Japan: DOE and cross-border infringement of a biologics process patent

Summary of the case

Ajinomoto filed patent infringement lawsuits against CJ CheilJedang (CJCJ) of South Korea and its affiliates (CJ Group), which manufactures monosodium glutamate (MSG) products in Indonesia and sells them in various countries, at both the District Court of Düsseldorf and the Tokyo District Court. Ajinomoto is of the opinion that the manufacturing process used by the CJ Group infringes its patent rights.

That is, Ajinomoto holds patent JP3651002 for an invention titled “Process for constructing amino acid-producing bacterium and process for producing amino acid by the fermentation method using the constructed amino acid-producing bacterium” (the patent right 1) and patent JP5343303 for an invention titled “L-glutamic acid-producing bacterium and process for producing L-glutamic acid” (the patent right 2). Ajinomoto alleged that the processes for producing the MSG specified in numbers one through four of Attachment 2 “List of CJ Japan’s Products” respectively by the corresponding processes specified in Attachment 3 “List of CJ Japan’s Production Processes” fall within the technical scopes of the inventions claimed in the patents 1 and 2. Ajinomoto also alleged that CJ Japan’s act of importing, selling, and offering to sell CJ Japan’s products produced by CJ Japan’s production processes, by itself or jointly with its affiliated company, constitutes infringement of the patent right 1 with regard to CJ Japan’s products one and three, as well as the patent right 2 with regard to CJ Japan’s products one through four.

Based on this allegation, Ajinomoto made a claim seeking an injunction against the sale, import, and offer to sell (including displaying for the purpose of sale) of CJ Japan’s products, a claim seeking disposal of CJ Japan’s products, and a claim for payment of damages in the amount of JPY 990 million (US $9,388,336) as partial claims for the damages.

CJ Japan, while recognising that its production process 1 was being used in a part of the subject period,  disputes infringement of the patent right 2 under Doctrine of Equivalents (DOE) mainly regarding CJ Japan’s product four.

Also, with regard to the existence and the scope of acts of working the inventions claimed in the patents for which CJ Japan should be held liable for compensation for damages in connection with the claim for compensation for damages caused by acts conducted during the subject period, CJ Japan argues that, whereas its products were produced in Indonesia, its products exported to Japan include a portion directly sold to Japanese customers by the Indonesian corporation which produced the products, and therefore this portion does not constitute working of the inventions in Japan because the act of sale was conducted outside Japan, and that CJ Japan should not be held liable for compensation for damages with regard to this portion. Thus, CJ Japan disputes Ajinomoto’s method of calculation of damages.

Judgment of September 24, 2020, Tokyo District Court

The Tokyo District Court (Presiding Judge Yamada) accepted Ajinomoto’s claim seeking injunction and disposal with regard to the act of selling, importing, and offering to sell the MSG mentioned in one and two of Attachment 17 “List of Products Subject to Injunction” based on the patent right 2, and calculated the value of damages as a total of JPY 1,928,656,532 ( $18,289,773). It also accepted Ajinomoto’s claims for compensation for damages in the amounts of JPY 900 million ($8,534,851) and JPY 90 million ($853,485) for lawyer fees and patent attorney fees.  The Tokyo District Court affirmed infringement under DOE and offering to sell.

(1) Infringement under DOE

Even if, within the configuration indicated in the claims, there is a part which is different from the product to be produced or the process to be used by the counterparty (the accused product), if [i] the different part of the claimed structure from the accused product is not an essential part of the patented invention, [ii] the purpose of the patented invention can be achieved by replacing this part with a part in the accused product, and an identical function and effect can be obtained, [iii] the skilled person could easily conceive the idea of such replacement as of the production of the accused product, [iv] the accused product is not identical to the publicly known technology or could have been easily conceived as of the filing by the skilled person, and [v] there are no such special circumstances that the accused product had been intentionally excluded from the claims in the patent examination process, it is reasonable to construe that the subject product falls within the technical scope of the patented invention as being an equivalent to the configuration indicated in the claims (see the judgment of February 24 1998, Supreme Court, and the judgment of March 24 2017, Supreme Court).

The problem to be solved by invention 2 is to provide novel art to enhance the L-glutamic acid-producing ability of a coryneform bacterium when L-glutamic acid is produced by using the coryneform bacterium. And, when compared with the prior art detailed in  description 2, the specific technical idea in invention 2 that cannot be found in the prior art (the principle for solving the problem) was to focus on the yggB gene of a coryneform bacterium, whose effect on production of glutamic acid had been unknown in the past, modify the yggB protein, which is a type of a mechanosensitive channel, by using a mutant-type yggB gene into which a C-terminal side mutation or mutations in transmembrane regions have been introduced, and thereby provide novel art to enhance the glutamic acid-producing ability of the bacterium.

(b) The first requirement (non-essential part)

In light of the unique technical idea or the principle for solving the problem in invention 2, the essential part of the configuration using the 19-type mutation is found to be “to introduce into a yggB gene derived from a coryneform bacterium a mutation equivalent to the A100T mutation in the yggB gene derived from Corynebacterium glutamicum, modify the coryneform bacterium by using that mutant-type yggB gene, and enhance the glutamic acid-producing ability of the bacterium even under a condition in which an excess of biotin is present”.

CJ Japan alleges that, in light of the prosecution history, the state of the art as of the priority date 2, and the effect of the configuration using the 19-type mutation, when determining the essential part of the configuration using the 19-type mutation, the claims should not be adopted as a generic concept, but instead should be limited to “the A100T mutation in the specific amino acid sequence of SEQ ID NO: 22, which is the sequence of the yggB gene after the mutation” described in the claims.

However, invention 2 does not target a problem that only exists in a coryneform bacterium having a yggB gene with a specific sequence, and the principle for solving the problem was to introduce novel art of modifying yggB protein, by using a mutant-type yggB gene into which a C-terminal side mutation or mutations in transmembrane regions are introduced, in order to enhance the glutamic acid-producing ability. Even by taking into consideration that claim 1 or claim 4 of invention 2 lists the amino acid sequences of the yggB gene before introduction of the mutation, and claim 6 lists the amino acid sequences of the yggB gene after the mutation, when determining invention 2 and the essential part of the configuration using the 19-type mutation comprised therein, it is reasonable to find that the species of the coryneform bacterium from which the yggB gene is derived, the specific sequence of the entire yggB gene before the mutation, or the specific sequence of the yggB gene after the introduction of a mutation equivalent to the A100T mutation, is not an essential part.

As none of the differences between the configuration using the 19-type mutation and CJ Japan’s production process 4 are differences in the essential part of the patented invention, CJ Japan’s production process 4 that uses the strains is found to fulfil the first requirement of DOE.

(c) The second requirement (replaceability)

It is found that the strains used in CJ Japan’s production process 4 show enhancement in the glutamic acid-producing ability, which solves the problem to be solved by invention 2, and have the same function and effect as the configuration using the 19-type mutation, which is to enhance the glutamic acid-producing ability under a condition with an excess of biotin.

CJ Japan alleges that, as the essential part of the configuration using the 19-type mutation is a specific mutation, SEQ ID NO: 22, and its function and effect are also limited to the function and effect of a specific amino acid sequence, SEQ ID NO: 22, the function and effect of CJ Japan’s production process 4 and those of the configuration using the 19-type mutation are not the same. However, as mentioned above, in light of the problem to be solved by invention 2 and the principle for solving that problem, it cannot be said that the essential part of the configuration using the 19-type mutation should be limited to a specific sequence of the yggB gene before and after the mutation, and it cannot be said either that the function and effect of the configuration using the 19-type mutation are limited to those of the amino acid sequence of SEQ ID NO: 22. Therefore, CJ Japan’s allegation cannot be adopted.

(d)  The third requirement (ease of replacement)

It is reasonable to find that, as of July 2016, when CJ Japan’s production process 4 began, a skilled person could have easily conceived of substituting the configuration using the 19-type mutation with the configurations relating to the differences, in other words, replacing Corynebacterium glutamicum used as the strain from which the mutant-type yggB gene is derived with Corynebacterium callunae, and accordingly changing the position of the alanine to be substituted with threonine in the amino acid sequence of the yggB gene from position 100 to position 98.

CJ Japan alleges that the ease in conceiving of the invention as mentioned in the third requirement should be construed to be the level of ease for any skilled person to be able to recognise the invention in the same manner as that specified in the claims, and that such ease did not exist in this case. However, in light of the abovementioned circumstances, it should be said that the ease in conceiving of the differences can be found by deeming an average technician at a glutamic acid fermentation plant using bacteria to which the invention 2 belongs, who is a skilled person, as a standard, and CJ Japan’s allegation regarding this point cannot be adopted.

(e) The fifth requirement (special circumstances)

1. Statements of the initial claims at the time of the filing and the status of amendments

The initial claim 1 at the time of filing the application for the invention 2 read “a coryneform bacterium having an L-glutamic acid-producing ability, wherein the coryneform bacterium has an enhanced L-glutamic acid-producing ability as compared to a non-modified strain as a result of being modified by using the yggB gene”. Invention 2 included claims that did not specify the strain from which the mutant-type yggB gene is derived or the specific amino acid sequence before and after the mutation, but subsequently, as a result of making amendments twice in response to a notice of grounds for rejection, the statement of the claim 1 at the time of registration read as described in [Claim 1] of Attachment 5-1 “Claims (the patent 2)”, and the numbers of the amino acid sequences of the mutant-type yggB gene before the mutation were specified as SEQ ID NOs: 6, 62, 68, 84, and 85 derived from Corynebacterium glutamicum (including Brevibacterium flavum) or Corynebacterium melassecola, while the contents of the mutation to be introduced therein were also specified.

As a result, it is found that a configuration that uses a mutant-type yggB gene derived from Corynebacterium callunae, such as in CJ Japan’s production process 4, ceased to be literally included within the technical scope of the invention 2.

1. Determination on whether there are special circumstances

It is not found to have been easily possible for Ajinomoto, which is the applicant, to specify a specific configuration using a mutant-type yggB gene derived from Corynebacterium callunae, which could solve the problem to be solved by invention 2, and state it in the claims in a form that satisfies the support requirement and other description requirements at the time of filing the application for invention 2.

The statement of claim 1 at the time of the filing did not specify the bacterial species any more than generally stating “a coryneform bacterium having an L-glutamic acid-producing ability”, and in particular, it did not state a configuration that uses a mutant-type yggB gene derived from Corynebacterium callunae. In addition, description 2 only mentioned Corynebacterium callunae as an example of a bacterium that could be used as the coryneform bacterium of invention 2 (paragraphs [0012] and [0013]), and no mention is made of a configuration that uses a yggB gene derived from Corynebacterium callunae in description 2, either before and after the amendments.

In light of the circumstances mentioned above, it cannot be said, based on the process of the prosecution and corrections referred to above, that the aim of intentionally excluding a configuration that uses a mutant-type yggB gene derived from Corynebacterium callunae from the claims was indicated from an objective and external viewpoint.

(2) Offer to sell

(a) The offer to sell

The sale of the MSG in question itself is not found to have been conducted in Japan with regard to the portion sold by CJ Indonesia. However, it is reasonable to find that CJ Japan was conducting sales activities relating to the portion sold by CJ Indonesia, jointly with CJ Indonesia, with regard to the portion sold by CJ Indonesia during the period of use of CJ Japan’s production processes. CJ Japan is found to have made an offer to sell, in light of the following: the relationship between CJ Japan and CJ Indonesia in the CJ Group; the fact that order forms for the portion sold by CJ Indonesia were sometimes submitted to CJ Japan and were sent to CJ Indonesia via CJ Japan; the fact that a commission contract was concluded between CJ Japan and CJ Indonesia to the effect that CJ Indonesia would pay a part of the sales amount of the portion sold by CJ Indonesia to CJ Japan; the fact that CJ Japan engaged in delivery of samples and recovery of defective products of the MSG in question in Japan with regard to the portion sold by CJ Indonesia; and the fact that expenses relating to the portion sold by CJ Indonesia were recorded in CJ Japan’s accounting based on instructions by or based on an agreement with CJCJ.

CJ Japan also alleges that, as a “sale” under the Patent Act means a sale in Japan, and an “offer to sell”, which is an act to prepare for a sale, also means an offer to make a sale in Japan, CJ Japan’s act with regard to the portion sold by CJ Indonesia does not constitute an offer to sell.

Indeed, although the sale of the MSG in question to the buyers with regard to the portion sold by CJ Indonesia is found to have been conducted outside Japan, the portion sold by CJ Indonesia was all sold to buyers in Japan, and even if the sale of the MSG in question itself was conducted at the time of the shipping, the MSG in question was scheduled to be subsequently imported into Japan by the buyers’ side. Given that an offer to sell is stipulated as a separate act of working from a sale, regarding products like the MSG in question relating to the portion sold by CJ Indonesia, which are sold to buyers in Japan and imported into Japan as a result of sales activities conducted in Japan, it is not reasonable if the conclusion as to whether the sales activities constitute an offer to sell made in Japan differs solely based on whether the sale to the buyers is conducted outside Japan or inside Japan. It is reasonable to construe that the act of CJ Japan and CJ Indonesia to jointly conduct sales activities relating to the portion sold by CJ Indonesia, in Japan, constitutes an “offer to sell” by CJ Japan. CJ Japan’s allegation relating to this point cannot be adopted.

(b) Joint tort by CJ Japan and CJ Indonesia

It is reasonable to find that CJ Japan and CJ Indonesia are not merely in a relationship of a supplier/customer of the MSG in question with regard to the portion traded by CJ Japan, but are in an integral relationship with each other in selling the MSG in question produced by CJ Indonesia targeting the Japanese market, regardless of the selling modes of the portion sold by CJ Japan and the portion sold by CJ Indonesia. As they jointly conduct the respective acts of working the inventions with regard to the portion sold by CJ Japan and the portion sold by CJ Indonesia, it is reasonable to find that joint tort will be established for CJ Japan in regard to these acts.

(c) Method of calculation of the profit under Article 102(2) of the Patent Act made through joint tort by CJ Japan

The inventions relating to patent right 1 or patent right 2 have been worked by way of importing, selling, and offering to sell the MSG in question with regard to the portion sold by CJ Japan, and by way of offering to sell the MSG in question with regard to the portion sold by CJ Indonesia, and joint tort by CJ Japan and CJ Indonesia is found to be established for these acts. Accordingly, in presuming the value of damages under Article 102(2) of the Patent Act as well, it should be said that the total amount of the marginal profits of CJ Japan would be presumed to be the value of damages sustained by Ajinomoto with regard to the abovementioned infringing acts relating to the portion sold by CJ Japan.

It is also considered that CJ Japan and CJ Indonesia were in an integral relationship with each other in selling the MSG in question produced by CJ Indonesia targeting the Japanese market, regardless of the selling modes for the portion sold by CJ Japan and the portion sold by CJ Indonesia. It is therefore reasonable to calculate the total amount of the marginal profits made by CJ Japan through the respective infringing acts relating to the portion sold by CJ Japan by deducting overall expenses that became additionally required by CJ Japan in direct association with the sale of the relevant portion from the overall sales amount of the portion sold by CJ Japan.

CJ Japan alleges that the value of damages from the “offer to sell”, which is an act of working the inventions in relation to the portion sold by CJ Indonesia, should not be calculated based on the sales amount of the portion sold by CJ Indonesia, but instead should remain within the scope specific to the “offer to sell”.

However, because joint tort is established for CJ Japan and CJ Indonesia with regard to the portion sold by CJ Indonesia, not only the profits made by CJ Japan but also those made by CJ Indonesia would be considered in calculating the value of damages, and, the portion sold by CJ Indonesia was all sold to buyers in Japan, and was scheduled to be subsequently imported into Japan after being sold to the buyers. Therefore, it is reasonable to find that, even if the “sale” itself was conducted outside Japan, the profits made by CJ Japan calculated based on the sales amount of the portion sold by CJ Indonesia are the profits received by CJ Japan from the “offer to sell” made in Japan, in applying Article 102(2) of the Patent Act. CJ Japan’s abovementioned allegation cannot be adopted.

Practical tips

This judgment is epoch-making in that it affirmed both the infringement under DOE and the offer to sell.

The t-PA case, judgment of March 29 1996, Osaka High Court, was the first judgment affirming infringement under DOE in the biotechnology area. It affirmed infringement under DOE in a case in which there was only one difference regarding the amino acid residue of valine and methionine. The t-PA case was the judgment before the Ball Spline case, judgment of February 24 1998, Supreme Court, which established five requirements of DOE. After the Ball Spline case, many cases denied infringement under DOE on the grounds of the first or the fifth requirements, but this judgment affirmed infringement under DOE.

Regarding the first requirement, in response to CJ Japan’s allegation that the essential part of the patented invention should not be found as a generic concept in relation to part of the claims but should be limited to the specific amino acid sequence stated in the claims, this judgment held that the specific amino acid sequence was not the essential part. That is, it seems this judgment viewed that this case falls under (i) of the following holding of the judgment of the Maxacalcitol case, judgment of March 25 2016, the Grand Panel of the IP High Court: “The essential part of a patented invention should be found based on the claims and description, in particular, through comparison with prior art in the description. (i) If the degree of contribution of the patented invention is considered to be more than that of prior art, the patented invention is found as a generic concept in relation to part of the claims. (ii) If the degree of contribution of the patented invention is evaluated as not much more than prior art, the patented invention is found to have almost the same meaning as stated in the claims.”

Regarding prosecution history estoppel of the fifth requirement, there is a conflict between a complete bar and a flexible bar. This judgment can be assessed as adopting a flexible bar, as it held that CJ Japan’s production process had not been intentionally excluded from the claims by the amendments. And, this judgment is characteristic in that it denied prosecution history estoppel while the cause of the amendments was in response to the notice of reason for refusal of the lack of inventive step, and that it set a criterion as whether it had been easily possible to describe CJ Japan’s production process in the claims to satisfy the description requirements.

Existing theories were divided on whether offering to sell is established if the sale is conducted outside Japan. This judgment, under the facts of this case, held that an offering to sell in Japan is established even if the sale is conducted outside Japan. In addition, in awarding damages, CJ Japan’s profit calculated based on the sales outside Japan was included as infringer’s profits. This judgment has been criticised for being questionable from the perspective of the principle of territoriality, as it is substantially equivalent to allowing Japanese patent enforcement against sales outside Japan [1].

On the other hand, Professor Echi of Kyoto University has proposed the view, further beyond this judgment, intending to escape from the principle of territoriality [2]. That is, if the demand for the patented invention in Japan is deprived by the infringer providing its product or service to the Japanese market, the applicable law is Japanese law regardless of where the working act itself such as sale or offer to sale takes place and patentees who have obtained the patent right in Japan should be able to seek an injunction and damages on the grounds of patent infringement. Regarding network-related inventions, in its judgment of July 20 2022, the IP High Court held that it does not violate the principle of territoriality to give effect to Japanese patent rights even if the server exists in the US and not all networks are completed in Japan as long as it can be evaluated that the working act of the patented invention took place in Japan from the substantial and overall view. Recent cases in Japan have been very unstable in their adherence to the principle of territoriality.

This case was settled in the Tokyo District Court.

Takanori Abe is managing partner at Abe & Partners. He can be contacted at: abe@abe-law.com

[1] Yuki Hirai, Hanpi [Comments on Judgment], 74(9) Patent 79, 86 (2021); Iichiro Yamada, Hanpi [Comments on Judgment], 20(232) Chizai Prism [IP Prism] 35, 44 (2022).

[2] Yasuyuki Echi, ‘Cross-Border Patent Infringement: Two Recent Cases’, “74 Patent Studies”, 6, 14, 16 (2022).