanebo publication andthe fact that an aqueous solution in which hardly-soluble sodium alginate ispreliminarily added to water is commonly used in the field of pharmaceuticals foruniformly imparting viscosity to the aqueous solution.
[Appellee's allegation]
Regarding the problem of significantly poor gas retaining ability in the Kanebo
comparative example invention, the Kanebo publication discloses a method forselecting an on-demand mixture dosage form with a first agent of aqueous solution
obtained by dissolving citric acid into water and a second agent of a solid in which
sodium alginate and sodium hydrogen carbonate are covered with polyethyleneglycol
as a means for solution.

Thus a person ordinarily skilled in the art would notrecognize that the problem had not yet been completely solved even by this.
(6) Issue 6-1 (Appellee's amount of damage - Article 102, paragraph (2) of the
Patent Act)
[Appellee's allegation]
A. Contribution to the respective inventions in the respective Defendants' products(A) Formulation of butyleneglycol
The judgment in prior instance determined on the basis of the experimental resultsof Exhibit Otsu A3 that a contribution of the implementation of the respective
inventions is limited when formulating butyleneglycol.

This is unreasonable.

The experiment of Exhibit Otsu A3 was conducted through an improper
experimental method, and inconsistent with the other experiment (Exhibit Otsu A4),and thus is not reliable.

Further, the experimental results of Exhibit Otsu A11 do notcorroborate the reliability of the experiment of Exhibit Otsu A3.

Furthermore,butyleneglycol mixed into the respective Defendants' products is mixed as amoisturizing agent.

Thus it does not affect the amount of transdermal absorption of9carbon dioxide.
The experiment of Exhibit Otsu A3 compares the sample of Example 44 of therespective inventions with a sample in which Example 44 of the respective inventions
is modified.

It is not true that a product with a same configuration as the latter has

been sold in the market.

Thus a result of the comparison between the two samples

has nothing to do with buying motive of consumers for the respective Defendants'
products.
(B) The sufficiency of Constituent features 1-4A and 1-5A
Should the respective Defendants' products not satisfy Constituent features 1 -4A
and 1-5A, Constituent features 1-4A and 1-5A are the constituent features according
to the dependent claims.

Thus they do not affect the contribution of Patent 1 to therespective Defendants' products.
B. Implementation of the other patent invention(A) It is indefinite as to whether or not the Defendant's product 15 falls within atechnical scope of the invention according to the patent owned by Appellant
NeoChemir (Patent No. 4756265).

Even if Defendant's product 15 should fall withina technical scope of the invention according to the above Patent, it would not affectbuying motive of consumers.
Specifically, a unique function and effect of the respective inventions is to supply
more carbon dioxide to subcutaneous tissues in a sustained manner by preliminarily
dissolving sodium alginate into water.

It is of great significance that a function andeffect of the respective inventions are caused in the respective Defendants' products.
Also in the promotion and advertisement of the respective Defendants' products, what
is highlighted is to realize the improvement on a problem of skin treatment andimproved effects of partial adiposeness.
In contrast, the feature of the invention according to the above Appellant
NeoChemir's patent "lies in providing a method for peeling and removing a carbon
dioxide external preparation, the method comprising the step of coating on a surfaceof the carbon dioxide external preparation after the use of a carbon dioxide external
preparation for hardening to facilitate the peeling and removal of the carbon dioxide
external preparation, and a divalent cation-containing aqueous solution used
therefore".

A function and effect of "facilitate the peeling and removal of the carbon

dioxide external preparation" is not described with emphasis even in the promotion
and advertisement of the Defendant's product 15.
(B) It is hardly believed that the indication of patent number itself can be a fact
for the rebuttal to presumption.

The grant of working license can indicate pat ent
10numbers of the respective patents.

Thus it is obvious that the indication of patent

number of Appellant NeoChemir itself does not correspond to the fact for the rebuttal
to presumption.
C. Presence of competing products
The function and effect of the respective inventions is to "supply more carbon
dioxide to subcutaneous tissues in a sustained manner by preparing a thickener inadvance".

Therefore, it is of great significance that a function and effect of therespective inventions are caused in the respective Defendants' products.

There is aclear difference in customer attraction force between the implemented products of therespective patents and the other products.
Therefore, it is obvious that the presence of carbonate pack cosmetics incl uding agel in a kit which do not correspond to two-pack type does not correspond to the fact
for the rebuttal to presumption.
D. The remaining facts as Appellants allege cannot be facts for the rebuttal topresumption.
[Appellants' allegation]
A. Contribution to the respective inventions in the respective Defendants' products(A) Formulation of butyleneglycol
The judgment in prior instance determined that the gel of the respective
Defendants' products did not include butyleneglycol, whereas the gel of the respective
Defendants' products includes butyleneglycol.

According to the experimental resultsof Exhibit Otsu A3, a contribution of the implementation of the respective inventions
is limited when formulating butyleneglycol.
(B) The sufficiency of the constituent features 1-4A and 1-5A
As in the aforesaid (2) [Appellants' allegation], the respective Defendants'
products do not satisfy Constituent features 1-4A and 1-5A.

In this way, therespective Defendants' products do not satisfy the constituent features of thedependent claims of Patent 1.

Thus it must be said that the contribution of Patent 1

to the respective Defendants' products was quite limited.
B. Implementation of the other patent invention(A) Defendant's product 15 includes a gelator (The name in the Defendant's
product 15 is "gel solidifier (foam)") in addition to a gel and granules.

The gelator isa product that implements an invention according to the Patent (Patent No. 4756265)
owned by Appellant NeoChemir.

Further, regarding the Defendant's product 15, an

introduction page of the product on a website and in a booth exhibition in an
exhibition show a step of peeling a gel, and strongly promote and advertise a gelator11

as a feature of products.
As aforementioned, the contribution of the above Appellant NeoChemir's patentinvention for the Defendant's product 15 is at least 30%, and thus an amount for thecompensation for damage should be reduced accordingly.
(B) The implementation of a patent may cause consumers to have some extent of
expectation or hope for reliability as a buying motive.

Consumers would neither

totally understand the content of the patent nor investigate the same kind of patents
owned by the other companies.
The respective Defendants' products implemented Appellant NeoChemir's patent,
and thus its patent number was indicated in outer cases of the products.

Appellant

NeoChemir's indication of patent on products impressed consumers that the productwas supported by a high-level technique, and caused their buying motive.

Appellant

NeoChemir's indication of patent number led to purchasing these products.

Thus thispart should be recognized as the rebuttal to presumption.
C. Presence of competing products
Customers do not seek for two-pack type carbonate pack cosmetics initially
including a gel in a kit, but select regardless of dosage form such as one -pack type,
two-pack type, cream, spray.
be selected.

Thus a more convenient one for use is highly likely to

In a market of a carbonate pack cosmetics, two-pack type is least

inconvenient in the sense that it is necessary to feed two agents into the same
container just before the use and mix them for use.

Appellee's products andcompeting products of the respective Defendants' products are generally products
related to carbonate pack cosmetics regardless of dosage form.
D. Circumstances after the suspension of sales
In view of "AIDMA's law" in marketing (caption letter of each word of Attention,
Interest, Desire, Memory, and Action; consuming activity is allegedly done throughthese five steps), even in the same product, the number of sales largely differs
depending on a combination of 4P (Product, Price, Place, and Promotion) inmarketing.

Therefore, it is obvious that it cannot be said that the number of sales

would all be replaced with the Appellee's product in the absence of the respective
Defendants' products.

Thus, the determination of the judgment in prior instanceestimating a profit according to the respective Defendants' products as an amount ofdamage of Appellee is erroneous.
Even after Appellants suspended the sales of the respective Defendants' products,
distributors who had purchased and sold the respective Defendants' products did no tpurchase Appellee's products, nor were the respective Defendants' products replaced
12with the Appellee's products.

From this viewpoint, it is unreasonable to presume

that the profit of the respective Defendants' products is lost profits of Appellee.
E. Appellant Cosmepro et al.'s Allegation
As of the registration of Appellant NeoChemir's patent according to carbonate
pack cosmetics on August 6, 2008, the above patent was the only patent in ourcountry directed to carbonate pack cosmetics.

Thus Appellant Cosmepro et al. who

were midsize distributors in the cosmetic business sold the respective Defendants'
products by paying a high royalty to Appellant NeoChemir.
respective patents were registered.

Thereafter, theThe inventions according to the res pective

patents were invented by a representative of Appellant NeoChemir who waspreviously a coleader of Appellee.
From such history, Appellant NeoChemir and Appellee should have a discussion
between them about the coverage or attribution of patents respectively owned.
Should Appellant Cosmepro et al. pay damage of the respective patent rights, it would
lead to the duplicate payment of royalty.

Thus Appellant Cosmepro et al. are victims

who are involved with dispute between Appellee and Appellant NeoC hemir.

Neitherintention nor gross negligence is found.
Further, before the registration of the respective patents, Appellant Cosmepro et al.
expanded sales of the respective Defendants' products through continued efforts andpromotion activity.

The respective patents do not at all contribute to the sales

expansion of the respective Defendants' products.
In view of such special circumstances of this case, the finding of an amount ofcompensation by the judgment in prior instance is extremely severe.

An amount tobe paid by Appellant Cosmepro is reasonably 5% of a sales figure.
(7) Issue 6-2 (Appellee's amount of damage - Article 102, paragraph (3) of the
Patent Act)
[Appellee's allegation]
Appellants allege that Appellee is so-called a patent troll who mainly engages inthe enforcement of patent rights.

Appellee is a legal entity which engages in

research, development, production, sales, etc. of pharmaceutical products andcosmetics, etc.

Since September 1999, Appellee has been selling two-pack type

carbonate pack cosmetics of granules and a gel with the product names of"mediplorer" or "Spaoxygel" and has conducted legitimate enforcement against
counterfeit products from Appellants.

Thus it cannot be said to be a patent troll.

The Appellants' allegation is not reasonable.
Appellants allege that they take a special sales method of MLM.
13

It is indefinite

as to which Appellant utilizes a sales method of MLM.

The allegation is notreasonable.
A discussion in the aforesaid (6) [Appellee's allegation] shall apply to theremaining points as Appellants allege.
[Appellants' allegation]
A. In a report on which the judgment in prior instance relied for the calculation ofa royalty to be paid for the implementation, a royalty rate according to the domestic
questionnaire is 5.3% and a royalty rate in the determination by court is 6.1%.
the average is 5.7%.

Thus

As in the aforesaid finding (6) [Appellants' allegation],butyleneglycol is mixed with a gel of the respective Defendants' products, therespective inventions make a limited contribution, and in view of the fact that therespective Defendants' products are implemented products of the patent invention, therespective inventions make little contribution.

According to these circumstances, aroyalty rate to be paid for the implementation should fall below 5.7%.
B. Appellee is a so-called a patent troll, the above report is not directed to a casewhere the patent troll is a patentee.

Further, Appellee's business model is to repeat

divisional applications, own numerous patents with a characteristic part of "prepare
viscous composition in advance" in common, which is commonly used art, and after
producers and sellers of two-pack type carbonate gel pack invested certain amount of
capital, obtain a high amount of royalty by means of sending a warning letter or filinga suit.

To permit such business model is equivalent to forcing producers and sellersof two-pack type carbonate gel pack to get out from a market, which unjustly impedes
competition, and thus not reasonable.

Therefore, a royalty rate to be paid for the

implementation should be reduced as compared to a case of a normal patent
infringement lawsuit also in view of promoting competition.

The rate would notexceed 3%.
C. The above report is not directed to a person who utilizes a special sales methodof MLM.

MLM is based on a special human network formed by investing capital,and presumed to be operated at a higher operating cost compared to a company thatthe above report premises.

Thus approximately half the royalty appeared in theabove report is appropriate, and the royalty to be paid for implementation does notexceed 3%.
D. In calculating an amount of compensation by Appellant Cosmepro et al., a
consideration should be given to the special circumstances of the case, similar to thedescription of the aforesaid (6) [Appellants' allegation] E.
No. 3 Judgment of this court
141. Whether or not to fall within a technical scope(1) The recitation of the Claims and the description
A. The scope of claims(A) The recitation of Claims 1, 4, 5, 7 to 9, 12 and 13 of the scope of the claims of
the Patent 1 is set forth as below: The symbol "/" indicates a part of carria ge return(the same shall apply hereinafter).
[Claim 1] A kit for obtaining a carbon dioxide-containing viscous composition to
be used for cosmetics for the improvement of partial adiposeness or pharmaceuticalcompositions for the treatment of athlete's foot, atopic dermatitis, or bedsore,consisting of: /1) a combination of an aqueous viscous composition comprising acarbonate and sodium alginate with granules (subtle granules, powders) comprising anacid, or /2) a combination of composite granules (subtle granules, powders)
comprising a carbonate and an acid with an aqueous viscous composition comprisingsodium alginate, /wherein the aqueous viscous composition is capable of retaining
carbon dioxide in the form of bubbles, and the kit is capable of obtaining the carbon
dioxide-containing viscous composition comprising the carbon dioxide in the form of
bubbles by reacting carbonate and acid in an aqueous viscous composition.
[Claim 4] The kit of any one of Claims 1 to 3, wherein the aqueous viscouscomposition comprises 2 weight% or more of sodium alginate.
[Claim 5] The kit of any one of Claims 1 to 4, wherein the aqueous viscouscomposition comprises 87 weight% or more of water.
[Claim 7] A cosmetics for the partial improvement of adiposeness comprising acarbon dioxide-containing viscous composition capable of obtaining the kit of any oneof Claims 1 to 5.
[Claim 8] The cosmetics of Claim 7 used for the partial improvement of
adiposeness of the face, leg, arm, abdomen, flank, back, neck, or jaw.
[Claim 9] A method for preparing a carbon dioxide-containing viscouscomposition to be used for cosmetics for the partial improvement of adiposeness or
pharmaceutical compositions for the treatment of athlete's foot, atopic dermatitis, or
bedsore, by use of /1) an aqueous viscous composition comprising carbonate andsodium alginate, and granules (subtle granules, powders) including an acid; or /2)
composite granules (subtle granules, powders) comprising a carbonate and an acid,and an aqueous viscous composition comprising sodium alginate; /Comprising thestep of preparing a carbon dioxide-containing aqueous viscous composition
comprising the carbon dioxide in the form of bubbles by reacting carbonate and acidin an aqueous viscous composition, /wherein the aqueous viscous composition can
15

retain the carbon dioxide in the form of bubbles.
[Claim 12] The method of any one of Claims 9 to 11, wherein the aqueous viscouscomposition comprises 2 weight% or more of sodium alginate.
[Claim 13] The methods of any one of Claims 9 to 12, wherein the aqueous
viscous composition comprises 87 weight% or more of water.
(B) The recitation of Claims 1, 4, 5, and 7 of the scope of the claims of the Patent
2 is set forth as below:[Claim 1] A kit for obtaining a carbon dioxide-containing viscous composition to
be used for pharmaceutical compositions or cosmetics, consisting of: /1) a
combination of an aqueous viscous composition comprising carbonate and sodium
alginate with granules, subtle granules, or powders comprising an acid; /2) a
combination of an aqueous viscous composition comprising an acid and sodium
alginate with granules, fine grains, or powders comprising a carbonate, or /3) a
combination of composite granules, fine grains, or powders comprising a carbonate
and an acid with an aqueous viscous composition comprising sodium alginate,/wherein the aqueous viscous composition is capable of retaining carbon dioxide in
the form of bubbles, and the kit is capable of obtaining the carbon dioxide-containing
viscous composition comprising the carbon dioxide in the form of bubbles by reacting
carbonate and acid in an aqueous viscous composition.
[Claim 4] The kit of any one of Claims 1 to 3, wherein the aqueous viscouscomposition comprises 2 weight% or more of sodium alginate.
[Claim 5] The kit of any one of Claims 1 to 4, wherein the aqueous viscouscomposition comprises 87 weight% or more of sodium alginate.
[Claim 7] A cosmetics comprising a carbon dioxide-containing viscouscomposition capable of obtaining the kit of any one of Claims 1 to 5.
B. Inventions 1-1, 1-4, and 1-5 and Invention 2-1 may be divided into thefollowing segments:(A) Invention 1-1
1-1A. A kit for obtaining a carbon dioxide-containing viscous composition to be
used for cosmetics for the improvement of partial adiposeness or pharmaceuticalcompositions for the treatment of athlete's foot, atopic dermatitis, or bedsore,
1-1B. consisting of:1) a combination of an aqueous viscous composition comprising carbonate andsodium alginate with granules (subtle granules, powders) including an acid; or2) a combination of composite granules (subtle granules, powders) comprising acarbonate and an acid with an aqueous viscous composition comprising sodium
16alginate,
1-1C. wherein the aqueous viscous composition is capable of retaining carbon
dioxide in the form of bubbles,
1-1D. and the kit is capable of obtaining the carbon dioxide-containing viscouscomposition comprising the carbon dioxide in the form of bubbles by reacting
carbonate and acid in an aqueous viscous composition.
(B) Invention 1-4
1-4A. wherein the aqueous viscous composition comprises 2 weight% or more of
sodium alginate.
1-4B. The kit of any one of Claims 1 to 3,(C) Invention 1-5
1-5A. wherein the aqueous viscous composition comprises 87 weight% or more ofwater.
1-5B. The kit of any one of Claims 1 to 4.
(D) Invention 2-1
2-1A. A kit for obtaining a carbon dioxide-containing viscous composition to be
used for pharmaceutical compositions or cosmetics,
2-1B. consisting of:1) a combination of an aqueous viscous composition comprising carbonate andsodium alginate with granules, subtle granules, or powders comprising an acid;2) a combination of an aqueous viscous composition comprising an acid andsodium alginate with granules, subtle granules, or powders comprising a carbonate; or3) a combination of composite granules, subtle granules, or powders comprising acarbonate and an acid with an aqueous viscous composition comprising sodium
alginate,
2-1C. wherein the aqueous viscous composition is capable of retaining carbon
dioxide in the form of bubbles,
2-1D. and the kit is capable of obtaining the carbon dioxide-containing viscouscomposition comprising the carbon dioxide in the form of bubbles by reacting
carbonate and acid in an aqueous viscous composition.
C. The description of the respective descriptions
Except for the addition of "A thickener may include a semisynthetic polymer, such
semisynthetic polymer may include sodium alginate. ([0020], [0028])" to the end of
page 60, line 24 of the judgment in prior instance with the carriage return, thedescription of the respective descriptions in No. 4-1(1)B (A) of the judgment in priorinstance (the judgment in prior instance, page 59, line 6 to page 63, line 8) shall apply.
17

Thus it is incorporated by reference.
(2) The sufficiency of Constituent features 1-1A and 2-1A (Issue 1 -2)
The determination about the sufficiency of Constituent features 1-1A and 2-1A
shall apply as per described in page 75, line 24 to page 77, line 5 of the judgment inprior instance, except that the description from "indefinite" of page 76, line 14 to ","of the same line of the judgment in prior instance is modified with "indefinite,".
Thus it is incorporated by reference.
(3) The sufficiency of Constituent features 1-1B and 2-1B (No issue)
There is no issue between parties that the respective Defendants' products satisfy
Constituent features 1-1B and 2-1B.
(4) The sufficiency of Constituent features 1-1C and 2-1C (Issue 1-1)
A. The meaning of "capable of retaining carbon dioxide in the form of bubbles" ofConstituent features 1-1C and 2-1C(A) The scope of claims of the respective patents recites that "aqueous viscouscomposition is capable of retaining carbon dioxide in the form of bubbles"(Constituent features 1-1C and 2-1C), and "obtaining said carbon dioxide-containing
viscous composition comprising the carbon dioxide in the form of bubbles by reacting
carbonate and acid in an aqueous viscous composition" (Constituent features 1 -1D
and 2-1D).
It can be seen from these descriptions that the above configuration reacts a
carbonate and an acid in an aqueous viscous composition to generate carbon dioxidein the form of bubbles, and the generated carbon dioxide in the form of bubbles may
be retained by an aqueous viscous composition; however, it is not construed as
showing that the content of carbon dioxide retained in an aqueous viscouscomposition is limited.
(B) Accordingly, consideration is given to the description of the respective
descriptions.
In addition to the description of the respective descriptions as in the aforesaid(1)C, according to the common general knowledge that carbonate gas has a functionof blood vessel expansion, and promotes blood flow of skin when directly acting on
the skin (it is a matter of common general knowledge before the priority date and thefiling date of the respective patents, Exhibits Otsu A102, 105, 111, 114, 115, Exhibits
Otsu E all 3, 6), Invention 1-1 and Invention 2-1 are aqueous viscous compositions
comprising sodium alginate as one agent of two-pack type kit (a specific combinationof the kit is as in Constituent features 1-1B and 2-1B), which causes a carbonate andan acid to react in the aqueous viscous compositions to generate carbon dioxide, retain18carbon dioxide in the form of bubbles in the resultant carbon dioxide-containing
viscous composition, apply the obtained composition to skin mucosa or a damaged
skin tissue or skin to supply carbon dioxide to subcutaneous tissues in a sustainedmanner, thereby bringing about the effects for the treatment, prevention, or
improvement of athlete's foot, atopic dermatitis, or bedsore as well as the
improvement of beautiful skin and partial improvement of adiposeness.
Further, in view of the description that [i] the "aqueous viscous composition" usedin the respective descriptions is a composition comprising one or two or more kinds ofthickeners dissolved into or swelled by water, an aqueous viscous composition allows
carbon dioxide to be retained in the form of bubbles, and in a case of applying on askin mucosa or a damaged dermal tissue etc., carbon dioxide bubbles can be retained
to the extent that can supply a sufficient amount of carbon dioxide to hypodermal
tissue. etc. (the Disclosure of the Invention of Description 1 and Description 2,[0017]), and the description that [ii] carbon dioxide-containing viscous compositionof the respective inventions comprises 1 to 99 volume%, preferably 5 to 90 volume%,
more preferably 10 to 80 volume% of carbon dioxide in the form of bubbles when inuse (the disclosure of the Invention of Description 1, and Description 2, [0061]), it
can be seen that "capable of retaining carbon dioxide in the form of bubbles"(Constituent features 1-1C and 2-1C) requires the inclusion of carbon dioxide in theform of bubbles when using a carbon dioxide-containing viscous composition
obtained from a kit; however, it cannot be seen that the content of carbon dioxide
retained in an aqueous viscous composition should be limited to a certain amount or
more.
(C) As in the foregoing, an aqueous viscous composition is "capable of retaining
carbon dioxide in the form of bubbles" (Constituent features 1-1C and 2-1C).

It isreasonable to understand that this means the ability to retain carbon dioxide in theform of bubbles in using carbon dioxide-containing viscous composition obtained
from a kit.
B. Sufficiency
It is recognized that carbon dioxide-containing viscous composition obtained fromthe respective Defendants' products contains/retains carbon dioxide in the form of
bubbles in a gel for 20 minutes or more after mixing a gel and granules (Exhibits Ko
25, 26, 42, the overall import of the oral argument) (Although there is noexperimental result for the Defendant's product 9, it has the same components as a gel
and granules of the Defendant's product 12.
the same as the Defendant's product 12.).
19

Thus its experimental result would beFurther, the respective Defendants' products are kits of pack cosmetics for mixing
two agents when in use, and from the viewpoint of its properties, a gel and granules
are mixed and instantaneously used.

Thus it can be said that an aqueous viscouscomposition of the respective Defendants' products has a configuration capable ofretaining carbon dioxide in the form of bubbles when using a carbon dioxidecontaining viscous composition obtained from a kit.
Therefore, the respective Defendants' products satisfy Constituent features 1 -1Cand 2-1C.
C. Appellants' allegation(A) The meaning of "capable of retaining carbon dioxide in the form of bubbles"of Constituent features 1-1C and 2-1C
a. Appellants allege that it can be seen from the description of the respective
description (Description 2, [0004] to [0006], [0017], [0032] and [0066]; Description 1
has the same descriptions in background Art, disclosure of the Invention, and the Best
Mode for Carrying Out the Invention) as necessary not to be "0" at least in Evaluation
criteria 1 and Evaluation criteria 2 of the respective descriptions to satisfy "capable ofretaining carbon dioxide in the form of bubbles".
However, from the description of the respective descriptions as Appellants point
out, a part of the description of the evaluation criteria of carbon dioxide -containing
viscous composition ([0066] of Description 2 and a similar description in Best Mode
for Carrying Out the Invention of Description 1) is only a description of the examples.
Even if a reference is made to the description of the aforesaid A(B)[ii] of therespective descriptions, it cannot be construed that the technical scopes of therespective inventions are limited to scopes as Appellants allege.

Further, theremaining part as Appellants point out fails to have a description that should beconstrued as further specifying the language of "capable of retaining carbon dioxidein the form of bubbles" by the content of carbon dioxide.

Thus Appellants'

allegation of this point is not acceptable.
b. Appellants allege that the technical scopes of the respective inventions should
be construed narrowly due to the necessity of the distinction from a well -known
technique. (A pack utilizing carbonate gas or bubbling effects of carbonate gas
generating substance in a cosmetics for facial treatment.

Exhibits Otsu E all 3 to 5.)

Taking into consideration the well-known art as Appellants allege as state of the art;
however, it does not affect the claim construction of the respective inventions.
c. Appellants allege that the technical scopes of the respective inventions should
be construed narrowly for the reason of the prosecution histories of the respective
20

patents.
Appellee made an amendment to the scope of claims, and submitted a written
opinion in the prosecution of the respective patents (regarding prosecution history, thedescription of the judgment in prior instance No. 4, 1(1)B(B) is cited (the judgment inprior instance, page 63, line 9 to page 68, line 12).)
However, it cannot be seen from the document submitted by Appellee that"retaining carbon dioxide in the form of bubbles" is limited to a case where thecontent of carbon dioxide in the form of bubbles to be retained is ranked as a certain
grade or more in Evaluation criteria 1 and Evaluation criteria 2 of the respective
descriptions.
Consequently, it cannot be construed that Appellee objectively represented thelimitation to the technical scopes of the respective inventions in the prosecution
history of the respective patents.

Thus it cannot be said that a narrow construction as

Appellants allege should be given for the technical scopes of the respective inventions
on the basis of the prosecution history of the respective patents.
d. Furthermore, Appellants allege that the respective descriptions disclose that therespective inventions cause alleged effects in this proceeding such as the preventionof various diseases and the improvement on cosmetic problems by improving
transdermal absorption efficiency of carbon dioxide.

Thus "capable of retaining

carbon dioxide in the form of bubbles" means that carbon dioxide is retained in theform of bubbles to the extent that causes the above effects via the improvement on thetransdermal absorption of carbon dioxide.

However, the respective descriptions failto describe as Appellants allege, and thus the allegation is based on an incorrect
premise.

Further, regarding "capable of retaining carbon dioxide in the form of

bubbles", the content of carbon dioxide in the form of bubbles is not specified, as
explained in the aforesaid A.
(B) Sufficiency
Appellants allege that an increasing rate of volume one minute after stirring the
Defendant's products 1 to 9 and 11 to 17 corresponds to the lowest evaluation ("0") of
the evaluation criteria (evaluation criteria 1) of the bubbling property of the respective
descriptions, and thus these products do not satisfy Constituent features 1 -1C and 21C.

However, this allegation is not acceptable as explained in the aforesaid A andthe above (A).
(5) The sufficiency of Constituent features 1-1D and 2-1D (Issue 1-2)
Besides the above explanation, according to the configuration of the respective
Defendants' products and the fact that the respective Defendants' products are kits of21

pack cosmetics to be used by mixing a gel comprising sodium hydrogen carbonate,sodium alginate, and water with granules comprising malic acid (No. 2, 2(5)C of thejudgment in prior instance cited in aforesaid No. 2, 3), the respective Defendants'
products satisfy Constituent features 1-1D and 2-1D.
(6) Summary
As described above, the respective Defendants' products can at least fall withintechnical scopes of Invention 1-1 and Invention 2-1.
2. Argument of function and effect not caused (Issue 2)(1) Function and effectInvention 1-1 and Invention 2-1 are aqueous viscous compositions comprisingsodium alginate as one agent of two-pack type kit, which causes a carbonate and anacid to react in the aqueous viscous compositions to generate carbon dioxide, retaincarbon dioxide in the form of bubbles in the resultant carbon dioxide-containing
viscous composition, apply the obtained composition to skin mucosa or a damaged
skin tissue or a skin to supply carbon dioxide to subcutaneous tissues in a sustainedmanner, thereby bringing the effects for the treatment, prevention, or improvement of
athlete's foot, atopic dermatitis, or bedsore as well as the improvement of beautiful
skin and partial improvement of adiposeness.

As in the aforesaid finding 1(4)B,

carbon dioxide-containing viscous composition obtained from the respective
Defendants' products retains carbon dioxide in the form of bubbles.

Thus it can besaid that the function and effect of the respective inventions would be caused.
(2) Appellants' allegation
Appellants allege that the respective inventions transdermally absorb carbon
dioxide of a carbon dioxide-containing viscous composition as is, and thus they are
fundamentally different from the technical idea of the respective Defendants' products.
It is indefinite, however, as to whether the respective inventions might transdermallyabsorb carbon dioxide of a carbon dioxide-containing viscous composition as is, andthe function and effect of the respective inventions are as in the above findings (1).
Thus it is not negated that the respective Defendants' products fall within the technicalscopes of Invention 1-1 and Invention 2-1.
Further, Appellants point out that granules of the respective Defendants' products
comprise lactose having effects of suppressing the generation of carbon dioxide in theform of bubbles.

Even if lactose should have an effect of suppressing the generationof carbon dioxide in the form of bubbles, however, a composition obtained from therespective Defendants' products would retain carbon dioxide in the form of bubbles,
as in the aforesaid findings 1(4)B.

Thus the Appellants' point does not affect the22determination of the above (1).
Furthermore, Appellants allege that, according to the experimental result of
Exhibit Otsu A3, the respective Defendants' products failed to cause function andeffect of the respective inventions since there is no significant difference in an amountof transdermal absorption (sustainability) of carbon dioxide between the respective
Defendants' products in which sodium alginate was preliminarily dissolved into waterto prepare an aqueous viscous composition and the constitution in which sodium
alginate was not preliminarily dissolved into water.

In view of the explanation of theaforesaid 1 and the above (1), however, it must be said that the respective Defendants'
products cause the function and effect of the respective inventions, and theexperimental result of Exhibit Otsu A3 has nothing to do with this.
3. Invalidity Defense(1) Incompletion of Invention (Issue 3-1)
Regarding the incompletion of the invention (Issue 3-1), it is as per described in
the judgment in prior instance, "Facts and reasons", No. 4-4 (the judgment in priorinstance, page 80, line 4 to page 84, line 15) except the following correction.

Thus itis incorporated by reference.
A. The description of the top of page 80, line 5 to the end of page 81, line 23 shallbe replaced as set forth below.
"(1) Incompletion of the Invention
The Invention is a creative idea of a certain technique on the basis of theutilization of law of nature, and the created technique should be embodied andexternalized to the extent that allows anyone who has a common knowledge andexperience in the technical field to repeatedly implement the technique to achieve theexpected technical effects.

Thus if the technique is not configured as such an extent,such technique is incomplete as an invention (see Supreme Court ruling of the third
Petty Bench on January 28, 1969, 1964 (Gyo-Tsu) 92, Collection of Civil cases, Vol.
23, No. 1, page 54).
Further, as in the aforesaid 1(1)C, the respective descriptions describe a specificmethod of producing a carbon dioxide-containing viscous composition according toInvention 1-1 and Invention 2-1, and the effects are also described together with thetest examples.

In view of these descriptions, the technical contents of Invention 1 -1

and Invention 2-1 are embodied and externalized to the extent that allows a person
ordinarily skilled in the art to repeatedly implement these inventions to achieve theexpected effects.

Therefore, it cannot be said that Invention 1-1 and Invention 2-1

are incomplete as an invention."23

B. The judgment in prior instance, page 82, line 4 is deleted, and "B" of the same
page, line 5 shall be replaced with "(2)", "(A)" of the same page, line 6 shall be
replaced with "A", and "(B)" of the same page, line 21 shall be replaced with "B".
C. The language of "cannot be recognized as ... as in the foregoing." of page 82,
line 9 of the judgment in prior instance shall be replaced with "cannot be said ... ,".
D. "(C)" of page 83, line 5 of the judgment in prior instance shall be replaced with"C".
E. A description from "The respective inventions" of page 84, line 11 of thejudgment in prior instance to the end of the same page, line 15 shall be replaced with"whether to drastically generate carbon dioxide is irrelevant to the feature of therespective inventions, and thus the Appellants' point does not affect the function andeffect of the respective inventions.".
(2) Nonconformance to supporting requirement (Issue 3-2) and nonconformance toenablement requirement (Issue 3-3)
A. Supporting requirement and enablement requirement(A) It is reasonable to make a determination of whether or not the recitation of theClaims might comply with the support requirement should follow the steps of:comparing the recitation of the Claims and the descriptions of the Detailed
Description of the invention; and considering whether or not the invention recited in
the Claims might fall within the scope in which person ordinarily skilled in the art
could recognize that a problem to be solved by the invention might be solved by thedescription of the Detailed Description of the Invention, or considering whether or not
the inventions recited in the Claims might fall within the scope in which person
ordinarily skilled in the art could recognize without such description or suggestion inview of common technical knowledge as of the filing that the problem to be solved by
the invention might be solved.
It can be seen from the scope of claims and the respective descriptions ofInvention 1-1 and Invention 2-1 that the problem of both inventions is to provide aformulation effective for skin mucosal disorder such as athlete's foot and atopic
dermatitis or itching and bedsore involved with skin mucosal disorder, beautiful skinand partial adiposeness.
Further, in view of the explanation of the aforesaid 1(4)A(B) and (1), a person
ordinarily skilled in the art could understand from the common general knowledge asof the filing of the respective patents and the description of the respective descriptions
that Invention 1-1 and Invention 2-1 cause a carbonate and an acid to react in the
aqueous viscous compositions to generate carbon dioxide, retain carbon dioxide in the24form of bubbles in the resultant carbon dioxide-containing viscous composition, apply
the obtained composition to skin mucosa or a damaged skin tissue or skin to supply
carbon dioxide to subcutaneous tissues in a sustained manner, thereby bringing about
the effects for the treatment, prevention or improvement of athlete's foot, atopic
dermatitis or bedsore as well as the improvement of beautiful skin and partial
improvement of adiposeness.

The respective description also discloses the specificembodiment and test examples.

According to this, Invention 1-1 and Invention 2-1

are the inventions described in the Detailed Description of the Invention.

In view ofthe description of the Detailed Description of the Invention and the common generalknowledge as of the filing date, a person ordinarily skilled in the art could recognizethat the above problem to be solved by the invention might be solved.

Thus it can besaid that the description conforms to the supporting requirement.
(B) Subsequently, in order that the description of the Detailed Description of theInvention conforms to the enablement requirement, the Detailed Description of theInvention of the description is required to describe to the extent that allows a person
ordinarily skilled in the art to implement the invention without excess trial and error
on the basis of the description of the Detailed Description of the Invention and thecommon general knowledge as of the filing.

Further, in view of the explanation of

the above (A), it can be said that a person ordinarily skilled in the art could implement
Invention 1-1 and Invention 2-1 on the basis of the description of the Detailed
Description of the Invention and the common general knowledge as of the filing.
Thus it can be said that the description of the Detailed Description of the Invention of
the respective descriptions conforms to the enablement requirement.
B. Appellants' allegation
Appellants allege that a test example or a result of a pharmacological test showingthat all the problems of the respective inventions have been solved is required.
However, according to the specific embodiment including test example described in
the respective descriptions, it can be said that a person ordinarily skilled in the art
could recognize that the problem of Invention 1-1 and Invention 2-1 might be solved,
and both inventions might be implemented, as explained in the above A.
Further, Appellants allege that the respective descriptions are silent about action
mechanism, and there is a possibility that any factor other than transdermal absorptionof carbon dioxide in the form of bubbles might function.

Even so, however, it does

not affect the above determination A.
Furthermore, Appellants also allege that since there is no limitation to thecompositions of a carbonate and an acid, and thus it cannot be said that a person
25

ordinarily skilled in the art could recognize that the respective inventions could solve
the problem.

It can be said, however, from the common general knowledge and thedescription of the respective descriptions that a person ordinarily skilled in the art
could recognize that a problem to be solved by the invention might be solved, as
explained in the above A.
(3) Lack of Inventive step (Issues 3-4 and 3-5)
A. Citation of the judgment in prior instance
Except for the determination about lack of inventive step (Issue 3 -4 and 3-5) shallbe corrected as in the following, and the determination of the Appellants' allegation inthis proceeding is supplemented as described below, the judgment in prior instance"Facts and reasons" No. 4-6 and -7 (judgment in prior instance, page 87, line 9 topage 94, line 21) shall apply as is.

Thus it is incorporated by reference.

(A) "Main reference" of the judgment in prior instance, page 87, line 9 shall be
replaced with "main cited reference".
(B) "And" of page 89, line 7 of the judgment in prior instance shall be replacedwith "or".
(C) The description of "Accordingly" of page 89, line 19 of the judgment in priorinstance to "difference ..." of the same page, line 20 shall be replaced with "there is adifference as to whether or not to include an aqueous viscous composition in whic hsodium alginate is dissolved into water,".
(D) The description of "not be said ...," of page 90, line 20 to the same page, line
23 of the judgment in prior instance shall be replaced with "not be said ..."(E) The description of "Further," of page 91, line 2 of the judgment in priorinstance to the end of the same page, line 3 shall be deleted.
(F) Each of "main reference" of page 91, line 4 and line 5 of the judgment in priorinstance shall be replaced with "main cited reference".
(G) "And" of page 92, line 6 of the judgment in prior instance shall be replacedwith "or".
(H) The description of "Accordingly" of page 92, line 18 of the judgment in priorinstance to "difference ..." of the same page, line 19 shall be replaced with "there is adifference as to whether or not to include an aqueous viscous composition in which
sodium alginate is dissolved into water".
(I) The description of "not be said ...," of page 94, line 10 to the end of the same
page, line 13 of the judgment in prior instance shall be replaced with "not be said ...".
(J) The description of "Further," of page 94, line 18 of the judgment in priorinstance to the end of the same page, line 19 shall be deleted.
26

(K) "Main reference" of the judgment in prior instance, page 94, line 20 shall be
replaced with "main cited reference".
B. Appellants' allegation in this proceeding(A) Issue 3-4
Appellants allege that a person ordinarily skilled in the art who read the Kanebo
example invention would recognize a problem of "further improved sustainability of
bubbles".

However, the Kanebo example invention is characterized in that a

carbonate and a water soluble polymer of sodium alginate are covered with
polyethyleneglycol that is solid at room temperature, so that carbonate gas bubbles aregradually generated, stable bubbles are formed due to the viscosity of the watersoluble polymer and the gas retaining ability is improved.

Further, the Kanebo

example invention has allegedly achieved sufficient effects by this.

Thus i t cannot

be recognized that a person ordinarily skilled in the art who read the Kanebo
publication would further recognize the problem as Appellants allege in the Kanebo
example invention.
As described above, it cannot be said that a person ordinarily skilled in the art
would recognize the problem as Appellants allege.

Thus the Appellants' allegation isbased on an incorrect premise.
The remaining points as the Appellants allege do not affect the above
determination.
(B) Issue 3-5
Appellants allege that, with a premise that there is a problem of "further improved
sustainability of bubbles" in the Kanebo example invention, a person ordinarily
skilled in the art would recognize that the problem of the Kanebo comparative
example invention of significantly poor gas retaining ability might not be completely
solved even if a person ordinarily skilled in the art would adopt the constitution of the
Kanebo example invention in compliance with the description of the Kanebo
publication with respect to the Kanebo comparative example invention.

However, itcannot be said that a person ordinarily skilled in the art would recognize the problem
as Appellants allege in the Kanebo example invention, as explained in the above (A).
Thus the Appellants' allegation is based on an incorrect premise.
The Appellants' remaining allegation is not acceptable, in view of the explanationof the judgment in prior instance that has been cited and corrected in the aforesaid A.
4. Appellants' liability(1) Patent right infringement
A. Direct Infringement27

As discussed in aforesaid 1(6), the respective Defendants' products fall within thetechnical scopes of Invention 1-1 and Invention 2-1.

Thus without determination ofwhether or not the respective Defendants' products fall within a technical scope of theother claims (Issue 1-2), the Appellants' act of producing and selling the respective
Defendants' products corresponds to a direct infringing act of the respective patentrights.
B. Indirect infringement (Issue 1-2)
Defendant's products 2, 5 to 7, 9, 11 to 14 and 16 to 18 are kits of a gel andgranules produced and sold by Appellant NeoChemir.

Consequently, granules soldby Appellant NeoChemir were produced and sold as the one to be sold with a gel inthese Defendant's products (the overall import of the oral argument).

Therefore, itcannot be seen that there is any other economical, commercial or practical use.
Therefore, Appellant NeoChemir's act of producing and selling granules
corresponds to an act of indirect infringement of the respective patent rights (Article
101, item (i) of the Patent Act), since such an act corresponds to the production andthe assignment of "a product used only for production" of these Defendant's products.
C. As in the foregoing, Appellants are presumed to be culpable for infringing acts
since they are those who infringed the respective patent rights (Article 103 of the
Patent Act).
(2) No-fault of Appellant Cosmepro et al. (Issue 4)
Appellant Cosmepro et al. alleges that Appellant Cosmepro et al. is no-fault,
however, the determination about this point (Issue 4) is as per described in the
judgment in prior instance, "Facts and reasons", No. 4-8 (the judgment in priorinstance, page 94, line 23 to page 95, line 5).

Thus it is incorporated herein byreference.
(3) Whether or not to establish joint tort (Issue 5)
The determination about whether or not to establish joint tort (Issue 5) is as per
described in the judgment in prior instance, "Facts and reasons", No. 4-9 (thejudgment in prior instance, page 95, line 6 to page 99, line 21).

Thus it isincorporated herein by reference.
(4) Summary
As described above, the liability for damage on the basis of tortious act of patentright infringement (Civil Code, Article 709) should be accepted by [i] Appellant
NeoChemir for the sales of the Defendant's products 1, 3, 4, 8, and 15 and the
production and sales of granules of the Defendant's products 2, 5 to 7, 9, 11 to 14, and
16 to 18; [ii] Appellant Cosmepro for the production and sales of the Defendant's
28

products 1, 14, 15, and 18; [iii] Appellant Airica for the sales of Defendant's product5; [iv] Appellant Chiara Macchiato for the sales of Defendant's product 5; [v]Appellant Wingsense for the sales of Defendant's product 13; [vi] Appellant Cosme
Bose for the production and sales of Defendant's product 13; and [vii] Appellant Clear
noir for the sales of Defendant's product 15, respectively.
5. Damage (Article 102, paragraph (2) of the Patent Act) (Issue 6-1)
(1) Article 102, paragraph (2) of the Patent Act
A. Article 102, paragraph (2) of the Patent Act specifies that "If a patentee ...
claims compensation for damages that the patentee ... personally incurs due toinfringement, against a person that, intentionally or due to negligence, infringes thepatent ..., and the infringer has made a profit from the infringement, the amount ofthat profit is presumed to be the value of damages incurred by the patentee ...".

In

the principle of Civil Code, it is a patentee who must establish the occurrence and an
amount of damage as well as the connection between these facts and infringing act ofpatent right to seek a compensation for damage on patentee by patent right
infringement.

The proof poses challenges, which as a result causes inconveniencesuch as insufficient compensation for damage.

In such circumstances, Article 102,

paragraph (2) of the Patent Act is a provision that aims to alleviate the difficulty toprove, specifying that when an infringer makes profit by an infringing act, the profit ispresumed to be an amount of damage on patentee.

Further, should there be any

circumstances where patentee could have obtained a profit in the absence of the patentright infringing act by an infringer, it should be construed that Article 102, paragraph(2) of the Patent Act shall apply.
B. Appellee has been producing and selling a two pack-type carbonate packcosmetics consisting of a gel and granules with the product names of "Mediplorer","Spa Oxygel", and "Nano aquagel pack" since September 1999.

These products(hereinafter collectively referred to as "Plaintiff's products") are the implemented
products of Invention 1-1 and Invention 2-1 (Exhibits Ko 5, 6, 46, 55-2 and theoverall import of the oral argument).
According to this, there are circumstances where Appellee could have obtained a
profit in the absence of the patent right infringing act by Appellants.

Thus Article

102, paragraph (2) of the Patent Act shall apply.
C. Further, it is reasonable to understand from the above purpose of Article 102,
paragraph (2) of the Patent Act that an amount of profit made by an infringer due toan infringing act as provided in the same paragraph is a total amount of profit madeby the infringer in principle, and there should be a presumption under the paragraph29

for such a total amount of profit.
presumption.

Of course, the above provision is a provision ofThus in a case where an infringer establishes the fact that there is noconnection between a damage on patentee and a part or all of profit made by the
infringer, the above presumption may be rebutted to such extent.
(2) Amount of profit made by an infringer due to an infringing act
A. Meaning of profit
It should be construed that an amount of profit made by an infringer due to an
infringing act of Article 102, paragraph (2) of the Patent Act is an amount of marginal
profit in which only an additional cost that was necessitated in direct relation to
manufacture and sales of infringing products by the infringer is deducted from sales
figures of the infringing products by the infringer, and the burden of proof is on thepatentee's side.
Appellee alleges an amount of profit as provided in the same paragraph as per
described in the column "Amount as Appellee alleges" "Amount of damage under theparagraph (2)" of the attachment "List of amount of damage", stating that Appellants'
sales figures and expenses from the registration date of Patent 1 of January 7, 2011 to
the date described in each paragraph of the attachment "List of claims" for eachAppellant and for each product (corresponding to Defendant's products 1 to 9, 11 to
18 in the order from the item 1) are as per described in the column "Sales figure" andthe column "Expenses without issue" of the attachment "List of sales figures andexpenses" for the respective Defendants' products (hereinafter including granules inrelation to Appellant NeoChemir) (hereinafter referred to as "the period for damage").
B. Sales figure
There is no dispute between the parties with regard to the fact that the Appellants'
sales figure of the respective Defendants' products during damage period is as per
described in the column "sales figure" of the attachment "List of sales figures andexpenses".
C. Expenses to be deducted(A) As aforementioned, expenses to be deducted means expenses additionallyrequired in direct relation to the production and sales of infringing products, which
includes, for example, raw material cost, purchase cost, and shipping cost for
infringing products.

In contrast, for example, an employment cost as well as

traveling and communication costs in administrative part do not correspond to
additional expenses that were necessitated in direct relation to manufacture and salesof infringing products in usual circumstances.
Further, Appellee alleges the above raw material cost, purchase cost, and shipping30

cost in the period of damage as per described in the column "Expenses without issue"of the attachment "List of sales figures and expenses".
there is no dispute between the parties.

To the extent of this amount,

Appellants allege expenses to be further

deducted, as per described in the column "Expenses as Appellants allege" of theattachment.

Thus a determination is made in the following.

(B) Appellant NeoChemir's expenses (the respective Defendants' products)
Appellant NeoChemir alleges that an employment cost for researchers of R&D
center should be deducted from the sales figure.

However, the R&D center

researchers' assignment and their engagement in the production and sales of the
Defendant's products (granules for the products 2, 5 to 7, 9, 11 to 14, and 16 to 18) are
unknown.

Thus it cannot be said that the employment cost as Appellant NeoChemiralleges was additionally necessitated in direct relation to the production and sales ofthese products.

Therefore, it is unreasonable to regard the above employment

expenses as expenses to be deducted from the sales figure of these products.
(C) Appellant Cosmepro Expenses (the Defendant's products 1, 14, 15, and 18)
a. Employment cost for part-time employees
Appellant Cosmepro alleges that employment cost for part-time employee should
be deducted.

However, the part-time employees' assignment and their engagement in

the production and sales of the Defendant's products 1, 14, 15, and 18 are unknown.
Thus it cannot be said that the employment cost as Appellant Cosmepro alleges wasadditionally necessitated in direct relation to the production and sales of theseproducts.

Therefore, it is unreasonable to regard the above employment expenses as

expenses to be deducted from the sales figure of these products.
b. Outsourced experiment and research expenses
Appellant Cosmepro alleges that 378,880 yen should be deducted as an outsourced
experiment and research expenses.

The experiment according to [ii] and [iii] of

Exhibit Otsu B2-9 was conducted on November 2014 and directed to the antiseptic
and antifungal tests for Defendant's product 18 sold on December 2014 (the overall
import of oral argument).

Therefore, it can be said that the expense for the above

test (38,880 yen in total) was additionally necessitated in direct relation to the
production and sales of the same product, and thus the expense corresponds to theexpenses to be deducted from the sales figures of the product.

In contrast, it isindefinite as to what product the remaining experiment expenses (directed to Exhibit
Otsu B2-9[i]) are directed to.

Thus it cannot be said that the experimental expenses

were additionally necessitated in direct relation to the production and sales of the
Defendant's products 1, 14, 15, and 18.

Therefore, it is unreasonable to regard this31

part as expenses to be deducted from the sales figure of these products.
c. Promotion costs
Appellant Cosmepro alleges that the advertising cost should be deducted.
However, the content of the exhibition of Appellant Cosmepro and the manner ofindication of Defendant's products 1, 14, 15, and 18 in the exhibition are not obvious
from Exhibits Otsu B2-11 (1) to (4).

Thus it cannot be said that the advertisement

cost as Appellant Cosmepro alleges was additionally necessitated in direct relation to
the production and sales of these products.

Therefore, it is unreasonable to regard

the above advertising cost as expenses to be deducted from the sales figure of theseproducts.
d. Cost for free distribution of sample and cost for distribution in exhibition
Appellant Cosmepro alleges that sample costs (raw material cost, purchase cost,and shipping cost) should be deducted.

However, it is not obvious from Exhibits

Otsu B2-10 and -12 as to whether Appellant Cosmepro bore expenses according tosamples in addition to the products for sales for the Defendant's products 1, 14, 15,
and 18.

Thus it cannot be said that the sample cost as Appellant Cosmepro alleges

was additionally necessitated in direct relation to the production and sales of theseproducts.

Therefore, it is unreasonable to regard the above sample cost as expenses

to be deducted from the sales figure of these products.
(D) Promotion and advertising cost for Appellant Airica (Defendant's product 5)Appellant Airica alleges that promotion and advertising costs should be deducted.
However, it cannot be seen from Exhibit Otsu B8-7 that the promotion and advertisingcosts are directed to the Defendant's product 5.

Thus it cannot be said that thepromotion and advertising costs as Appellant Airica alleges were additionallynecessitated in direct relation to the production and sales of the products.

Therefore,

it is unreasonable to regard the above promotion and advertising costs as expenses tobe deducted from the sales figure of the same product.
(E) Promotion and advertising cost for Appellant Chiara Macchiato (Defendant's
product 5)
It is recognized that Appellant Chiara Macchiato paid 1,089,837 yen for thepromotion of Defendant's product 5 (Exhibit Otsu B8-4).

This was additionallynecessitated in direct relation to the production and sales of the same products.

Thus

it corresponds to the expenses to be deducted from the sales figure of the same
products.
(F) Employment cost of Appellant Wingsense (the Defendant's product 13)
Appellant Wingsense alleges that an employment cost for part-time employees
32who are exclusively in charge of the Defendant's product 13 should be deducted.
However, the part-time employees' assignment and their engagement in the production
and sales of the Defendant's product 13 are unknown from Exhibit Otsu B18-7, [xix].
Thus it cannot be said that the employment cost as Appellant Wingsense alleges wasadditionally necessitated in direct relation to the production and sales of the product.
Therefore, it is unreasonable to regard the above employment expenses as expenses tobe deducted from the sales figure of the same product.
(G) Appellant Clear noir's expenses (Defendant's product 15)
a. Purchases for stock articles
Appellant Clear noir alleges that purchases for stock articles and samples should
be deducted.

However, it is obvious that the purchase of the stock articles was not

the expense additionally necessitated in direct relation to the production and sales of
Defendant's product 15.

This fact remains unchanged by a reason for producing

stock articles as to whether Defendants refrained from selling by the settlement ofprovisional disposition case.

Further, it is indefinite as to whether Appellant Clear

noir distributed samples, or why the distribution was additionally necessitated for the
production and sales of the same product.

Thus it cannot be said that the purchase ofsamples as Appellant Clear noir alleges was additionally necessitated in direct relation
to the production and sales of the same product.

Therefore, it is unreasonable toregard the above purchase Appellant Clear noir alleges as expenses to be deductedfrom the sales figure of the same product.
b. Promotion and advertising costs, etc.
Appellant Clear noir alleges that promotion and advertising cost and travelingexpense should be deducted.

However, it is not obvious from Exhibits Otsu B20-3

and -5 that the expenses as Appellant Clear noir alleges are directed to the
Defendant's product 15.

Thus it cannot be said that the promotion and advertisingand traveling costs as Appellant Clear noir alleges were additionally necessitated indirect relation to the production and sales of the products.

Therefore, it isunreasonable to regard the above promotion and advertising cost and the travelingexpense as expenses to be deducted from the sales figure of the same product.
(H) As aforementioned, the expenses to be deducted from the sales figure is as per
described in the column "Total amount of expenses" of the attachment "List of sales
figures and expenses".
D. Summary
Therefore, an amount described in the column "Amount as Court found" "Amountof damage under the paragraph (2)" of the attachment "List of amount of damage" is33presumed to be an amount of damage on Appellee by Appellants' patent right
infringing acts.
(3) Ground for rebuttal to presumption
A. Circumstances of the rebuttal to presumption
Regarding the rebuttal to the presumption under the provision of Article 102,
paragraph (2) of the Patent Act, it is construed as an infringer who should bear burdenof proof, similar to the circumstances of the proviso to the same paragraph, paragraph(1) of the Patent Act, and a fact for the rebuttal to presumption may be construed asincluding circumstances which could disprove the connection between a profit gainedby the infringer and a damage on patentee.

For example, the following facts may beconsidered as a fact for the rebuttal to presumption with respect to Article 102,
paragraph (2) of the Patent Act, as similar to the circumstances of the proviso to thesame article, paragraph (1) of the Patent Act: [i] a difference in business style (market
is not the same) between patentee and infringer; [ii] the presence of competingproducts in a market; [iii] marketing efforts of infringer (branding, advertisement);
and [iv] performance of infringing products (features other than patent invention
including function and design).

Further, even in a case where a patent invention is

implemented for only a part of the infringing products, these facts may be taken into
consideration as a fact for the rebuttal to presumption.

It cannot be deduced directlyfrom the fact that the patent invention is implemented for only a part of the infringing
products that the above rebuttal to presumption is recognized, but it is reasonable tofind by comprehensively taking into account the circumstances such as an importanceof a part of an infringing product where the patent invention is implemented and thecustomer attracting force of the patent invention.
B. Appellants allege that the presence of the other carbonate pack cosmetics canbe a fact for the rebuttal to presumption, supposing that all the pack cosmetics
utilizing carbonate gas be competing products.
It is construed, however, that a competing product needs to be a product thatcompetes with infringing products in a market.
The respective Defendants' products are pack cosmetics utilizing carbonate gas
using an aqueous viscous composition as one agent of a two-pack kit of carbonate
pack, and causing a carbonate and an acid to react in the aqueous viscous composition
to generate carbon dioxide and cause the obtained carbon dioxide-containing viscouscomposition to retain carbon dioxide in the form of bubbles.

Further, the dosage

form in cosmetics affects not only facility and handleabilit y but also satisfaction
obtained by spending efforts.

It is selected according to the need and favor of each34

consumer.

Therefore, it is not reasonable to understand that all the pack cosmetics

utilizing carbonate gas are competing products without regard to the dosage form.
The sales period and market share of the products as Appellants allege as competingproducts is indefinite, and thus it is insufficient to find that these products are thecompetitors of the respective Defendants' products in a market.
C. Appellants allege that the respective Defendants' products are superior inconvenience, or the sales of the respective Defendants' products have beenaccomplished by the planning ability and marketing efforts of Appellants.
It is usual, however, that business company makes device on the utility of
products and marketing efforts.

Thus it cannot be said as a fact for the rebuttal topresumption even if an ordinary level of marketing device and marketing efforts
should be made.

In this case, there is no proper evidence sufficient to find that

Appellants have made particular device or marketing efforts that go beyond theordinary level.
D. Appellants allege that the respective Defendants' products cause significantly
superior performance compared to the Plaintiff's products.
Should an infringing product causes effects superior to the products of patentee, itwould not directly lead to the rebuttal to presumption.

There should becircumstances where the superior effects contribute to the sales of the infringer.
(A) Plaintiff advertises the respective products in the manner of "Power ofcarbonate to moisturize skin deep inside", "bubbling carbonate gas delivers 'oxygen'necessary for metabolism of skin", or "Spa oxygel constructs a confident f acial
contour.

It is a slimmed skin with fitness, gloss, and moisture.".

The method foruse of these products allegedly comprises the steps of putting a gel and granules into acup, uniformly mixing with spatula, heavily applying a resultant gel onto a cleaned
skin, packing steadily for about 20 minutes or 30 minutes, roughly removing gel witha spatula, and wiping off with a wet towel to clean off. (Exhibits Ko 5, 6, 46, 55 -2,
and the overall import of the oral argument)(B) A method for the use of the respective Defendants' products is generally
instructed as below: [i] moderately mixing an agent A (granules) with an agent B (gel),and extending the mixture to the whole surface of a face slightly thicker (1 mm or so),[ii] an estimated time for packing is 20 minutes to 30 minutes, [iii] after packing, agel is removed with an included spatula, and [iv] finally washing the face lightly toclean off (Defendant's product 3), while a method for use slightly differs depending
on products.
But regarding a time of [ii], one is 15 minutes or more (Defendant's product 5),35one is 15 minutes to 30 minutes (or so) (Defendant's products 13, 14), and one is 15
minutes to 20 minutes (Defendant's product 9).

Thus a time for using a composition

obtained from the respective Defendants' products (a time for packing) is 15 minutes
to 30 minutes.
Further, regarding [iii] and [iv], in Defendant's product 1, it is described that aproper amount of a mousse gelator is sampled with a spatula, and extended in a small
amount to a face so as to cover a gel coated on the face with a thin layer, after coating
the gelator, the gel is peeled several times, a remained gel is wiped off, or washed off
for complete removal.

In Defendant's product 8, it is described that a proper amo untof an included fixer (hardening agent) is scooped with a cleaned spatula, and extended
first so as to cover a gel on a face, and after a surface is gradually solidified, a solid isslowly peeled off, and after peeling, the face must be washed off thoroughly.
Furthermore, the use of a solidifying agent is instructed to peel a gel in Defendant's
product 15 (Exhibits Ko 7, 8, 20, Exhibits Otsu A36-3, 42-4, Exhibit Otsu E all 27-3
and the overall import of the oral argument).
A third party's website describes unique features of the products, saying that "A
method for use is just simple! ...

Since a jelly serving for a solidifying agent isfinally put on a pack to facilitate the peeling of the pack, the gel can be easily
removed - This is one feature" (Defendant's product 1.

Exhibit Otsu A36-2, Exhibit

Otsu E all 27-2), "a weakly acidic carbonate gas pack suitable for all skins"(Defendant's product 8.

Exhibit Otsu A38-2), "Carbonate power causes a focusing

beauty component to be permeated into a skin!", "10 kinds of beauty components are
mixed" (Defendant's product 12.

Exhibit Otsu A39-2) and "To effectively cause ahigh level carbonate gas to be permeated into a horny layer, a highly viscous gel" isused (Defendant's product 18.

Exhibit Otsu A45-2) (Exhibits Otsu A36 to 45,

Exhibits Otsu E all 27, 28).
(C) The respective Defendants' products and Plaintiff's products are both theimplemented products of Invention 1-1 and Invention 2-1, which causes a carbonate
and an acid to react in the aqueous viscous compositions to generate carbon dioxide,
retain carbon dioxide in the form of bubbles in the resultant carbon dioxide-containing
viscous composition, apply the obtained composition to the skin to supply carbon
dioxide to subcutaneous tissues, thereby bringing the effects for beautiful skin andpartially improved adiposeness.

Facts found in the above (A) and (B) areinsufficient to find circumstances where the respective Defendants' products causesignificantly excellent performance compared to Plaintiff's products, and thiscontributes to the Appellants' sales.

There is no other proper evidence sufficient to36

find this.
E. Appellants allege that the respective Defendants' products are the implemented
products of the patent invention owned by Appellant NeoChemir, and in view of thecontribution of these patent inventions, an amount of compensation for damage should
be reduced.
Should an infringing product be an implemented product of the other patentinvention, it would not directly lead to the rebuttal to presumption.

There should be

any circumstances where the implementation of the other patent invention contributes
to the sales of the infringing product.

Appellant NeoChemir owns the following

patents related to carbon dioxide external preparation: [i] Patent No. 4130181 ( Exhibit
Otsu A18); [ii] Patent No. 4248878 (Exhibit Otsu A19); [iii] Patent No. 4589432(Exhibit Otsu A20); and [iv] Patent No. 4756265 (Exhibit Otsu B all 7).

There is noproper evidence that supports the fact that the respective Defendants' products fallwithin the technical scope of the invention according to the above respective patents.
Thus it cannot be said first of all that the respective Defendants' products are
implemented products of the other patent invention.

Therefore, the rebuttal topresumption due to the contribution of these patented inventions cannot be recognized.
Further, there were the ones in which the existence of the above patent right or theacquisition of patent was indicated on an outer case, or indicated for promotion andadvertisement in the respective Defendants' products (Exhibits Ko 7, 8, 17, and 20).
In the absence of the fact of implementation of a patent invention, it is inappropriate
to consider the only indication of the patent as a fact for the rebuttal to presumption.
Thus the rebuttal to presumption from this point cannot be recognized.
F. Appellants allege from the viewpoint of the comparison with the conventional
technique that Invention 1-1 and Invention 2-1 have low technical values.

The

technique of cosmetics to combine a gel and powders as Appellants point out(Shiseido 614 and Nisshin 324) is not directed to cosmetics utilizing carbonate gas(Exhibit Otsu A103, Exhibits Otsu E all 9, 35, 36).

Two-pack type cosmetics

generating carbon dioxide in the form of bubbles (Ishigaki inventions 1 and 2) are thetechnique of bubbling cosmetics for massaging skin, etc. by the breakage of bubbles
of carbonate gas.

It is not intended for obtaining a carbon dioxide-containing

viscous composition that retains carbon dioxide in the form of bubbles (Exhibits Otsu
E all 4, 5, 37, 38).

Thus neither of Invention 1-1 and Invention 2-1 is replaced.

Consequently, the presence of these conventional techniques has nothing to do with adamage to the Appellee, and thus it cannot be said as a fact for the rebuttal topresumption.
37

G. According to the experimental results of Exhibit Otsu A3, Appellants allege
that the contributions of Invention 1-1 and Invention 2-1 are limited in the respective
Defendants' products where butyleneglycol is mixed.

However, Invention 1-1 andInvention 2-1 are inventions of a two-pack type kit of cosmetics for obtaining acarbon dioxide-containing viscous composition.

The respective Defendants'

products are kits of pack cosmetics to be used by mixing a gel comprising a car bonate
with granules comprising an acid.

Thus it must be said that Invention 1 -1 andInvention 2-1 are implemented for all of the respective Defendants' products.
Further, in this case where there are no circumstances where the effects caused bymixing butyleneglycol with the respective Defendants' products contribute to theAppellants' sales, the mixture of butyleneglycol is irrelevant to the damage on
Appellee.

Thus the experimental result of Exhibit Otsu A3 pointed by Appellants

does not support the above Appellants' allegation.
H. Appellants allege that the respective Defendants' products do not satisfy
Constituent features 1-4A and 1-5A, and thus the contribution of the respective
inventions is limited.

The production and sales of the respective Defendants'

products correspond to the infringement of the respective patent rights, as in theforegoing.

The presence or absence of the implementation of the invention

according to the dependent claims in this case is irrelevant to a damage on Appellee,
and thus cannot be said as supporting the above Appellants' allegation.
I. None of the remaining points as Appellants allege could be a fact for the
rebuttal to presumption under Article 102, paragraph (2) of the Patent Act.

For theabove reason, the rebuttal to presumption of the same paragraph is not recognized inthis case.
(4) Summary
For the above reason, an amount of damage calculated by Article 102, paragraph(2) of the Patent Act for the respective patent right infringement is as per descr ibed in
the column "Amount as Court found" "Amount of damage under the paragraph (2)" of
the attachment "List of amount of damage".

Further, in view of the contents ofPatent right 1 and Patent right 2, an amount of damage does not differ between aperiod when infringing one patent and a period when infringing both patents.
6. Damage (Article 102, paragraph (3) of the Patent Act) (Issue 6-2)
(1) Article 102, paragraph (3) of the Patent Act
A. Appellee selectively alleges an amount of damage calculated by Article 102,
paragraph (3) of the Patent Act, as per described in the column "Amount as Appellee
alleges" "Amount of damage under the paragraph (3)" of the attachment "List of38

amount of damage".

Article 102, paragraph (3) of the Patent Act statutorily specifies

a minimal amount of damage that a patentee can claim in a patent right infringement.
B. Article 102, paragraph (3) of the Patent Act specifies that "The patentee ... may
fix the value of the damages that the patentee ... has personally in curred as being
equivalent to the amount of money the patentee ... would have been entitled to receive
for the working of the patented invention, and may claim compensation for thisagainst a person that, intentionally or due to negligence, infringes the patent ...".
Consequently, a damage under the provision of the same paragraph should be
calculated in principle on a sales figure basis of infringing products by multiplying
the sales figure by a royalty rate to be paid for the implementation.
(2) Amount corresponding to amount to be paid for the implementation of thepatent invention
A. Regarding "an amount corresponding to an amount to be paid for the
implementation of the patent invention" as provided in Article 102, paragraph (3) ofthe Patent Act, it specified before the revision by 1998 Law No. 51 that "an amountcorresponding to an amount to be paid usually for the implementation of the patentinvention", whereas "an amount to be paid usually" was in favor of infringement, andthus a part of "usually" was deleted by the revision.
In a license agreement of the patent invention, a royalty rate is determined inadvance in a situation where it is usual to be subjected to various contractual
restrictions, e.g. a licensee is required to pay a minimum guarantee in a stage where it
is indefinite as to whether or not the licensee's product might fall within a technicalscope of the patent invention or whether or not the patent should be invalidated, and it
is impossible to seek a refund of the paid royalty fee even in a case where the patentshould be invalidated, whereas an infringer would not bear such contractual
restrictions in a case where the infringer's product should fall within a technical scopeof the patent invention and be found to infringe the patent right, stating that it cannot
be said that the patent should be invalidated.

Further, in view of the aforementioned

history of the revision of the Patent Act, in calculating damage on the basis of thesame paragraph, it is not always necessary to be based on a royalty rate in the license
agreement for the patent right, but a rate to be paid for the implementation as
determined post facto for a person who infringed a patent right would inevitably
become a higher rate compared to an usual royalty rate.
Therefore, a royalty rate to be paid for the implementation should be determined
as a reasonable royalty rate by comprehensively taking into account the following
circumstances appeared in a lawsuit: [i] a royalty rate in the actual license agreeme nt
39

of the patent invention or if it is indefinite, a market rate of royalty rate in theirbusiness; [ii] the value of the patent invention itself; i.e., the technical content orsignificance of the patent invention, and the substitutability with alternativ e products;[iii] contributions to sales figure and profit when the patent invention is used for
products and a manner of infringement; and [iv] a competition between patentee andinfringer as well as a business policy of patentee.
B. Facts found(A) The royalty rate of the actual license agreement for the respective patents is
not disclosed in this case, whereas the following facts are recognized from evidences(Exhibit Ko 48, Exhibit Otsu A49) and the overall import of the oral argument.
a. In Table III-10 of "Research and study reports on how to utilize patents etc. inview of value assessment of intellectual property - Investigation of intellectual
property (assets) assessment and royalty rate - (March 2010)" prepared by TEIKOKUDATABANK, LTD., (hereinafter referred to as "the report"), as a questionnaire resultof royalty rate of domestic businesses, a royalty rate of patent in an industrial field ofchemistry is described as 5.3%.
First of all, in Table II-3 where a result of questionnaire in 2007 for domestic
businesses is described, an average of a royalty rate of patent in a technical categoryof chemistry is described as 4.3% (maximum value 32.5%, minimum value 0.5%)(103 cases).
b. In Table III-12 of the reports, a royalty rate determined by court is described as
6.1% on average (maximum value: 20%, minimum value: 0.3%) (for 5 cases) for
patents in an industrial field of chemistry from 2004 to 2008.
On the other hand, in Table III-11 of the report, a royalty rate determined by court
is described as 3.1% on average (median 3.0%, maximum 5.0%, for 7 cases) for
patents in an industrial field of chemistry from 1997 to 2008.
c. Settlement with regard to the other patent right owned by the Appellee(a) Appellee owns the following Patent No. 5164438 (Exhibit Ko 51-1, hereinafterreferred to as "patent of the other case") in addition to the respective patent rights:
Filing date: June 11, 2007
Original filing date: May 6, 1999
Registered Date: December 28, 2012
Title of invention: A composition for transdermal and transmucosal absorption ofcarbon dioxide(b) Extra-judicial compromise by Appellee
Appellee claimed a suspension of the production and sales of the products
40

produced and sold by H2O Co., Ltd. on the grounds of the patent right according to
the patent of the other case, and reached an extra-judicial compromise on April 30,
2013 with the company, to the effect that Appellee may receive the payment of asettlement money of 561,219 yen corresponding to 10% of the sales figure of the
products, and received a payment of the settlement money (Exhibits Ko 49, 57-1).
Appellee claimed a suspension of the sales of the products sold by RISE Co., Ltd.
on the grounds of the patent right according to the patent of the other case, andreached an extra-judicial compromise on October 1, 2013 with the company, to theeffect that Appellee may receive the payment of a settlement money of 346,225 yencorresponding to 10% of the sales figure of the products, and received a payment of
the settlement money (Exhibits Ko 50, 57-2).
(B) As in the aforesaid 1(4)A(B), Invention 1-1 and Invention 2-1 use an aqueous
viscous composition comprising sodium alginate as one agent of two -pack type kit,
and cause a carbonate and an acid to react in the aqueous viscous compositions togenerate carbon dioxide, retain carbon dioxide in the form of bubbles in the resultant
carbon dioxide-containing viscous composition, and apply the obtained composition
to skin mucosa or a damaged skin tissue or a skin to supply carbon dioxide to
subcutaneous tissues in a sustained manner, thereby bringing about the effects for the
improvement on beautiful skin and partial adiposeness.

Further, Invention 1-1 andInvention 2-1 are aqueous viscous compositions comprising sodium alginate as one
agent in cosmetics retaining carbon dioxide in the form of bubbles.

In this context,

these inventions are inventions related to the whole configuration of dosage form incosmetics and of considerable significance.

Further, regarding cosmetics that retaincarbon dioxide in the form of bubbles, there is no conventional technique to make one
agent of two-pack type kit an aqueous viscous composition comprising sodium
alginate.

In this regard, there seems to be no alternative technique.

(C) As in the aforesaid 5(3)G, it must be said that Invention 1-1 and Invention 2-1
are implemented for all the respective Defendants' products.

Further, the dosage

form in pack cosmetics affects buying motive of consumers, and thus the use of bothinventions for the respective Defendants' products would contribute to Appellants'
sales and profit.
(D) Appellant and Appellee are both manufacturers and sellers of cosmetics andcompetitors.
C. Amount to be paid for the implementation
As in the foregoing, it is reasonable to find that a royalty rate to be paid for the
implementation of the present case to be determined post facto for a person who
41

infringed a patent right would not fall below 10% by taking into account the following
circumstances appeared in a lawsuit: [i] in this case, the royalty rate of the actual
license agreement of the respective patents is not disclosed, whereas an average
license fee in recent statistics of a technical field to which the respective inventions
pertain is 5.3% in a result of questionnaire for domestic businesses, and 6.1% in thedetermination by court, and there is a case where a settlement money was found to be
10% of sales figure with regard to patent right infringement of patent in the same fieldowned by the Appellee; [ii] Invention 1-1 and Invention 2-1 have considerable
importance, and no alternative technique is present; [iii] it can be said that theimplementation of Invention 1-1 and Invention 2-1 contributes to the sales and profitof the respective Defendants' products; and [iv] the Appellee and the Appellants havea competitive relationship.

Further, in view of the contents of Patent right 1 andPatent right 2, the royalty does not differ between one case and a combination of bothcases.
Therefore, an amount of damage calculated by Article 102, paragraph (3) of the
Patent Act for the respective patent right infringement is as per described in thecolumn "Amount as Court found" "Amount of damage under paragraph (3)" of theattachment "List of amount of damage".
(3) Appellants' allegation
The Appellants allege that a royalty rate to be paid for the implementation shou ld
be lowered on the grounds that a contribution of the respective patents in therespective Defendants' products is limited.

It cannot be seen from the explanation in

the aforesaid 5(3) that a contribution to sales and profit due to the use of Invention 11 and Invention 2-1 for the respective Defendants' products is limited.

Thus theAppellants' allegation is based on an incorrect premise.
Further, the Appellants allege that the business model of the Appellee unjustly
impedes competition.

As in the aforesaid finding 5(1)B, the Appellee produces andsells the implemented products of the respective patents.

Thus there is no ground toconstrue that the business model of the Appellee unjustly impedes competition.

The

Appellants' allegation of sales method by MLM lacks specific argument, and is thus
not reasonable.
The remaining points as the Appellants allege do not affect the above
determination.
7. Conclusion(1) Regarding Appellee Chiara Macchiato (Defendant's product 5), an amount ofdamage according to Article 102, paragraph (3) of the Patent Act as found in the42

above 6, is higher than an amount of damage according to the same article, paragraph(2), as found in the above 5.

Thus the amount of damage according to the same

article, paragraph (3) should be recognized as an amount of damage on Appellee.
On the other hand, the amounts of damage calculated by the same article,
paragraph (2) found in the aforesaid item 5 are higher than with regard to theremaining Appellants.

Thus these amounts should be recognized as the amounts ofdamage on Appellee.
In view of the history of Appellants Cosmepro et al. having produced and sold therespective Defendants' products, Appellants Cosmepro et al. alleges that Appellants
Cosmepro et al. had neither intention nor serious fault.

Thus a consideration should

be given to this fact in finding an amount of compensation for damage for Appellants
Cosmepro et al. under the provision of the same article, paragraph (4).

However,Appellant Cosmepro, Appellant Airica, Appellant Wingsense, Appellant Cosme Bose,and Appellant Clear noir are manufacturers of cosmetics, and should there be
circumstances alleged by Appellants, it cannot be said that there was neither intention
nor serious fault for patent right infringement with respect to the Appellants.

Thus

the above Appellants' allegation is not acceptable.
(2) As described above, an amount of damage of Appellee amounts to a sum of anamount of damage calculated by Article 102, paragraph (2) of the Patent A ct forAppellants except for Appellant Chiara Macchiato and an amount of damage
calculated by the article, paragraph (3) of the Patent Act for Appellant Chiara
Macchiato and an amount of attorney cost.
Further, it is reasonable to find that the attorney cost in connection with thetortious act of Appellants does not fall below ten percent of an amount of damage tobe calculated by the above item.

Thus the Appellee's amount of damage is as per

described in the columns "Amount as the court finds" and "Damage on Appellee" ofthe attachment "List of amount of damage".
Therefore, the Appellee's claim has a point to the extent of seeking a payment of
the above amount of damage and default charges in a proportion of 5 percent per year
prescribed in Civil Code from the day on which the computation of each delinquentcharge (the days after amendment for days amended) described in the attachment "Listof Claims", which is the day after the day of tourtous act, to the paid date.
No. 4 Conclusion
For the above reason, the determination of the judgment in prior instance iscorrect in that Appellee's claim for compensation for damage was accepted to theextent of the above No. 3-7 and the remaining claims for compensation for damage
43

were dismissed, and the Appellants' appeal is groundless, and thus should bedismissed.

Further, since Appellee has withdrawn an action for each claim for

injunctive relief and disposal against Appellants that was sought in the prior instance,a part directed to the Appellants in the main text of the judgment in prior instance Nos.
1 to 5, 8 to 10, 12 to 18, 21 to 23, 25, and 26 ceases to be effective, and thus the court
clarifies it and renders as in the main text.
Intellectual Property High Court, Special Division

Presiding Judge

TAKABE Makiko

Judge MORI Yoshiyuki
Judge TSURUOKA ToshihikoJudge OHTAKA Ichiro
Judge TAKAHASHI Aya

44

Attachment
List of Claims
1

Appellant NeoChemir and Appellant Cosmepro should jointly pay to Appellee

7,364,892 yen and an interest for arrears in a proportion of 5 percent on an annual
basis from December 16, 2016 to the paid date.
2

Appellant NeoChemir should pay to Appellee 20,853,199 yen and an interest

for arrears in a proportion of 5 percent on an annual basis from February 28, 2015 to
the paid date.
3

Appellant NeoChemir should pay to Appellee 10,037,758 yen and an interest

for arrears in a proportion of 5 percent on an annual basis from February 28, 2015 to
the paid date.
4

Appellant NeoChemir should pay to Appellee 13,772,552 yen and an interest

for arrears in a proportion of 5 percent on an annual basis from December 31, 2016 to
the paid date.
5

Appellant Airica, Appellant Chiara Macchiato, and Appellant NeoChemirshould jointly pay to Appellee 7,867,880 yen and an interest for arrears in a
proportion of 5 percent on an annual basis from March 17, 2017 to the paid date.
6

Appellant NeoChemir should pay to Appellee 6,155,646 yen and an interest for

arrears in a proportion of 5 percent on an annual basis from December 16, 2016 to thepaid date.
7

Appellant NeoChemir should pay to Appellee 41,949,557 yen and an interest

for arrears in a proportion of 5 percent on an annual basis from February 29, 2016
(with the proviso that from November 6, 2015 for its part 770,880 yen) to the paiddate.
(A claim after amendment in this proceeding)Appellant NeoChemir should pay to Appellee 41,949,557 yen and an interest
for arrears in a proportion of 5 percent on an annual basis from February 29, 2016 to
the paid date.
8

Appellant NeoChemir should pay to Appellee jointly with the Appellant

Rhythm before separation and the Appellant AMPLY before separation 270,633,428
yen and an interest for arrears in a proportion of 5 percent on an annual basis from
December 16, 2016 to the paid date.
9

Appellant NeoChemir should pay to Appellee jointly with the Appellant SHIN

before separation 1,765,707 yen and an interest for arrears in a proportion of 5 percent
45

on an annual basis from September 14, 2016 to the paid date.
10

Appellant NeoChemir should pay to Appellee jointly with the Appellant Japan

Cosme before separation 1,046,895 yen and an interest for arrears in a proportion of 5
percent on an annual basis from December 3, 2015 to the paid date.
11

Appellant NeoChemir should pay to Appellee 521,381 yen and an interest for

arrears in a proportion of 5 percent on an annual basis from May 31, 2015 to the paid
date.
12

Appellant Wingsense, Appellant Cosme Bose and Appellant NeoChemir should

jointly pay to Appellee 12,547,058 yen and an interest for arrears in a proportion of 5
percent on an annual basis from December 16, 2016 (with the proviso that fromFebruary 28, 2014 with respect to its part 204,692 yen for Appellant Cosme Bose, andfrom the same date with respect to its part 316,800 yen for Appellant NeoChemir) tothe paid date.
(A claim after amendment in this proceeding)Appellant Wingsense, Appellant Cosme Bose, and Appellant NeoChemir should
jointly pay to Appellee 12,547,058 yen and an interest for arrears in a proportion of 5
percent on an annual basis from December 16, 2016 (with the proviso that fromJanuary 31, 2017 for the Appellant Wingsense) to the paid date.
13

Appellant NeoChemir and Appellant Cosmepro should jointly pay to Appellee

797,419 yen and an interest for arrears in a proportion of 5 percent on an annua l basis
from December 16, 2016 to the paid date.
14

Appellant Clear noir, Appellant Cosmepro, and Appellant NeoChemir should

jointly pay to Appellee 21,320,478 yen and an interest for arrears in a proportion of 5
percent on an annual basis from December 16, 2016 to the paid date.
(A claim after amendment in this proceeding)Appellant Clear noir, Appellant Cosmepro, and Appellant NeoChemir should jointly
pay to Appellee 21,320,478 yen and an interest for arrears in a proportion of 5 percent
on an annual basis from December 16, 2016 (with the proviso that from January 31,2017 for the Appellant Clear noir) to the paid date.
15

Appellant NeoChemir should pay to Appellee 1,598,640 yen and an interest for

arrears in a proportion of 5 percent on an annual basis from May 16, 2017 to the paid
date.
16

Appellant NeoChemir should pay to Appellee jointly with Appellant Cosmepro

before separation 302,672 yen and an interest for arrears in a proportion of 5 percent
on an annual basis from January 31, 2011 to the paid date.
17

Appellant Cosmepro and Appellant NeoChemir should jointly pay to Appellee
46

1,334,002 yen and an interest for arrears in a proportion of 5 percent on an annual
basis from December 25, 2014 to the paid date.
(A claim after amendment in this proceeding)Appellant Cosmepro and Appellant NeoChemir should jointly pay to Appellee
1,334,002 yen and an interest for arrears in a proportion of 5 percent on an annual
basis from December 25, 2014 (with the proviso that from December 26, 2014 for theAppellant Cosmepro) to the paid date.
Period47

Attachment

Product
numberDefendant's
product 1

Defendant's
product 2
Defendant's
product 3
Defendant's
product 4Manufacturer
Sales figureand seller
Appellant
NeoChemir¥8,810,966

Appellant
Cosmepro¥946,400

Appellant¥12,400,000
NeoChemirAppellant¥3,780,000
NeoChemirAppellant¥14,984,240
NeoChemirAppellant¥11,046,320
AiricaAppellant
Defendant's¥6,283,200
Chiaraproduct 5
Macchiato
Appellant
NeoChemirDefendant's Appellant
product 6 NeoChemir
Defendant's Appellant
product 7 NeoChemir¥1,674,000¥2,880,000¥7,008,000

List of sales figures and expenses
Costs
Costs as Appellants allege
without
Expense item
issue

AmountEmployment
cost
for
R&D
Center¥2,757,312 Researcher (Salary, mandatory welfare ¥229,469
expense)Part-time employment cost 512,300 yen[Including the cost for Defendant's products 14, 15, and 18]¥304,697

Outsourcing cost for test and research 378,880 yen

Advertisement cost, etc. 3,529,443 yen
Sample cost for free distribution 1,222,158 yen
Sample cost for distribution in exhibition 736,600 yen
Employment cost for R&D Center Researcher¥1,878,600¥262,397(Salary, mandatory welfare expense)
Employment cost for R&D Center Researcher¥1,870,029¥113,530(Salary, mandatory welfare expense)
Employment cost for R&D Center Researcher¥7,536,238¥1,158,830(Salary, mandatory welfare expense)

Court's
decision

Total amountof expenses¥0¥2,757,312¥0¥304,697¥0¥1,878,600¥0¥1,870,029¥0¥7,536,238¥6,283,200 Promotion and advertisement costs¥3,584,700¥0¥6,283,200¥5,187,600 Promotion and advertisement costs¥1,089,837¥1,089,837¥6,277,437¥45,526¥0¥380,102¥60,783¥0¥346,900¥156,339¥0¥988,629

Employment cost for R&D Center Researcher(Salary, mandatory welfare expense)
Employment cost for R&D Center Researcher¥346,900(Salary, mandatory welfare expense)
Employment cost for R&D Center Researcher¥988,629(Salary, mandatory welfare expense)¥380,10248

Defendant's Appellant ¥110,320,00
Employment cost for R&D Center Researcher¥58,519,431¥3,177,518
product 8 NeoChemir
0(Salary, mandatory welfare expense)[Including the cost for Defendant's products 11,
Defendant's Appellant
12, and 17]¥1,480,308¥337,020¥71,369
product 9 NeoChemir
Employment cost for R&D Center Researcher(Salary, mandatory welfare expense)
Defendant's Appellant¥998,112¥227,239 As per Defendant's product 9
product 11 NeoChemir
Defendant's Appellant¥613,704¥139,721 As per Defendant's product 9
product 12 NeoChemir

Appellant¥15,609,370
Wingsense
Defendant's
product 13 Appellant
Cosme
Bose
Appellant
NeoChemirDefendant's
product 14¥1,860,840¥2,880,000

Employment cost (Salary from October
2013 to December 2015 for two part-time¥8,299,189¥4,570,930
employees employed for exclusively
engaging in Defendant's product 13)¥0¥337,020¥0¥227,239¥0¥139,721¥0¥8,299,189¥1,426,713 None
¥346,900¥1,426,713

Employment cost for R&D Center Researcher(Salary, mandatory welfare expense)¥61,329¥0¥346,900¥0¥112,509¥0¥149,205

Part-time employment cost 58,464 yen.

Appellant
Cosmepro¥396,540¥112,509 The others are as per described in the column "Appellant
Cosmepro" of the above Defendant's product 1

Appellant
NeoChemir¥590,100¥149,205 Employment cost for R&D Center Researcher (Salary,mandatory welfare expense)[Including the cost for Defendant's product 18]¥40,499

Total purchase cost of 1,396,442 yen corresponding
Appellant
to 270 samples and 231 stock articles¥24,196,404 ¥13,072,526
Clear
Promotion and advertisement costs 7,266,793 yen
Defendant's
noir
Traveling cost 181,320 yen
product 15
Appellant
Cosmepro¥0 ¥58,519,431¥3,145,791

Part-time employment cost 1,098,886 yen¥1,075,184 The others are as per described in the column "Appellant
Cosmepro" of the above Defendant's product 149¥0 ¥13,072,526¥0¥1,075,184

Appellant¥14,451,650
NeoChemirDefendant's Appellant¥960,000
product 16 NeoChemir
Defendant's Appellant¥279,876
product 17 NeoChemir
Appellant
Defendant's Cosmepro
product 18
Appellant
NeoChemir¥731,200¥1,095,900

Employment cost for R&D Center Researcher(Salary, mandatory welfare expense)
Employment cost for R&D Center Researcher¥144,928(Salary, mandatory welfare expense)¥8,263,882¥453,397¥0¥8,263,882¥34,606¥0¥144,928¥0¥63,720¥38,880¥376,156¥0¥277,095¥63,720 As per Defendant's product 9
Part-time employment cost 92,000 yen¥337,276 The others are as per described in the column "Appellant
Cosmepro" of the above Defendant's product 1
As per the column of "Appellant NeoChemir" of¥277,095
Defendant's product 1450

Attachment
List of amount of damage
Amount as Appellee claimed
Product number Manufacturer andsellerAppellant NeoChemir
Defendant's product 1

Appellant Cosmepro
Defendant's product 2 Appellant NeoChemir
Defendant's product 3 Appellant NeoChemir
Defendant's product 4 Appellant NeoChemir

Appellant Airica
Defendant's product 5 Appellant Chiara Macchiato

Appellant NeoChemir
Defendant's product 6 Appellant NeoChemir
Defendant's product 7 Appellant NeoChemir
Defendant's product 8 Appellant NeoChemir
Defendant's product 9 Appellant NeoChemir
Defendant's product 11

Appellant NeoChemir

Defendant's product 12Appellant NeoChemir
Appellant Wingsense

Defendant's product 13

Appellant Cosme Bose
Appellant NeoChemir

Defendant's product 14

Amount as Court foundAmount of damage Amount of damage Amount of damage Amount of damage Attorney cost
under theunder theunder theunder theparagraph (2)paragraph (3)paragraph (2)paragraph (3)Appellant Cosmepro
Appellant NeoChemir

51

Appellee's
damageAmount as Appellee claimed
Product number Manufacturer andsellerAppellant Clear noir
Defendant's product 15 Appellant Cosmepro

Appellant NeoChemir
Defendant's product 16 Appellant NeoChemir
Defendant's product 17 Appellant NeoChemir
Defendant's product 18

Amount as Court foundAmount of damage Amount of damage Amount of damage Amount of damage Attorney cost
under theunder theunder theunder theparagraph (2)paragraph (3)paragraph (2)paragraph (3)Appellant Cosmepro
Appellant NeoChemir

52

Appellee's
damage