On June 14, 2023, the National Diet of Japan passed a bill to amend the Unfair Competition Prevention Act of Japan, etc. (the "New Bill"). The New Bill makes very significant amendments to the Japanese trademark law and unfair competition law, including introduction of a consent system. The New Bill will come into effect within one year from the above date (the effective date to be designated by a cabinet order).
In this newsletter, we would like to introduce some important features of the New Bill.
1. Amendment to Trademark Act (1): Introduction of Consent System
First, the New Bill introduces a consent system to the Japanese trademark law.
Current Law
Under the current Trademark Act of Japan, the Japan Patent Office (the "JPO") does not accept letters of consent for the purpose of overcoming citation of prior marks. The only exception is a case in which the owner of the cited mark controls or is under control of the applicant (e.g., a parent company-subsidiary relationship), in which case a letter of consent may be submitted to the JPO in order to overcome the citation. However, in other cases, a letter of consent is not available.
Instead of letters of consent, the applicant must use an assign-back scheme (namely, the first party assigns its trademark registration/application to the second party, and once the JPO allows registration, the second party assigns back the trademark registration/application to the first party.). However, such an assign-back scheme may be troublesome in some cases, especially when there are quite a number of trademark registrations/applications that must be assigned and assigned back in order to achieve the goal of the scheme.
New Bill
The New Bill adds Article 4(4) to the Trademark Act of Japan. The newly added Article 4(4) provides that a trademark that is identical or similar to a prior registered mark and is to be used for goods/services that are identical or similar to the designated goods/services of the prior registered mark may nevertheless be registered, if: (a) the applicant obtains consent of the owner of the prior registered mark for registration of the trademark; and (b) there is no likelihood of confusion between the goods/services for which the trademark is to be used and the goods/services of the owner of the prior registered mark or its licensee.
It is likely that it would become much easier for an applicant to overcome citation of a prior mark, where the owner of the prior mark is willing to cooperate.
It should be noted, however, that a consent alone is not sufficient to overcome citation; the applicant must also show that there is no likelihood of confusion. One possible way of making such showing would be to enter into a co-existence agreement with the owner of the prior mark and provide for measures for avoiding confusion.
2. Amendment to Trademark Act (2): Registration of Full Name Becomes Easier
Second, the New Bill makes it easier to register a full name of a person.
Current Law
Under the current Trademark Act of Japan (Article 4(1)(viii)), in order to register a trademark that includes a full name of a person, the applicant must obtain consent of the person. If there are more than one person who has that same full name, the applicant must obtain consent from all such persons. Thus, it is virtually impossible to register a common Japanese full name (e.g., "Taro Sato" or "Ichiro Suzuki").
Also, it is understood that it does not matter whether or not that certain full name is well-known as a full name of a certain person. For example, the current Prime Minister of Japan is Mr. Fumio Kishida, and thus the full name "Fumio Kishida" is well-known as the full name of the current Prime Minister. However, in order to obtain trademark registration on "Fumio Kishida", a consent of the current Prime Minister is not sufficient; the applicant must obtain consent of all "Fumio Kishida"s in the world.
The current Article 4(1)(viii) often becomes a problem when an individual tries to register his or her name as a trademark. Fashion brands often take their brand names from the full names of founders or designers. However, the current Article 4(1)(viii) prevents fashion brands from doing so, when there are other persons who have the same full name.
Article 4(1)(viii) recently became an issue in the "Matsumoto Kiyoshi" sound mark case.
"Matsumoto Kiyoshi" is a well-known drug store chain in Japan, but there are also Japanese individuals whose names are "Matsumoto Kiyoshi". In that case, the Intellectual Property High Court eventually allowed registration of the sound mark, ruling that Article 4(1)(viii) does not apply where a sound mark does not evoke a full name of a person (judgment dated August 30, 2021). However, it is generally understood that this case is an exceptional case, and that the general understanding of Article 4(1)(viii) has not changed by the court ruling.
New Bill
The New Bill limits the scope of Article 4(1)(viii) of the Trademark Act. Under Article 4(1)(viii) as amended, the applicant must obtain consent of a person in order to register a full name of the person, but only when the said full name is well-known among consumers in the field of goods/services for which the trademark is to be used.
Therefore, full names that are not well-known among consumers will be available for registration, while full names that are well-known still require the well-known person's consent.
It is likely that it would become much easier for an individual to register his or her name as a trademark, especially for new designers who have just set up their fashion brands (unless the names are already well-known, of course).
3. Amendment to Unfair Competition Prevention Act: Protection of Design of "Virtual" Goods
Third, the New Bill grants protection to design of "virtual" goods as part of the unfair competition law.
Current Law
The rise of the Metaverse is attracting many businesses, and many companies are now seeking protection of their goods and services in the digital space. For example, there are increasing number of trademark applications filed in the world that intend to protect brand names used in connection with "virtual" goods.
However, one problem is that, under the current Japanese law, it is not always easy to protect a design of "virtual" goods. Design registration under the Design Act is the main intellectual property rights for protecting product designs in Japan, but protection under the current Design Act only protects designs of tangible goods, and does not extend to "virtual" goods.
Also, the Unfair Competition Prevention Act (the "UCPA") provides some protection to designs of goods, by defining an act of transferring of products that have the same or substantially similar forms (designs) as those of others ("Imitations") as "unfair competition" and prohibiting such an act (Article 2(1)(iii) of the UCPA). In order to enjoy protection under the UCPA, a registration is not required; but the protection is only available for three years from the release of the original products.
However, it is understood that Article 2(1)(iii) of the UCPA only prohibits transfer of tangible Imitations. Therefore, the current UCPA does not provide protection of designs of "virtual" goods.
Another possible protection would be copyright protection. However, it is generally understood that copyright protection of design of goods is quite limited.
New Bill
The New Bill amends Article 2(1)(iii) of the UCPA. Under Article 2(1)(iii) of the UCPA as amended, an act of offering of Imitations through a telecommunication line is also prohibited. This will allow companies to take actions against Imitations that are sold in the digital space.
It should be noted, however, that (as explained previously) the protection of product designs under the UCPA is available only for three years from the release of the original products. Therefore, protection of designs of "virtual" goods under the New Bill is still somewhat limited.
Nevertheless, it is a good sign that the Japanese Government is taking infringement in the digital space as a serious matter, and we expect to see more rule making concerning infringement in the digital space after discussions with the relevant sectors.
Written by: Mr. Yusuke Inui (Attorney at Law, Patent Attorney)