Intellectual Property High Court Decision of February 19, 2025 (Case No. 10061 [Ne] 2023 ˗ Presiding Judge Nakadaira)
[Summary of the Judgment]
| (1) | Where a litigation is filed asserting that a particular indication constitutes a misleading indication as to quality under Article 2, Paragraph 1, Item 20 of the Unfair Competition Prevention Act and seeking damages or an injunction based on said act, the burden of proving that the indication constitutes a misleading indication as to quality shall rest with the plaintiff X. However, where the indication causes consumers to believe it is based on specific tests or similar procedures, as in this case, if the indication lacks supporting documentation, the act of making such an indication shall be deemed a misleading indication as to quality. Therefore, if Y, who made the indication in question, fails to submit supporting materials for said indication, there is room to interpret that X has successfully proven the assertion of a misleading indication as to quality. In this case, since Y submitted the experimental results report and other documents, and X submitted the results of the verification tests conducted at the time of filing the litigation and at the time of appeal, we examine whether each of Y’s indications constitutes a misleading indication as to quality by considering the aforementioned materials.
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| (2) | Y’s indications are published on Y’s web pages and in Y’s catalogs, aiming to demonstrate the effects that using Y products can bring to general consumers and to stimulate their desire to purchase such products. The effects indicated in each of Y’s indications are attributable to functions that are not visible to the user. The degree of these effects cannot be determined by a single, universally agreed-upon measurement method and may vary significantly depending on conditions such as the usage environment, usage method, and individual differences. Each of Y’s indications includes a cautionary note stating that results may vary from person to person. The average consumer viewing such displays of Y’s indications likely understands the specific numerical values and experimental results merely as indicating the degree of effectiveness and the existence of supporting scientific evidence, and does not pay particularly close attention to whether they are strictly accurate. Given the content and nature of indications by Y, it cannot be recognized that each indication immediately constitutes a misleading indication as to quality merely because its stated content lacks strict accuracy. When it is recognized that each of Y’s indications is based on sufficient scientific evidence, it shall not be deemed a misleading indication as to quality. |
| (1) | According to the experimental results report and other documents submitted by Y, it is acknowledged that Y conducted experiments regarding Y’s indications based on the operation procedures manual created within the company and prepared experimental results verification materials based on these experiments. Furthermore, based on the specific content of the experimental results reports and other documents pertaining to the individual tests conducted by Y for each of Y’s indications, it can be concluded that each of Y’s indications indicates the performance of Y products or the effects achieved by Y products within the scope of the results of tests conducted by Y based on the operational procedures manual.
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| (2) | On the other hand, the results of both verification tests conducted at the time of X’s filing and at the time of appeal cannot be deemed sufficient to show that the tests conducted by Y fail to substantiate Y’s respective indications, nor can they be interpreted as sufficient to establish that Y’s respective indications constitute misleading indications as to quality.
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| (3) | Among the various indications by Y, some descriptions or photographs reuse indications from advertisements for models released prior to Y’s products (previous models). However, such indications do not constitute misleading indications as to quality under Article 1, Paragraph 1, Item 20 of the Unfair Competition Prevention Act, provided that the content of those indications does not mislead the average consumer regarding the quality of Y’s products. Therefore, the mere fact that an advertisement displays the same content as a previous model, or includes the same content, does not constitute misleading indications as to quality. |
[Comments]
A previous court case has held as follows and concluded that indications for the candles in question, such as “90% reduction in soot!” or “50% reduction in extinguishing odor!,” were deemed to constitute misleading indications as to quality: When not supported by test results under appropriate normal usage conditions, the aforementioned indications constitute misleading indications as to quality, since “they mislead consumers into believing soot and extinguishing odor are reduced, even though under normal usage conditions soot volume does not decrease by 90% and extinguishing odor does not decrease by 50%.” (Osaka High Court Decision of April 28, 2005 (Case No. 2208 (Ne) 2004), Osaka District Court Decision of June 1, 2004 (Case No. 8337 (Wa) 2002) (“Misleading Indications as to Quality for Candles” case))
Furthermore, under the regulations against false advertising under the Act against Unjustifiable Premiums and Misleading Representations, to effectively regulate misleading representations of superiority, the burden of proof lies with the advertiser to demonstrate that the representation does not constitute a misleading indication as to superiority as follows:
The commissioner of the Consumer Affairs Agency may require the relevant entrepreneur to submit, within a specified period, data as reasonable evidence for the representation the entrepreneur has made.
If the Entrepreneur fails to submit the data or if the submitted materials are deemed not to provide reasonable evidence supporting the displayed information, the representation concerned is deemed to constitute a misleading representation under the provisions for Orders for Action (Article 7, Paragraph 2 of Act against Unjustifiable Premiums and Misleading Representations), and the representation concerned is presumed to constitute a misleading representation under the provisions for Payment Order for Surcharge. Furthermore, for submitted materials to be recognized as providing reasonable evidence supporting the representations, it is necessary that the submitted materials contain objectively substantiated content and that the effects and performances represented correspond appropriately with the content substantiated by the submitted materials (Guidelines on Unsubstantiated Advertising Regulations).
In the above summary of the judgment 1 (1), it is understood that the court, premised on the understanding that the burden of the proof for establishing the applicability of Article 2, Paragraph 1, Item 20 of the Unfair Competition Prevention Act regarding misleading indications as to quality rests with the plaintiff, presented a framework for judgment that is as consistent as possible with prior judicial precedents concerning the applicability of such indications misleading as to quality, and with the content of regulations on false advertising under the Act Against Unjustifiable Premiums and Misleading Representations.
A previous court case in relation to the representation “a Teflon coating is applied to the vehicle’s paint surface during new car purchase, maintaining the paint’s original shine for five years thereafter,” for an automotive coating agent held as follows: Based on the results of the aforementioned weather resistance tests relied upon by the defendant, it must be concluded that it is not possible to accurately determine that the defendant’s product lacks the effect of maintaining the gloss level of the painted surface for five years from the time of a new car purchase. Whether the ‘new car shine’ indicated in these representations persists is largely subjective to the viewer and inherently possesses a certain degree of subjectiveness. Considering all of the above, even with all the evidence in this case, it cannot be concluded that the representation ‘the paint’s original shine at the time of new car purchase is maintained for five years’ in the respective representations is false, nor that such representation causes consumers and others to mistakenly believe the quality and content of the defendant’s product. (Intellectual Property High Court Decision of August 10, 2005 (Case No. 10029 (Ne) 2005), (‘5-Year Complete No-Wax’ case)).
In the above summary of the judgment 1 (2) it is understood that the court presented a framework for judgment that is as consistent as possible with such prior judicial precedents.
In the above Summary of Judgment 2, the court denied that Y’s respective indications constituted misleading indications as to quality under the framework held in Summary of Judgment 1, after considering the experimental results report submitted by Y and the results of the verification test submitted by X at the time of filing and at the time of appeal. When determining as the above Summary of Judgment 2 under the framework held in Summary of Judgment 1, as long as the content of the defendant’s submitted materials are relatively substantiated and the effects and performances indicated correspond appropriately with the content substantiated, it is likely that the claim that the indications constitute indications misleading as to quality will be easily refuted and will often be refuted, regardless of the materials submitted by the Plaintiff. Therefore, the dispute between the parties is likely to center not so much on the nature of the plaintiff’s submitted materials, but rather on whether the defendant’s submitted materials contain sufficiently substantiated content, and whether the effect indicated by the defendant corresponds appropriately to the content sufficiently substantiated by the defendant’s submitted materials.
【Keywords】Article 2, Paragraph 1, Item 20 of the Unfair Competition Prevention Act; Misleading indications as to quality; Act against Unjustifiable Premiums and Misleading Representations; Misleading representations; Hair dryer; High-penetration nanoe; Panasonic; Dyson
※ The contents of this article are intended to convey general information only and cannot be understood as providing any legal advice.
Kei IIDA (Writer)
Attorney at Law & Patent Attorney (Daini Tokyo Bar Association)
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