Saturday, September 17, 2022

[GUEST POST] Antitrust defense to patent infringement in Japan: IP High Court overruled Tokyo District Court in toner cartridge recycling case

Every once in a while, I invite experts to contribute to this blog in order to shed more light on fields or jurisdictions I'm not too familiar with, but which are of interest to a significant part of FOSS Patents' audience. This is a guest post on which I have collaborated with Takanori ABE, the founding partner of Japanese law firm ABE&PARTNERS. He is also a Guest Professor at the Osaka University Graduate School of Medicine.

Antimonopoly Act Defense against Patent Enforcement Awakened in Japan?

Ds Japan is in the toner cartridge recycling business. Refilling Ricoh's toners per se does not appear to give rise to patent assertions. But there are electronic components in Ricoh's toner cartridges on which Ricoh holds patents, and those components may be necessary in order to display the toner level. Ds Japan replaced certain components in order to ensure that a correct toner status would be displayed. From Ds Japan's perspective, doing so--while it was deemed an act of patent infringement-–is inevitable in order to level the playing field: otherwise the display would show a question mark instead of an approximate toner level, and consumers would potentially lack faith in cartridges refilled by third parties like Ds Japan.

The lower court agreed with Ds Japan that Ricoh's patent enforcement in this case constituted an unfair restraint on competition and, therefore, a violation of Japan's antitrust law, the Antimonopoly Act. The Tokyo District Court placed the emphasis on the fact that Ricoh insisted the actions of Ds Japan resulted in either a patent infringement or a decline in competitiveness. The higher court, however, focused on the fact that recycled cartridges could be used. Even if Ricoh's patents-in-suit are not infringed and cartridges are simply refilled without replacing electronic components, users will always know whether or not the toner level is sufficient at any given point in time.

The IP High Court assumed that users looking to save money on cartridges would accept that kind of shortcoming. In addition, the IP High Court agreed with Ricoh who claimed and proved that the recycling companies were able to manufacture recycled products that do not display a question mark, simultaneously avoiding infringement of Ricoh’s patents, by providing the result of an experiment to show that "it was confirmed that the remaining quantity of the toner was displayed instead of a question mark and Ricoh’s printer operated normally." Therefore, the IP High Court concluded that the restrictive effect on competition was too limited for Ricoh's patent enforcement to constitute exclusionary conduct and to run afoul of the Antimonopoly Act.

Further details on this case (which may ultimately be resolved Japan's Supreme Court) can be found in the following two articles: