The Plaintiff (later, the Appellee) uses indications 1 to 3 below (the Plaintiff’s indications) as indication of goods or business, holds trademarks 1 to 3 below (the Plaintiff’s trademarks) and holds trademark rights pertaining to goods “sushi” and services “providing beverages and food, mainly sushi”. The Plaintiff sought an injunction against each of the Defendant’s (later, Appellant) indications, deletion of each of the Defendant’s indications, and compensation for damages on the ground that the Defendant’s act of posting the Defendant’s indications 1 and 2 below (the Defendant’s indications) on each webpage listed in “Defendant’s Webpage List” 1 and 2 (the Webpages) falls under Article 2, Paragraph 1, Item (i) or (ii) of the Unfair Competition Prevention Act, and also infringes on each of the Plaintiff’s trademark rights (Article 37, Item (i) of the Trademark Act).
The court of first instance held as follows: Each of the Plaintiff’s trademarks is similar to each of the Defendant’s indications, and the Plaintiff’s designated services for the Plaintiff’s trademark “providing beverages and food, mainly sushi” is similar to the Defendant’s services for the Defendant’s indications (“providing beverages and food, mainly sushi”). Therefore, the Defendant’s act of posting the indications on its webpage infringes on each of the Plaintiff’s trademarks. In conclusion, the court found in favour of the Plaintiff, granting an injunction against the Defendant’s indications, requiring deletion of the Defendant’s indications and payment of compensation for partial damages. The Defendant subsequently filed an appeal.
The appeal court held as indicated in Summaries 1 to 4 below of the Judgment, and overturned those parts of the original judgment which the Defendant lost and dismissed all claims by the Plaintiff.
1. Concerning whether each of the Defendant’s indications fall under Article 2, Paragraph 3, Item (viii) of the Trademark Act
Based on the composition and content of the website in question, it can be found that the website as a whole introduces the information that the Daisho group of companies, which includes the Defendant, is developing in Southeast Asia a chain of restaurants serving Japanese food, and is running a business that exports high-quality and fresh ingredients from Japan to them. Therefore, it cannot be found that each of the webpages on the website bearing the Defendant’s indications falls under “advertisement materials … relating to … services” for the sushi restaurant in question (Article 2, Paragraph 3, Item (viii) of the Trademark Act).
2. Concerning whether each of the Defendant’s indications infringes on each of the Plaintiff’s trademarks
Each of the Defendant’s indications is not used in connection with providing services in Japan by the sushi restaurant in question. Even if consumers in Japan who see the Defendant’s indications misidentify the source of the services provided, since the sushi restaurant does not provide services in Japan, the results of such misidentification will always occur outside Japan, where Japanese trademark rights are not in effect. Therefore, there is no possibility of infringement in Japan on the function of source indicatior of each of the Plaintiff’s trademarks.
3. Concerning using indications of goods or business (Article 2, Paragraph 1, Item (i) of the Unfair Competition Prevention Act)
As mentioned above, it is found that on each webpage, each of the Defendant’s indications is used as indicating one piece of information in connection with the Defendant’s business of exporting food ingredients from Japan. Therefore, the Defendant’s use is recognized as neither using indications which are identical or similar to another entity’s indication of goods or business nor using the indications in a manner of fulfilling functions such as indicating source of goodsor distinguishing one’s own goods from those of others.
4. Concerning the use of indications of goods or business (Article 2, Paragraph 1, Item (ii) of the Unfair Competition Prevention Act)
From the same reasoning, each of the Defendant’s Indications does not fall under the use of “indications of goods or business” prescribed in the Article 2, Paragraph 1, Item (i) or (ii) of the Unfair Competition Prevention Act.
1. Concerning Summary 1 of the Judgment
In Summary 1 of the Judgment, based on the composition and content of the website, the website can be recognized as introducing the information that the Defendant’s group company is developing a chain of restaurants serving Japanese food in countries outside Japan and is running a business that exports high-quality, fresh ingredients from Japan to them. Therefore, it cannot be found that, even if the Defendant’s indications are used as a store name for the sushi restaurant on each webpage of the website, the use falls under the use for advertisement materials relating to providing beverages and food, mainly sushi. In this context, this judgment differs from the original judgment, which in its findings of facts and application of laws determined that the use of each of the Defendant’s indications as a store name of the sushi restaurant on each webpage was the use for advertisement materials relating to providing beverages and food, mainly sushi.
2. Concerning Summary 2 of the Judgment
In previous court cases, the effects of trademark rights are considered to be limited to within Japan’s borders due to the territorial principle (Intellectual Property High Court Decision of January 10, 2013 (LANCASTER case)). In addition, regarding patent rights, the same ruling applies (Supreme Court Decision of July 1, 1997 (BBS parallel import case); Supreme Court Decision of September 26, 2002 (Card reader case)). Therefore, it is considered necessary for the “use of a trademark” to which the “effect of trademark rights” applies (Article 25, and Article 2, Paragraph 3 of the Trademark Act) to be found within Japan.
However, whether the “use of a trademark” within Japan is found is based on a legal evaluation, not a tangible or physical aspect. In court cases, although all of these cases involve non-use cancellation cases in which the use of trademarks within Japan is explicitly at issue, particularly whether they fall under Article 2, Paragraph 3, Item (viii) of the Trademark Act, rulings have been as follows: Such use has been denied in cases such as when a trademark is used for advertising goods on a website hosted on a server outside Japan for the purpose of targeting consumers outside Japan (Intellectual Property High Court Decision of December 20, 2005 (Papa John’s case)); on the other hand, such use has been affirmed in cases where goods bearing a trademark registered abroad by the trademark owner are imported into Japan through exclusive distributors and displayed as photographs in transaction documents (Intellectual Property High Court Decision of January 10, 2013 (LANCASTER case)), or where the trademark is used in advertisements and order forms for goods on webpages located on servers with unknown locations, targeting consumers in Japan (Intellectual Property High Court Decision of November 29, 2017 (Coverderm case)). In a patent infringement court case, the court found the “implementation” (Article 68, Paragraph 3, Item (iii) of the Patent Act) within the scope of the patent’s effect in Japan of an “invention relating to a process for producing a product” in which the “offer to transfer” was made in Japan followed by the “transfer” to Japan of products manufactured using the patented process outside Japan, and thus affirmed patent infringement (Tokyo District Court Decision of September 24, 2020 (Case No. 25436 [Wa] 2016 (Process for producing L-glutamic acid case)).
Under the above circumstances, the court’s ruling in Summary 2 can be considered reasonable: The court ruled the interpretation that “services” relating to “advertisement material” set forth in Article 2, Paragraph 3, Item (viii) of the Trademark Act must be substantially provided within Japan, and not only outside Japan. Based on the interpretation, the court held that if the sushi restaurant in question provides beverages and food, mainly sushi, outside Japan, and the sushi restaurant does not provide the same in Japan, even if the advertising of the service of the sushi restaurant is conducted within Japan, the act does not infringe the function of indicating source of each of the Plaintiff’s trademarks, and therefore does not infringe each of the Plaintiff’s trademark rights. Please note that the court’s ruling in Summary 2 can be understood as not denying the applicability of Article 2, Paragraph 3, Item (viii) of the Trademark Act when “services” relating to “advertisement materials” set forth in Article 2, Paragraph 3, Item (viii) are provided via a website on a server located outside Japan through the internet to domestic consumers in Japan, for example.
3. Concerning Summary 3 of the Judgment
Article 2, Paragraph 1, Item (ii) of the Unfair Competition Prevention Act is intended to prevent confusion among consumers through the “use” of an indication for goods or business that is identical or similar to another entity’s well-known indication for goods or business. Based on the intent of Item (ii), although not explicitly set forth in the provisions, “use” generally refers to be used as an indication for goods or business.
In this context, the court’s ruling in Summary 1 relating to the applicability of “use” of a trademark, especially the applicability of “advertisement materials … relating to … services” set forth in Article 2, Paragraph 3, Item (viii) of the Trademark Act, and the court’s ruling in Summary 2 relating to the applicability of “use of a trademark” to which “effects of trademark rights” apply, especially the ruling that “services” relating to “advertisement materials” set forth in Article 2, Paragraph 3, Item (viii) of the Trademark Act must be provided within Japan, are considered to be similarly applicable to interpretation of Article 2, Paragraph 1, Item (i) of the Unfair Competition Prevention Act. Summary 3 of the Judgment is understood to be ruling on the above, and the ruling is considered to be appropriate.
4. Concerning Summary 4 of the Judgment
Article 2, Paragraph 1, Item (ii) of the Unfair Competition Prevention Act explicitly regulates the act of “using”, etc., as one’s own indication of goods or business, an indication of goods or business that is identical or similar to another entity’s well-known indication of goods or business. Therefore, the court’s ruling in Summary 1 relating to the applicability of “use” of a trademark, especially the applicability of “advertisement materials … relating to … services” set forth in Article 2, Paragraph 3, Item (viii) of the Trademark Act, and the court’s ruling in Summary 2 relating to the applicability of “use of a trademark” to which “effects of trademark rights” apply, especially the ruling that “services” relating to “advertisement materials” set forth in Article 2, Paragraph 3, Item (viii) of the Trademark Act, must be provided within Japan, are considered to be similarly applicable to interpretation of Article 2, Paragraph 1, Item (ii) of the Unfair Competition Prevention Act. Summary 4 of the Judgment is understood to be ruling on the above, and the ruling is considered to be appropriate as an interpretation of the current act.
However, Item (ii) is intended to prevent dilution of famous indications of goods or business, unlike the intent of Article 2, Paragraph 1, Item (i) of the Unfair Competition Prevention Act (“Detailed Explanation of the Unfair Competition Prevention Act” (in Japanese) compiled by the Intellectual Property Policy Division, Ministry of Economy, Trade and Industry (effective as of April 1, 2024) p. 83). Therefore, in view of the unique intent of Article 2, Paragraph 1, Item (ii) of the Unfair Competition Prevention Act, the necessity of legal reform is currently under discussion from theoretical and legislative perspectives so as to clarify the appropriateness of its content and to clarify the significance of the simultaneous existence of Item (ii), which is not a supplement to Item (i); for example, by adding a requirement of the likelihood of dilution while deleting the requirement “as its own indication of goods or business”. Summary 4 of the Judgment is also considered to be a useful reference for such legislative theory.
【Keywords】Article 2, Paragraph 3, Item (viii) of the Trademark Act, advertisement materials relating to services, territorial principle, use as a trademark, Article 2, Paragraph 1, Item (i) of the Unfair Competition Prevention Act, Article 2, Paragraph 1, Item (ii) of the Unfair Competition Prevention Act, use as an indication of goods or business, “すしざんまい”, “Sushi Zanmai”
※ The contents of this article are intended to convey general information only and not to provide any legal advice.
Kei IIDA (Writer)
Attorney at Law & Patent Attorney (Daini Tokyo Bar Association)
Contact information for inquiries: k_iida☆nakapat.gr.jp (Please replace ☆ with @.)