Patentee’s Right of Injunction after Granting Exclusive License

Supreme Court Decision, June 17, 2005

1. FACTS

A. Summary of Facts
(1) The appellee X (plaintiff in the first trial) owns the following patent right (“present patent right”).
Patent Number: 2,621,842
Title of Invention: Process for Searching Stable Complex Structure of Biopolymer – Ligand Molecule
(2) Institute A obtained from X the exclusive license under the present patent right for the entire life of the patent within the territory of Japan.
(3) X filed a law suit against Y (defendant in the first trial, appellant in the Supreme Court), who imported and sold in Japan programs (molecular modeling software products) in the form of CD-ROMs, requesting an injunction alleging that the process for complex searches used in the programs infringes the present patent right and that the media fall under the “goods exclusively used to implement the patented invention.”

B. Procedural History
(1) The Tokyo District Court dismissed X’s request stating that “it is appropriate to consider that Plaintiff X as patentee is prohibited from enforcing its right of injunction when the subject patent is exclusively licensed because such license limits enforcement of right of injunction only to the exclusive licensee to the extent of the licensee’s exclusive right to implement the patented invention.” X appealed the decision to the Tokyo High Court.
(2) The Tokyo High Court reversed the District court decision, stating that “even after granting the exclusive license, the patentee should be able to enforce the right of injunction. ” Y appealed the decision to the Supreme Court.

2. SUPREME COURT DECISION

(1) It is reasonable to consider that even after granting the exclusive license under the present patent right, the patentee may enforce its right of injunction based on the present patent right for the following reasons.
(2) A patentee has the right of injunction to stop or prevent infringement of its patent right (Article 100(1) of the Patent Law).
A patentee who granted the exclusive license under its patent right loses the right to commercially use (implement) the patented invention to the extent that the exclusive licensee has the right to use the patented invention (Proviso of Article 68).
The question is whether such patentee also loses the right of injunction under these circumstances.
In literal terms, Article 100(1) of the Patent Law does not provide any ground for the court to find that the patentee’s right of injunction should be limited as a result of granting the exclusive license.
Practically, moreover, it is obvious that the patentee has an actual interest in eliminating patent infringement to ensure licensing revenue if there is an agreement that the licensing royalties are paid based on the sales of the exclusive licensee.
Given the possibility that leaving patent infringement unsolved and termination of the exclusive license due to some reason may result in a disadvantage to the patentee in starting to use the patented invention on its own, the patentee should be able to enforce its right to request an injunction based on the patent right.
Based on the forgoing, it should be considered that a patentee does not lose right of injunction even after granting exclusive license.