2 System in the 21st Century

Although the current Japanese Trademark Law has undergone several amendments since its promulgation in 1959, these amendments have mostly been technical revisions of provisions to add necessary requirements. Therefore, a fundamental amendment of the law is required in the future. In this study, we clarified and investigated issues pertaining to the following eight major points that need to be investigated in order to fundamentally amend the current Trademark Law, with promoting the strategic use of names as one of the key perspectives. These points are as follows: (1) adding “distinctiveness” to the definition of “trademark”; (2) protection of consisting of sounds, colors and smells; (3) whether or not to allow “electricity” as goods under the Trademark Law; (4) whether or not to allow “retailing” as services under the Trademark Law; (5) introduction of a comprehensive definition for “use”; (6) whether or not use by auditory representation should be considered as the “use with respect to a mark” in Section 2 (3) of the Trademark Law; (7) introduction of the consent system; and (8) review of the defensive mark system.

Ⅰ Introduction Ⅱ Issues for Amendment in the Trademark Law: Specific Issues The current Japanese Trademark Law was for which Amendment is promulgated in 1959, and since then, has Required undergone several amendments to respond to domestic or international situations such as 1 How to Define “Trademark” strengthening the obligation to use registered trademarks, introduction of the (1) Introduction of a definition of registration system, and participating in treaties “trademark” that focuses on such as the Nice Agreement, the Trademark Law “distinctiveness” Treaty, the Madrid Protocol, etc. However, these (i) Nature of the problem amendments did not go beyond the scope of adding In the old Trademark Law of 1921, Section 1 necessary requirements to the technical (2) imposed the requirement of “special construction of provisions. Meanwhile, the distinctiveness” on a trademark, for which there trademark systems in the United Kingdom and was the “constituent element theory” and the Germany, which were the models for the Japanese “registration requirement theory.” “Special system, have undergone fundamental amendment distinctiveness” was generally interpreted as in accordance with the EC directive of 1988, which meaning “distinctive character distinguishing one’s may have been one reason that, regarding the goods from those of others.” necessity for the amendment of the Japanese The current Trademark Law does contain a Trademark Law, the Legal System Subcommittee of requirement of “special distinctiveness” in its the Policy Committee, definition of a “trademark,” but Section 3 (1) of the Industrial Structure Council (2001) proposed, “It is Law specifically provides for cases of a trademark necessary to promote review of the system in the lacking “special distinctiveness” for trademarks for future in line with international harmonization.” which an application for registration has been made. Furthermore, with China’s entry into the Therefore, “trademark” as defined in Section 2 (1) international market, full-scale use of brand-name is somewhat detached from the socially-accepted strategy by Japanese companies has become more idea of “trademark” that has distinctiveness as its and more important, and therefore, it is proposed in character. the Intellectual Property Policy Outline that “The Because of the points mentioned above, one of GOJ (Government of Japan) will consider specific the problems with the current trademark law is that measures to enable companies to provide products even a use of a mark that is not a so-called “use as a and services of greater value by using attractive trademark” may be accused of being an designs and brand-names, including the infringement of a trademark right. establishment of ideal design and trademark On the other hand, in recent years, court systems. It will draw a conclusion by FY 2005.” precedents have established that a use of a Therefore, in this study, we clarified and discussed trademark in a manner that lacks “distinctiveness” the issues that need to be investigated in order to cannot be an infringement of a trademark right, and amend the current Trademark Law, with promoting the opinion has been voiced that there should be no the strategic use of brand names as one of the key problem with the current definition; but the perspectives. reasoning regarding such opinion is not yet fixed,

● 12 ● IIP Bulletin 2003 and therefore, the fear of possible confusion cannot (ii) Examples in other countries be ruled out. Mainly European countries and the United (ii) Examples in other countries States allow registration of trademarks consisting Many countries have the explicit element of of sounds, colors or smells, and they have various “distinctiveness” in their definition of “trademark.” examples of registration. However, the number of (iii) Points to be investigated registrations itself is not so large, and it seems that ・ Whether it is necessary to provide for the the examination criteria or qualifications for the requirement of “distinctiveness” in the definition of subject of examination have yet to be established. “trademark,” thus clarifying the scope of protection, (iii) Points for investigation or to the contrary, whether it is better to keep it as ・Whether the Trademark Law is an appropriate it is so as not to cause confusion with the already framework for the protection of distinctive sounds, established theories and court precedents. colors, or smells (iv) Main opinions of the Committee ・Considering protection by the Trademark Law, c Adding “distinctiveness” as a constituent how to deal with the question of exhaustion of element in the definition of “trademark” colors, the manner of description on the application Most voices were generally in favor of adding form, the measure of examination and the “distinctiveness” as a constituent element. specification of the scope of the right. As mentioned above, the reasoning in the (iv) Main opinions of the Committee court precedents is not yet fixed. Rather, such As for trademarks by sounds, colors, or smells, precedents draw decisions without clarifying the the demand from the user side is not so strong, and points in question; furthermore, it was pointed out meanwhile, there was the opinion that if these that adding “distinctiveness” would clarify the trademarks were allowed, they would be difficult to meaning of “trademark” in the provisions of not manage. only Section 37 but also Section 3, 4, 26 and others. Another opinion that was voiced was that if the d Meaning of “distinctiveness” registration of these trademarks were allowed, the There was one suggestion of letting it have a Japan Office could be expected to incur a meaning that includes the concept of Section 3(2) of great burden for the preparation of the system to the Japanese Trademark Law, i.e., “capable of accept them and for the examination, etc. acquiring special distinctiveness as a result of the On the other hand, there were opinions that use,” referring to the term “capable” that is used in such registration might as well be allowed if those the U.K. as “capable of distinguishing,” and another trademarks are objectively distinctive, the scope of opinion suggested limiting it to an objective the right identifiable and their publication possible, requirement and excluding any subjective ones. and that from the standpoint of brand strategy, e Problems with adding “distinctiveness” companies should positively consider making use of There was the opinion that when judging these trademarks. whether trademarks are identical or similar to each (2) Review of the Concept of Goods and other, it may always become necessary to break Services (1): Treating “Electricity” as them down into the distinctive part and Goods non-distinctive part. (i) Nature of the problem Under the 9th edition of the Nice Agreement, 2 Expansion of Scope of Protection under “electricity” is certain to be added to the Trademark Law International Classification of Products and Services as Class 4 goods, and in Japan also, with (1) Expansion of component elements of a the amendment of the Electric Utility Law, the trademark: Protection of sounds, colors liberalization of electricity retailing has begun. and smells, etc. Under these circumstances, should it be allowable (i) Nature of the problem to obtain trademarks for goods for “electricity”? Trademarks protected under the current (ii) Views in other countries Trademark Law can consist of only the elements In the U.S. and U.K., “electricity supply” is that are recognizable by sight such as characters, included as a service but “retailing” is not figures and signs, etc., and the demand from recognized as such. Therefore, their view is in favor companies for the trademark protection of other of allowing trademarks for electricity as trademarks elements including sounds, colors, and smells has for goods to protect the activity of electricity not been very high. The question is, in this modern retailing. society with increasing diversification of the (iii) Points to be investigated concept of goods and services and the manner of ・How to apply the definition of “use” in Section 2 use of trademarks, whether to recognize a mark (3) to “electricity,” which is intangible and cannot consisting of sounds, colors, and smells as a be kept in a container (supplied through a wire), and trademark in line with the examples of European whether “electricity” can be regarded as goods in countries and the United States. Section 2 (1) (i).

● 13 ● IIP Bulletin 2003 (iv) Main opinions of the Committee unclear; since in the retail business also, the name There was no objection to allowing electricity of a store may have the power to attract customers, to be treated as goods under the Trademark Law. retailing should be admitted as a service. As a specific opinion, one member gave the Meanwhile, as to the scope of “retailing” that view that since industry is in effect treating should be admitted as a service, one opinion was electricity itself as goods, electricity can obviously that it should be determined with consideration be regarded as goods under the Trademark Law and given to small retailers, and, when it is introduced, there should be no objection to that, but it will be a transitory measure should be considered like that necessary to review the definition for “use.” of the right of continuous use that was adopted (3) Review of the Concept of Goods and when the service mark system was introduced. Services (2): The Question of Introducing “Retailing” as a Service 3 Responding to the Diversification of the (i) Nature of the problem Manner of Use In Japan, under the current Trademark Law, “retailing” is regarded as assignment (sales) of (1) Review of the definition of “use” of a goods and not as provision of a service. This is trademark: Introduction of a because “retailing” does not fall under the current comprehensive definition for “use” definition of services, i.e., “the act of providing (i) Nature of the problem labor or benefits to others which can in itself be the A problem with the current Japanese object of commercial trade” Trademark Law is that its definition of “use” On the other hand, in addition to the U.S. and prescribes the acts in too many segments, Canada who have been treating “retailing” as a especially for services prescribing peripheral acts service, the Office for Harmonization in the around the act of providing services, without Internal Market (OHIM) and the U.K. have also stipulating the essential act itself. Furthermore, in recently begun recognizing “retailing” as a service, order not to be forced to add to or modify the which is an international trend that we will have to provisions for “use” of a trademark each time a new face and take into consideration. business emerges with the changes of the times, it Meanwhile, while retailers have the opinion is necessary to consider introducing a that if it were sufficient to file an application for a comprehensive definition for “use” while making service mark designating only Class 35, it would reference to the examples of legislation in exclude the burden of applying for trademarks for European countries or the U.S. goods designating plural classes of goods, helping (ii) Examples in other countries also to reduce costs, concerns were also voiced European countries and the United States about possible conflicting registrations by others. have generic definitions of “use.” For instance, in Is it desirable to allow service marks for Germany and U.K., they have provisions like “offer “retailing” in Japan under these circumstances? or provision of services under a mark,” which (ii) Views in other countries covers all acts under Section 2 (3) (iv)-(vi) of the European countries, the United States, Taiwan Japanese Trademark Law, which defines the “use” and others have allowed service mark registration of trademark for services. for “retailing.” (iii) Points to be investigated (iii) Points to be investigated ・ If a comprehensive definition for “use” is ・Why “retailing” does not fall into the category of introduced, will it not make the definition of “use” “services” under the current Japanese Trademark of a trademark vague? Furthermore, what Law considerations need to be made concerning the ・Even if the registration of a mark designating effects of such definition on other provisions? “retailing” is admitted, isn’t the scope of the right ・How about providing for the term “use,” like in vague? Furthermore, in the examination, is Germany and the the United Kingdom, in the judgment required on similarity with various kinds provisions on infringement rather than providing of goods in Class 1 to 34? for the definition of “use” of marks as in the current ・What range of “retailing” should be admitted for trademark law? the registration of a service mark? (iv) Main opinions of the Committee (iv) Main opinions of the Committee For example, Section 10 (4) (b) of the U.K. Many were of a positive opinion towards Trade Marks Act stipulates, “offer or expose goods admitting service marks for “retailing.” On the for sale, put them on the market or stock them for other hand, there was an opinion that the scope of those purposes under the sign,” and if we provide “retailing” to be admitted should be determined by for a comprehensive definition for “use” based upon taking the social effects into consideration. this, it would be, “providing or offering to provide Specifically, there was an opinion that the goods under the sign,” which is vague in Japanese, necessity under the Trademark Law for a service to and thus requires further investigation. be “the object of commercial trade in itself” is

● 14 ● IIP Bulletin 2003 (2) Use through auditory representation registered trademark, to “transfer the application (i) Nature of the problem once to the right owner of the existing registered The current Trademark Law defines acts of trademark and get it transferred back after having it use of a trademark as acts in which distinctiveness registered by the existing right owner.” is recognizable by visual perception. Consequently, At the time of the amendment of the law in sounds (radio commercials, etc.) recognizable by 1996, the introduction of a “consent system,” which auditory perception are excluded from the scope of would enable the applicant in the preceding use of marks. On the other hand, there is a theory paragraph to obtain the same legal position as that that, “If another person repeats an appellation on a obtained through the convoluted procedure radio commercial, it would be no less likely to cause described above, was investigated, but was not confusion….[Therefore, it] should be regarded as a adopted for the reason of a possible delaying effect use of a trademark from the perspective of on the examination process. However, many other infringement.” Hence, investigation is required on countries have adopted this system, and with some whether to admit the use of trademarks through users desiring its introduction, the introduction of auditory representation. the “consent system” needs to be investigated. (ii) Examples in other countries (ii) Examples in other countries Australia and Norway are among the few Many countries have adopted the “consent countries that admit use through auditory system.” The U.K has, so to speak, a “complete representation. consent system,” in which “even if there is a (iii) Points to be investigated relative reason for rejection, the registration is ・Considering the developments in the advertising allowed if there is consent.” The U.S., Australia and function of trademarks and the advertising media, is others have, as it were, the “consent system with it not necessary to include the “use through some reservations” in which “if there is a danger of auditory representation” in the definition of the use causing confusion, registration is not allowed even of trademarks, thus strengthening the protection of if there is consent.” And OHIM, Germany and trademarks? France, etc. have what you might call the “hidden ・ Meanwhile, for example, where there is a consent system,” in that they conduct examination registered trademark on the Chinese characters for only for an “absolute reason for rejection.” “the sun” (pronounced “taiyou” in Japanese), if one (iii) Points to be investigated read aloud the Chinese characters for “the ocean” ・ Which should have more weight in allowing (different characters to the letters for “the sun” but registration, public interests or private interests? with the same pronunciation), would it constitute For example, while there are different views on the an infringement? purpose of each paragraph of Section 4 (of the (iv) Main opinions of the Committee Japanese Trademark Law), suppose the purpose of There was an opinion that, like an Paragraph 11 is private interest, and Paragraph 15 advertisement being read aloud, there are naturally public interest, when there is consent, even if the cases where a trademark is expressed by auditory examination will not be conducted if it is regarding representation, and, even if use of a mark in Paragraph 11, as for Paragraph 15, should it not be “auditory representation” does not fall under “use” conducted for the sake of protection of public in Section 2 (3), such use is most likely to be interest? subjected to the right to demand injunction under ・If the consent system were introduced, would it Section 36 (1), presenting no problems with regard not work to cause consumer confusion? to trademark protection. However, from the ・Is the fact that a trademark was registered by standpoint of strengthening trademark protection, consent to be publicized? such use might as well be included in the concept of ・What would be the scope of a right that has been “use,” and for this purpose, it is advisable to clearly registered by consent? stipulate that a use in “auditory representation” (iv) Main opinions of the Committee also falls under “use” as defined in Section 2 (3). As a whole, there were many opinions in favor of introducing the consent system. Among the 4 Other Issues opinions in favor, one was from the standpoint of having a user-friendly system, and another pointed (1) Introduction of consent system out that the introduction would enable the (i) Nature of the problem examination to be more based on the reality of By the amendment of the Japanese Trademark business. On the other hand, one alarming opinion Law in 1996, the transfer of a similar registered was that due consideration should be given to cope trademark separate from the main registered with possible examination delay, consumer trademark came to be allowed, which made it confusion and misuse of right. Furthermore, there possible, as a response to notification of reasons for was an opinion that if the system to be introduced refusal of an application for registration of a is the “consent system with some reservations,” trademark citing the existence of similar prior the law as it currently stands already

● 15 ● IIP Bulletin 2003 accommodates this in its operation. another similar system should be introduced in its (2) Review of the defensive mark system place. (i) Nature of the problem d Well known trademark protection to replace The defensive mark system is for the the current defensive mark system protection of well-known trademarks. However, (a) Protection by the Unfair Competition unlike when the system was introduced in 1959, Prevention Law the protection of famous trademarks by the Unfair One member stated that in order to give Competition Prevention Law has been enhanced, protection, under the Unfair Competition and therefore, on the occasion of the revision of the Prevention Law, of the same degree as under the Trademark Law in 1996, the abolition of the defensive mark system, it is necessary to make defensive mark system was investigated, with the violation of the Unfair Competition Prevention Law conclusion being to maintain the system for the subject to the border regulations under the reasons that under the Unfair Competition Customs Tariff Law, and make an act of misuse of a Prevention Law, an act of misusing a well-known well-known trademark (Section 2 (1) (ii) ) subject to trademark (Section 2 (1) (ii) of the Law) is not criminal penalties. And, in that case, additional punishable by criminal penalties and violation of the provisions in the Unfair Competition Prevention law is not subject to border regulations under the Law for the appropriate constituent elements would Customs Tariff Law. Meanwhile, the U.K., which be needed. had had a defensive mark system, abandoned the (b) Protection by the Trademark Law system in the amendment of the law in 1994, ・Expansion of prohibitive right replacing it with a new system in accordance with Although a trademark that is liable to cause the EC Directives. In light of these situations, it is confusion with another person's well-known necessary to investigate the necessity of the trademark cannot be registered, the use of such a defensive mark system, and the method of trademark, unless the trademark and goods or adequate protection of well-known trademarks. services with regard to which the trademark is (ii) Examples in other countries used are identical or similar to a registered Currently, India, Hong Kong, Australia and trademark and its designated goods or services, will others have a defensive mark system. not constitute an infringement of the registered (iii) Points to be investigated trademark even if it is a well-known trademark. ・Should the defensive mark system be maintained One suggestion was for legislation to the effect that, or abolished? Even if it were abolished, would the even if the goods or services with respect to which Unfair Competition Prevention Law cover it for the a trademark is used are not similar to the protection of well-known trademarks? And, can a designated goods or services of a registered new provision for the protection of well-known well-known trademark, if the use is liable to cause trademarks be conceived as a substitute for the confusion, the use shall be subjected to the defensive mark system? prohibitive right of the registered well-known (iv) Main opinions of the Committee trademark. c Necessity of the defensive mark system ・Legislating a provision based on Section 5 (2) of As there have been very few cases of the EC Directive enforcement of a defensive mark right (it seems By putting into legislation a provision such as there has been no case for the border regulation the one mentioned above, a well-known registered either), the necessity of the system is low. There trademark will have an expanded prohibitive right was also an opinion that since a defensive mark that extends to un-similar goods or services. This registration lasts ten years even if the trademark measure may be better than the defensive mark has ceased to be well-known, the system may not system for the protection of well-known be appropriate for the protection of well-known trademarks in that the judgment of whether the trademarks. trademark is well-known will be made at the time On the other hand, there was another voice in the owner makes use of this provision. There was support of maintaining the system for the reasons an opinion, however, that when this measure is that while, under the defensive mark system, the taken, it will be necessary to fully investigate how mark will be protected by registration for the scope to deal with the requisites for free ride, which is not of the right, if, without utilizing the system, one covered in the Japanese Trademark Law or the tries to protect a mark by trademark registration for Unfair Competition Prevention Law, and how to broader designated goods, there is a possibility the make a judgment on the famousness of a registration may face a demand of trial for trademark. cancellation of registered trademark not in use, and furthermore, an infringer of a defensive mark is (Researcher：Hiroki Hattori) subjected to criminal penalties, which could be a deterrent to infringement. This opinion added that even if the defensive mark system were abolished,

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