Unfair Competition Prevention Act Article 5: Presumption of Amount of Damages, etc.
In many cases, claims for damages are made based on Article 709 of the Civil Code.
The requirements for Article 709 of the Civil Code are: (i) the existence of intent or negligence, (ii) the infringement of another person's rights or legally protected interests, and (iii) the occurrence of damages as a result.
These requirements of Article 709 of the Civil Code are the general principles for making a claim for damages.
However, damages resulting from the infringement of business interests due to unfair competition are often difficult to prove. Therefore, the Unfair Competition Prevention Act provides for the presumption of the amount of damages and other related provisions (Article 5 of the Unfair Competition Prevention Act).
Specifically, for prescribed unfair competition, the amount of damages for the infringed party is presumed to be the quantity of goods transferred by the infringer multiplied by the profit per unit of goods that the infringed party could have sold had there been no such act of infringement (Article 5, Paragraph 1 of the Unfair Competition Prevention Act); the amount of profit received by the infringer due to the act of infringement is presumed to be the amount of damages (Article 5, Paragraph 2 of the Unfair Competition Prevention Act); and for prescribed unfair competition, the amount equivalent to a licensing fee is presumed to be the amount of damages (Article 5, Paragraph 3 of the Unfair Competition Prevention Act).
It can be said that since the amount of damages under this Article is only 'presumed,' if one can 'prove' that no damages occurred at all, there may be cases where one can avoid liability for damages.
・Article 5 of the Unfair Competition Prevention Act
(Presumption of Amount of Damages, etc.)
Article 5 (1) In a case where a person whose business interests have been infringed by unfair competition as listed in Article 2, Paragraph 1, Items 1 through 16 or Item 22 (in the case of those listed in Items 4 through 9 of the same paragraph, limited to those concerning technical secrets) (hereinafter referred to as the "infringed party" in this paragraph) claims compensation for damages sustained due to the infringement against a person who has infringed their business interests intentionally or negligently, and that person has transferred goods that constitute the act of infringement, the amount obtained by multiplying the quantity of the transferred goods (hereinafter referred to as the "transferred quantity" in this paragraph) by the profit per unit of goods that the infringed party could have sold had there been no such act of infringement may be set as the amount of damages sustained by the infringed party, within the limit not exceeding the amount corresponding to the capacity of the infringed party to perform sales or other acts related to such goods. Provided, however, that if there are circumstances where the infringed party would be unable to sell the quantity equivalent to the whole or a part of the transferred quantity, the amount corresponding to the quantity equivalent to such circumstances shall be deducted.
(2) In a case where a person whose business interests have been infringed by unfair competition claims compensation for damages sustained due to the infringement against a person who has infringed their business interests intentionally or negligently, and that person has received profits due to the act of infringement, the amount of such profits is presumed to be the amount of damages sustained by the person whose business interests have been infringed.
(3) A person whose business interests have been infringed by unfair competition as listed in Article 2, Paragraph 1, Items 1 through 9, Items 11 through 16, Item 19, or Item 22 may claim, as the amount of damages sustained by themselves, an amount of money equivalent to the amount of money that should be received for the acts specified in the following items according to the classification of unfair competition listed in each of those items, against a person who has infringed their business interests intentionally or negligently:
i. Unfair competition listed in Article 2, Paragraph 1, Item 1 or 2: Use of the indication of goods, etc. related to the infringement
ii. Unfair competition listed in Article 2, Paragraph 1, Item 3: Use of the form of goods related to the infringement
iii. Unfair competition listed in Article 2, Paragraph 1, Items 4 through 9: Use of trade secrets related to the infringement
iv. Unfair competition listed in Article 2, Paragraph 1, Items 11 through 16: Use of limited provision data related to the infringement
v. Unfair competition listed in Article 2, Paragraph 1, Item 19: Use of the domain name related to the infringement
vi. Unfair competition listed in Article 2, Paragraph 1, Item 22: Use of the trademark related to the infringement
(4) The provisions of the preceding paragraph do not preclude a claim for compensation for damages exceeding the amount prescribed in that paragraph. In this case, if the person who infringed the business interests did not have intent or gross negligence, the court may take this into consideration when determining the amount of compensation for damages.
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