The decision of the Tokyo District Court in SmithKline Beecham Co. Ltd v. Fujimoto Pharmaceuticals K.K. relating to infringement of SmithKline Beecham's patent on the production of compounds such as cimetidine (sold widely under the trademark Tagamet ) is of interest for several reasons.

Firstly, the Court employed the provisions of Article 104 of the Japanese Patent Law to find infringement based on the presumption set out in that article that a new product has been produced by a patented process unless the defendant produces evidence to the contrary. In this case, the defendant produced such evidence but internal inconsistencies in the evidence led the court to disregard it completely. Additionally the Court found it implausible that the defendant would have used a process that produced only a 40% yield when the plaintiff's process had a yield of 90%.

Secondly, the Court considered but rejected an argument that the product was not novel as of the patent's priority date so that Article 104 should not apply and that the patent was invalid over an earlier publication of the same applicants which disclosed a class of compounds including cimetidine but did not name or provide a formula for cimetidine itself. The Court held that such a broad disclosure which also lacked any manufacturing method or reference to any properties of cimetidine was insufficient to destroy the novelty of cimetidine at the relevant date.

Thirdly in calculating the damages to be awarded at about $27 million (the largest damages award ever made in an intellectual property case in Japan), the Court awarded damages based not only on lost profits calculated at 15% of the lost sales (which were taken to be all of the defendants' sales for the three-year statute of limitation period) but also on unjust enrichment (for which the limitation period is ten years) awarding the plaintiffs further royalty-based damages calculated at a rate of 5% of sales for the entire period that the defendants had sold their product in Japan. In support of its damages calculations, the Court relied on Article 248 of the new Code of Civil Procedure (discussed in our December 1997 Information Letter (N.S. 189)) which provides that when damages are found to have occurred but they are difficult to quantify the court can find a reasonable amount based on the trial hearings and the evidence submitted.