Safeguarding trademarks poses real challenges as the virtual world collides with the real one, but opportunities abound for those who are quick to adapt
Obtaining trademark rights in Japan requires filing an application for trademark registration with the Japan Patent Office (JPO). In total, 135,313 trademarks were registered in 2020 and the average time necessary for completing registration was about 11 months (FY2020). Japan uses the first-to-file system and is a member of the Madrid Protocol, an international system for obtaining trademark protection for many countries with a single application.
Trademark rights are a type of industrial property rights and protect, for instance, “marks” and “naming” attached to goods and services as properties of the owner. Trademarks may include characters, figures, symbols, three-dimensional shapes and any combination of these. In addition, as of April 2015, sound marks, motion marks, hologram marks, colour marks and position marks can also be registered as trademarks.
On the other hand, taste trademarks, aromatic trademarks and tactile trademarks cannot be registered under Japan’s Trademark Act.
REQUIREMENTS AND REFUSALS
After submitting a registration application, formality and substantive examinations are made by the JPO. For registration acceptance, trademarks must not align with any conditions for refusal of registration. The following trademarks cannot be registered:
(1) Trademarks used in connection with goods and services of an applicant that cannot be distinguished from those of other persons. Examples include: common names of goods or services customarily used trademarks, trademarks solely consisting of an indication of origin or quality of goods, etc., common surnames or the name of a judicial person, very simple and common marks, and trademarks by which consumers are not able to recognise the goods or services as those pertaining to a business of a particular person. However, exceptions are stipulated in article 3(2).
(2) Trademarks against the public interest. Examples include: trademarks identical with or similar to an indication used by a non-profit organisation and others (e.g. the Red Cross); trademarks likely to harm public order and morality, such as obscene or outrageous characters; and trademarks likely to mislead as to the quality of the goods or services.
(3) Trademarks that cannot be registered from the perspective of private interest. Examples include: trademarks containing the portrait or name of another person; trademarks identical with or similar to another person’s well-known trademark; trademarks identical with or similar to a registered trademark of another person filing a prior application; trademarks identical with a registered defensive mark of another person; trademarks likely to cause confusion as to the source or origin of goods or services; and trademarks using another person’s famous trademark for unfair purposes.
The term of trademark rights terminates 10 years from registration date, but may be renewed as often as required by filing a renewal application by the expiration date upon payment of a regular fee, or application witihin six months after the expiration date upon payment of an additional fee. Currently, applications made beyond the six-month period after the expiration date are possible only if the right holder has a justifiable reason for a late application. However, a recent revision of the Trademark Act eases this requirement. When the revision takes effect, it will be sufficient to prove that failure to apply for renewal within the designated period was unintentional.
RIGHTS AND LIMITATIONS
The basic effect of a trademark right is that anyone infringes it by using a mark identical or similar to the registered trademark for goods or services identical or similar to the designated goods or services for their business – unless they obtain permission from the trademark right holder.
However, to achieve a balance that allows for smooth economic activity, there are some limitations on the enforcement of trademark rights. Article 26 of the Trademark Act provides that a trademark right has no effect on any of the following trademarks:
- Trademarks indicating one’s name, or well-known pen name, etc. in a commonly used manner
- Trademarks indicating a common name, location of provision, or certain quality of goods or services in a commonly used manner;
- Trademarks customarily used for designated goods or services;
- Trademarks solely consisting of characteristics or features (designated by a cabinet order) indispensable for certain goods; and
- Trademarks not used in a manner recognisable by consumers as goods or services pertaining to the business of a particular person.
To prove infringement by a third party, it is necessary to show such marks are used in its business. Thus, a trademark right holder is unable to enforce its right against someone who privately imports, for instance, an imitation product with a mark identical or similar to a registered trademark.
In addition, preventing a foreign business entity from selling imitation products directly to individual customers in Japan through exercising a trademark right has been notoriously difficult – not least due to interpretational issues on who the importer is (i.e. the user of the mark). Increasing cross-border e-commerce has created a situation where this problem can no longer be overlooked.
To deal with this issue, a Trademark Act amendment promulgated in May 2021 includes the new article 2(7), providing that the “act of importing includes an act of a person in a foreign country causing another person to bring the product into Japan from the foreign country”.
This amendment will enable customs officers to seize imitation products with a mark identical or similar to a registered trademark sold by foreign entities directly to individual customers in Japan – for example, mailing a package. This amendment is supposed to take effect within 18 months from promulgation.
CANCELLATION FOR NON-USE
A third party may file a petition to cancel a trademark registration at the JPO if the trademark has not been used for three years or more, according to article 50(1). The trademark right holder bears burden of proof to show actual use of the trademark by the right holder or licensee. In addition, if the trademark is used only within three months prior to the petition filing for cancellation – and the petitioner proves the trademark was only used after becoming aware the petition would be filed – the trademark right holder cannot avoid cancellation.
REMEDY AGAINST INFRINGEMENT
A trademark right holder may claim an injunction against an infringer and compensation for damages. Article 38 of the Trademark Act provides a presumption of the amount of damages to help alleviate the difficulty a trademark right holder may have in proving the actual amount of damages caused by the infringement.
This presumption provides three types of damages: (1) amount of profit the trademark right holder would have received without infringement; (2) amount of the infringer’s profit derived from the infringement; and (3) so-called “reasonable royalty” expected from the infringer if the trademark had been licensed (please see article 38(1) to (3) for the details).
Recent revision of these presumptions took effect in April 2021, increasing the presumptive amount a trademark holder can receive due to infringement. With regards to (1), the quantity of products at issue used in calculation was previously limited to a trademark right holder’s capacity for sale and manufacturing. However, the recent revision enables a trademark right holder to seek “reasonable royalty” damages for an amount exceeding such capacity.
In addition, with regards to (3), the recent revision allows the court to take into consideration compensation that would be obtained on the premise that the trademark right had been infringed. In other words, the court can decide a royalty rate higher than the parties would have agreed before the infringement becomes certain.
TYPES OF LICENCES
Types of trademark licences are divided mainly into exclusive licences (senyo shiyoken) and non-exclusive licences (tsujo shiyoken). A non-exclusive licence is, as a contractual arrangement, divided mainly into monopolistic non-exclusive licences (dokusenteki tsujo shiyoken) and non-monopolistic non-exclusive licences (hi dokusenteki tsujo shiyoken).
Registration is required for an exclusive licence to take effect. Once an exclusive licence is established, even the trademark right holder is not allowed to use the trademark within the scope of the exclusive grant of rights. In addition, an exclusive licensee has the right to seek an injunction and damages – within the scope of the licence agreement – in its own name with respect to infringement by a third party.
For a non-exclusive licence to be established, registration is not required. However, it is advisable to note that unlike licences for patent rights, design rights and copyrights, registration of a non-exclusive licence of a trademark right is necessary as a requirement for perfection in cases where the trademark right is transferred to a third party.
A non-monopolistic non-exclusive licensee does not have the right to seek an injunction or damages in its own name, while a monopolistic non-exclusive licensee is considered to have the right to seek damages in its own name – although it is not necessarily clear whether it has the right to seek an injunction, and the requirements for such injunction.
OH-EBASHI & PARTNERS
Kishimoto Building, 2F, 2-2-1, Marunouchi,
Tokyo 100-0005, Japan
Tel: +81 3 5224 5566