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Generation Systems in Japan's Trademark Laws, 17 J. MARSHALL REV THE JOHN MARSHALL REVIEW OF INTELLECTUAL PROPERTY LAW THE BALANCES OF TWO TRADEMARK RIGHTS: GENERATION SYSTEMS IN JAPAN'S TRADEMARK LAWS WEIGUANG WU ABSTRACT This article consists of 6 sections. In Section I, the article mainly introduces the basic theory of a trademark right as a private right and its purpose. A trademark right as a private right is purposeful to protect goodwill of trademark users, which is their labor fruits during trademark use in the course of business. A trademark right generated by use is called a right subsisting upon use (RSUU) system, which is mainly adopted in common law countries. A trademark right generated by registration is called a right subsisting upon registration (RSUR) system, which is mainly adopted by civil law countries including Japan. In Japan’s judicial practices, goodwill protected by RSUR is broken down into 3 functions, the function of indicating origin and ownership; the quality guarantee function and an advertising function. In Section II, this article analyzes why the RSUR system, instead of the RSUU system, is adopted in many countries. Because of ambiguous, varied and untouchable goodwill generated in trademark use, RSUU is itself difficult to be grasped and respected by third parties. Therefore, in most civil law countries including Japan, the RSUR system is adopted, by which trademark rights are generated upon registration instead of use in business. The RSUR system is more transparent, stable and predictable than the RSUU system because the content and boundary of rights are statutory, which includes the exclusive right to use and the right to prohibit use, and infringements of RSUR are statutorily categorized. The RSUR system is preferential to efficiency of right protection and implementation. But in some situations, the efficiency-preferential RSUR system is inconsistent with the purpose of the TMA. These inconsistencies can be categorized into two groups, internal inconsistencies and external inconsistencies. Internal inconsistencies refer to inconsistencies caused by the RSUR system to be resolved by the TMA itself; and external inconsistencies refer to inconsistencies caused by the RSUR system that are to be resolved by laws other than the TMA, such as the UCPA and Civil Code. The internal inconsistencies mainly include: (1) trademark registration for banking purposes; (2) trademark registration in conflict with prior user’s goodwill; and (3) no protection for goodwill of registrants spilled out of registered trademarks. The external inconsistencies mainly include (1) no protection in the TMA for goodwill on unregistered indications; (2) no protection in the TMA for goodwill spilled out of registered defensive trademarks; and (3) abuses of registered trademark rights. Section III of the article discusses different meanings of well-known/famous trademarks in different contexts and their backup policies. The institutional functions of well-known/famous trademark protection in the TMA are to protect goodwill of trademark users from usurpation by registered trademark right holders. The goodwill worthy of protection in different context is different. Therefore, the meanings of well-known trademarks are different accordingly, which includes regional The John Marshall Review of Intellectual Property Law well-known, national well-known and international well-known marks. There is no famous trademark concept in the TMA, but famous indications exist in the UCPA, The article summarizes typical measures to cure internal inconsistencies in Section IV. They are: (1) cancellation of trademark registrations for banking purposes; (2) registration prevention for protection of prior goodwill; (3) registration prevention of agents who maliciously violate trust relationships between principals and agents; (4) preventing usurpation of honest users’ goodwill; (5) expanding protection for spilled goodwill by registered defensive trademarks; and (6) adoption of the trademark use doctrine. Measures to cure external inconsistencies are discussed in Section V. The first external inconsistency is the loophole of goodwill protection in the TMA. In three situations, goodwill is not protected in the TMA. The first is goodwill enshrined on not-registered trademarks; the second is goodwill enshrined on non-registrable indications; and the third is goodwill spilled out of scope of registered trademarks including registered defensive trademarks. The loopholes of goodwill in these three situations are made up by protection of well-known and famous indication protections in the UCPA. The second external inconsistency is abuse of RSUR, (i.e. registered trademark right holders abuse the right for purposes other than goodwill protection), which are considered unfair. In judicial practices, Japanese courts prohibit such abuses of registered trademark rights according to Art. 1 of Civil Code. The relevant cases could be summarized into 4 types, abuse of right with illicit purpose; abuse of right for market exclusion; abuse of right for unfair purpose; and abuse of right in parallel imports. And Section VI is the conclusion. Copyright © 2018 The John Marshall Law School Cite as Weiguang Wu, The Balances of Two Trademark Rights: Generation Systems in Japan's Trademark Laws, 17 J. MARSHALL REV. INTELL. PROP. L. 608 (2018). THE BALANCES OF TWO TRADEMARK RIGHTS: GENERATION SYSTEMS IN JAPAN'S TRADEMARK LAWS WEIGUANG WU I. INTRODUCTION .................................................................................................................. 611 A. Competition and Trademark Rights .................................................................... 611 1. Competition and Trading Ability.................................................................. 611 2. Goodwill Protection and Trademark Rights ............................................... 611 B. Two Right Generation Systems ............................................................................ 613 1. RSUU System .................................................................................................. 613 2. RSUR System .................................................................................................. 614 C. Legal Interests Protected by Trademark Right in Japan ................................. 614 1. Goodwill ........................................................................................................... 614 2. Three Functions Theory ................................................................................. 615 II. RSUR SYSTEM AND ITS INCONSISTENCIES .................................................................... 616 A. RSUR System.......................................................................................................... 616 1. Why the RSUR System is Needed ................................................................ 616 a. Dysfunction of RSUU System .............................................................. 616 b. Institutional Functions of Trademark Registration System ........... 617 2. The Merits of RSUR System ......................................................................... 617 a. Statutory and Transparent RSUR ...................................................... 617 b. Categorized Infringements of RSUR .................................................. 618 3. Trademark Rights in the TMA ..................................................................... 619 a. Exclusive Right to Use ......................................................................... 619 b. Right to Prohibitive Use ....................................................................... 620 B. The Inconsistencies Caused by the RSUR System ............................................ 621 1. The Cause of Inconsistencies ........................................................................ 621 a. Inconsistencies Caused in Theory ....................................................... 621 b. Inconsistencies Caused in Laws .......................................................... 622 2. The Internal Inconsistencies ......................................................................... 622 a. Registration for Banking Purpose ...................................................... 622 b. Registration Conflicted with Prior Users’ Goodwill ......................... 623 c. Goodwill Spilled Out of Registered Trademarks ............................... 623 3. The External Inconsistences ......................................................................... 623 a. No Protection in the TMA for Goodwill on Unregistered Indications .............................................................................................. 623 b. No Protection in the TMA for Goodwill Spilled Out of Registered Trademarks ........................................................................ 624 c. Abuse of Registered Trademark Rights.............................................. 624 III. WELL-KNOWN/FAMOUS TRADEMARKS AND THEIR INSTITUTIONAL FUNCTIONS ....... 624 A. Well-known and Famous Trademarks ................................................................ 624 1. Well-known Trademarks ............................................................................... 624 2. Famous Trademark ........................................................................................ 625 B. Well-known/Famous Trade Mark’s Institutional Functions ............................ 626 608 [17:608 2018] The Balances of Two Trademark Rights Generation: 609 Systems in Japan's Trademark Laws 1. Well-known Trade Mark’s
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