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August 31, 2018

Unfair Competition News

The Tokyo District Court finds the configuration of the foldable umbrella as an "Indication of Goods" under Article 2(1)(i) of the Unfair Competition Prevention Act and grants relief by ways of an injunction, destruction and damages

KK Shoes Selection (the "Plaintiff") filed a suit against KK Fukunaga (the "Defendant") seeking an injunction against sales, destruction of the goods and damages on the ground that the configuration of the Plaintiff's foldable umbrellas qualified as an indication of goods (the "Indication of Goods") and the importation and sales of such goods constituted unfair competition under Article 2(1)(i) of the Unfair Competition Prevention Act (the "UCPA"). The Tokyo District Court (the "Court") accepted the Plaintiff's claims and granted partial relief to the Plaintiff. (Case No. 2016 (wa) 10736, judgment issued on February 27, 2018)



Background

The Plaintiff, a manufacturer and wholesaler of umbrellas, started selling foldable umbrellas shown in the picture below (the "Plaintiff's Products") around November 2004. The Plaintiff's Products have the following configurations:
  • The total length is around 22-24 cm, the width is around 4.5-5.0 cm or 6.0-6.5 cm, and the thickness is around 2.5 cm. Its shape is like a thin flat plate;
  • The body is slightly curved because of the thickness of the cloth; and
  • The handle forms part of the thin flat plate shape and does not exceed the width and thickness of the body.


Plaintiff's Product "Pocket Flat"
http://www.water-front-online.com/shopdetail/000000000176/agom/page1/recommend/




The Defendant, a wholesaler of umbrellas, started importing and selling foldable umbrellas described below (the "Defendant's Products") around the beginning of 2015.
  • The total length is around 24 cm, the width is around 6.5 cm, and the thickness is around 2.5 cm at maximum. Its shape is like a thin flat plate;
  • The body is slightly curved because of the thickness of the cloth; and
  • The handle forms part of the thin flat plate shape and does not exceed the width and thickness of the body.


The Plaintiff argued that the configuration of the Plaintiff's Products gave consumers the impression that the Plaintiff's Products were shaped like a thin flat plate unlike typical foldable umbrellas and therefore it had a noticeable feature (the "Noticeable Feature"). The Plaintiff also argued that the configuration of the Plaintiff's Products had become widely recognized through its business activities: approximately 18.23 million items were sold by the end of 2015. Consequently, the Plaintiff asserted that the configuration of the Plaintiff's Products qualified as the Indication of Goods under Article 2(1)(i) of the UCPA and the Defendant's Products which had substantially identical configuration with the Plaintiff's products were likely to cause confusion as to the origin of the goods.

The Plaintiff sought damages totaling 4.724 million JPY: 2.724 million JPY as the profit obtained by selling the Defendant's Products, 2 million JPY as attorney fees.

Judgment

1. Indication of Goods

The Court ruled that although a configuration of goods, unlike trademarks, does not indicate the origin of goods inherently, if it (i) has the "Noticeable Feature" and (ii) has acquired well-knownness (the "Well-Knownness") as the origin of the goods through use for a long period or advertising and sales, the configuration itself would have acquired a secondary meaning and become qualified as the "Indication of Goods" under Article 2(1)(i) of the UCPA. The Court judged that the configuration of the Plaintiff's Products qualified as the Indication of Goods based on the following reasons.

(i) Noticeable Feature
The Plaintiff's Products were found distinctive in that they were shaped like a thin flat plate on the whole unlike typical cylindrical foldable umbrellas. In addition, the Court found that the Plaintiff's Products gave consumers the impression that its shape was like a thin flat plate on the whole based on the fact that the media and consumers remarked on them indicating their thin flat plate-like shape. Consequently, the Court concluded that the configuration of the Plaintiff's Products had the "Noticeable Feature."

(ii) Well-Knownness of Plaintiff's Products
Regarding the sales result of the Plaintiff's Products, the Plaintiff had sold over 20 million items from November 2004 to October 2017 and the Plaintiff's Products accounted for 8%-9% of the foldable umbrellas imported into Japan from 2007 to 2014 and 6% from 2015 to 2017. (Most of the foldable umbrellas sold in Japan are imported.)
As for the advertising, the Plaintiff had spent around 24.8 million JPY in total at the end of 2015. In advertisements in newspapers and magazines, the features that they were thin and flat were emphasized showing pictures of the Plaintiff's Product in a pocket. Also, in online shops and blogs of consumers, thinness and flatness were emphasized with their appearance. Considering above, the Court found that the configuration of the Plaintiff's Products had acquired the Well-Knownness as the origin of the goods by the beginning of 2015.

2. Similarity and Confusion between the configurations of Plaintiff's Products and Defendant's Products
Comparing the configurations of the Plaintiff's Products and the Defendant's Products, the Court found that they had the common features, except the total length and width, which gave consumers the impression that the products were shaped like a thin flat plate and caused confusion as to the origin of the goods. The Court concluded that importation and sales by the Defendant constituted unfair competition under Article 2(1)(i) of the UCPA.

3. Conclusion
Consequently, the Court accepted the Plaintiff's claims and granted relief by ways of an injunction against importing and selling of the Defendant Products and destruction of them, and awarded damages totaling around 1.4 million JPY.

Comments

The criteria in judging qualification as the Indication of Goods, the "Noticeable Feature" and the "Well-Knownness," has been commonly referred in past cases.
In this case, the feature of the configuration of the Plaintiff's Products, namely a shape like a thin flat plate, was found objectively not only based on the appearance of the product itself but also based on the recognition of the media and consumers reflected in the advertisements and comments on the Internet, etc. Such a way of judging will be a good future reference for establishing the Noticeable Feature and the Well-Knownness and countermeasures against imitation goods.

Written by: Ms. Tomoko Honami (Attorney at Law)