CASRIP Newsletter - Fall 2005, Volume 12, Issue 2

Japanese Legislative Updates on Intellectual Property in 2005

By Hiroshi Kawamata[1]

Since the institution of the Strategic Council on Intellectual Property in 2002, which aimed to establish the strategy and national goals for intellectual property in Japan, revision on intellectual property laws by the cabinet bill have been made almost every year.  First, the Basic Law on Intellectual Property, which sets a national goal as realization of a dynamic economy and society that is based on the creation of added values through the creation of new intellectual property and effective exploitation of such intellectual property[2] was enacted in 2003.  

The Basic Law on Intellectual Property also established the Intellectual Property Headquarters within the Cabinet, which annually adopts the Strategic Program for the Creation, Protection and Exploitation of the Intellectual Property Strategic Program and takes necessary measures including proposing legislation.  During the first few years, basic legislation to establish the basic framework, such as establishment of the Intellectual Property High Court[3] or expediting patent examination,[4] has been enacted.[5]

Additional legal reforms are ongoing to keep abreast of rapid social changes. Significantly, in 2005, revisions to trademark and unfair competition laws have been made.  This article will summarize the highlights of these revisions.[6]

I. Trademark Law

The 2005 revision of the Japanese Trademark Law[7] introduces the regionally-based collective mark.  The revision is intended to promote the credit of business, enhance industrial competitiveness and vitalize local economies.[8]

Prior to the revision, a mark, which is the combination of the name of a region and goods or services, could not be registered as a word mark unless it acquired nationwide recognition or was combined with other designs or letters with a distinctive character.[9] The problem was that an applicant could not exclude a third party's free-ride use of such word marks until the mark gained a nationwide recognition, which usually requires huge investments and a long period of marketing efforts.[10]  Another pitfall is that the registrant of a trademark which comprised certain words and figures could not prevent a third party's use of the words themselves or the mark which comprised the same words and other figures.[11]

The official outlines of the bill[12] gives key points of the revision:

1. Requirements for registration of regionally-based collective marks
   1. Cooperative business associations and other associations established under the special laws with the status of legal entities and foreign legal entities corresponding thereto shall be entitled to obtain a regionally-based collective mark.[13]
   2. A trademark registration of a regionally-based collective mark may be obtained where, as a result of the use of the trademark, it has become widely known among consumers as an indication of the applicant's or its members' products or services.[14]
   3. Trademarks which may be registered as regionally-based collective marks are comprised of the name of the production area of the goods where the applicant or its members have been using the trademark[15] prior to the filing, the place where the services are provided, or other corresponding areas which are recognized as having a close relationship[16] to the goods or services.[17]
2. Transfer of a trademark right of a regionally-based collective mark; Grant of exclusive use right
   The owner of a regionally-based collective mark may not assign[18] nor grant an exclusive use right[19] of the trademark.
3. Right to use a regionally-based collective mark based on prior use
   A person who has been using the trademark in Japan prior to the filing of an application for a regionally-based collective mark registration by another person without an intention of unfair competition shall have the right to continue such use.[20]
4. Opposition to the registration of regionally-based collective mark; Invalidation of the trademark registration
   1. Any person may file an opposition to the registration of a regionally-based collective mark which has been made in violation of the requirements for registration.[21]
   2. When a registration has been made in violation of the requirements for registration of a regionally-based collective mark, an invalidation procedure of the registration may be demanded.[22] In addition, when a registered regionally-based collective mark becomes not to meet the requirements for registration, an invalidation procedure of the registration may be demanded.[23]

Thus, the revised law allows a business group, such as a cooperative business association to register a trademark, which is a combination of the name of a region and its goods or services, earlier than acquiring nationwide recognition of the trademark.  This protects local businesses against a free-ride of their marks.  The revision of the Japanese Trademark Law, adding regionally-based collective marks, will become effective on April 1, 2006.

II. Unfair Competition Prevention Law and Other Related Laws

Over the last few years, a rapid change in the social environment in Japan has forced the Cabinet to submit bills to revise the Japanese Unfair Competition Prevention Law[24] almost annually[25] in response to the diversified form of unfair competition.

The purpose of the 2005 revision of the Unfair Competition Prevention Law and other related laws[26] is to extend measures against infringement of trade secrets, to prevent degradation of brand value by counterfeit goods and pirated copies, and thus to maintain a fair competitive environment.

The revision basically has two pillars: (1) strengthen the protection of trade secrets, and (2) provide a countermeasure for counterfeit goods and pirated copies.  The official briefing material provided by the Ministry of Economy, Trade and Industry[27] explains the outlines as follows.

A. Strengthen Protection of Trade Secrets

The first pillar of the revision focuses on reinforcing trade secret protection by expanding the scope of criminal punishment against unauthorized trade secret disclosure.  The three main points are stated below:

1. Introduction of criminal punishment of trade secret disclosure overseas
   1. expansion of eligibility for criminal punishment to a person who discloses a trade secret outside of Japan, which is managed in Japan[28]
   2. expansion of eligibility for criminal punishment to a person who violates a court order to maintain secrecy on civil suits that involve trade secrets[29]
2. Introduction of criminal punishment for retiree
   Ex-officers or ex-employees who propose or are asked to use or disclose a trade secret in breach of their employment obligations and later disclose it for the purpose of unfair competition after leaving their employer are subject to penalty.
3. Expansion of application of criminal punishment for corporate entity
   The revised law introduces a penalty to a corporation whose officers or employees infringe business interests by obtaining trade secrets through unfair means and then use or discloses those secrets at the maximum fine of ¥150,000,000.[30]

B. Countermeasures for Counterfeit Goods and Pirated Copies

With regard to the second pillar, three main points have been revised to enhance deterrence toward counterfeit goods and pirated copies and to increase the effectiveness on injunction at the Japanese border.

1. Introduction of criminal punishment for plagiarism of famous indication of goods
   The revised law is designed to punish conduct such as selling products and services by attaching another person's famous indication of goods such as a brand name.[31]
2. Introduction of criminal punishment for slavish imitation
   The revised law introduces a criminal penalty for selling a slavish imitation of another person's goods.[32]
3. Expansion of scope of injunction at the Japanese border (the custom tariff law)
   The 2005 revision of the custom tariff law prohibits the import of slavish imitation, goods using another's well-known indication of goods which causes confusion and goods using another's famous indication of goods.[33]

C. Other Considerations

Another revision is designed to increase deterrence by raising the maximum fine for unfair competitive conducts. The revision enhances the maximum punishment for a violation of the unfair competition law from three years in prison or a ¥3,000,000 fine, to five years in prison and a ¥5,000,000 fine for most cases.[34]

D. Revision of Other Related Laws

In accordance with the revision expanding criminal punishment to a person who violates a court order to maintain secrecy during civil suits that involve trade secrets, related laws such as patent law,[35] utility model law,[36] design law,[37] and copyright law[38] have also been revised.

In addition, the Patent Attorney Law is being revised to add reasons for disqualification of a patent attorney consistent with the introduction of an enhanced scope of criminal punishment in the Unfair Competition Prevention Law.[39]

As a result of the revision, the scope of the criminal punishment is substantially expanded and the level of the maximum punishment for a violation of the Unfair Competition Prevention Law becomes comparable to that of other intellectual property laws such as patent, trademark and copyright.

The revision on the Japanese Unfair Competition Law and other related laws came into force on November 1, 2005.

[1] Mr. Kawamata is a Visiting Scholar at the University of Washington, School of Law, and an Examiner of the Japan Patent Office (JPO).

[2] Basic Law on Intellectual Property, Law No. 122 of 2002, art.1.

[3] Chiteki zaisan kôtô saibansho secchihô [Law to establish the intellectual property high court], Law No. 119 of 2004.

[4] Tokkyo shinsa no jinsokukatô no tameno tokkyohôtô no ichibu wo kaiseisuru hôritsu [Law to partially revise the patent law and other laws in order to expedite patent examination process etc.], Law No. 79 of 2004.

[5] As to the 2004 revisions, see Matsuo Nonaka, Japanese Legislative Updates on Intellectual Property in 2004, CASRIP Newsletter (Spring-Summer 2004).

[6] Disclaimer: The information on the revised laws on this article is not exhaustive. This article is an expression of the author's understanding based on the materials published by JPO and Ministry of Economy, Trade and Industry (METI) and does not necessarily represent their official positions.

[7] Heisei 17-nen kaisei shôhyôhô [2005 Revised trademark law], Law No. 127 of 1959 [hereinafter 2005 Shôhyôhô].

[8] Outline of the 2005 Annual Report, chapter 1, section 1, available at http://www.jpo.go.jp/cgi/linke.cgi?url=/shiryou_e/toushin_e/kenkyukai_e/annual_report2005.htm.

[9] Heisei 17-nen shôhyôhô no ichibu wo kaisei suru hôritsu ni tsuite [The Textbook for Briefing Session on the Law to Partially Revise the Trademark Law (2005)], 3, available at http://www.jpo.go.jp/torikumi/ibento/text/pdf/houkaisei/01.pdf.

[10] Id, at 4.

[11] Id.

[12] Shôhyôhô no ichibu wo kaisei suru hôritsuan yôkô [Outline of the bill to partially revise the trademark law].

[13] 2005 Shôhyôhô, art 7 bis, para 1.

[14] Art 7 bis, para 1.

[15] Art 7 bis, para 1, art 3, para 1.

[16] Art 7 bis, para 1 and para 2.

[17] Art 7 bis, para 1.

[18] Art 24 bis, para 4.

[19] Art 30, para 1.

[20] Art 32 bis, para 1.

[21] Art 42 bis, para 1.

[22] Art 46, para 1, item 1.

[23] Art 46, para 1, item 6.

[24] Fuseikyôsô bôshihô (Fukyôhô) [unfair competition prevention law], Law No.47 of 1993.

[25] Fuseikyôsô bôshihô no ichibu wo kaisei suru hôritsu [Law to partially revise the unfair competition prevention law], Law No. 81 of 2001. (adding fraudulent procurement of domain name as an unfair competitive conduct), Fuseikyôsô bôshihô no ichibu wo kaisei suru hôritsu [Law to partially revise the unfair competition prevention law], Law No. 46 of 2003. (facilitating establishment of damage and infringing act by introducing clauses which ease calculation of lost earnings by an infringing act, enable in camera procedure, and so on; clarifying application of the law to the conduct for providing products which fraudulently use another person's product indication or other indications through electric communication circuits; strengthening protection by introducing criminal punishment for the person who fraudulently obtained, used or disclosed another person's trade secret), Fuseikyôsô bôshihô no ichibu wo kaisei suru hôritsu [Law to partially revise the unfair competition prevention law], Law No. 51 of 2004. (expanding applicable scope of criminal punishment to a national who give, offer, promise a bribe to a foreign public official outside of Japan)

[26] Fuseikyôsô bôshihôtou no ichibu wo kaisei suru hôritsu [Law to partially revise the unfair competition prevention law and other related laws], Law No. 75 of 2005.

[27] Available at http://www.meti.go.jp/policy/competition/downloadfiles/kaisei_gaiyo.pdf.

[28] Heisei 17-nen kaisei fukyôhô [2005 Revised unfair competition prevention law], Law No.47 of 1993 [hereinafter 2005 Fukyôhô], art 21, para 4.

[29] 2005 Fukyôhô, art 21, para 5.

[30] Art 22, para 1, item 2. In the case of profiting out of famous indication of goods or services, the maximum fine for the legal person is ¥300,000,000 (See Id. art 22, para 1, item 1), and ¥100,000,000 for the case of slavish imitation (See Id. art 22, para 1, item 3).

[31] 2005 Fukyôhô, art 21, para 1, item 2.

[32] 2005 Fukyôhô, art 2, para 1, item 3, and art 21, para 2.

[33] Heisei 17-nen kaisei kanzei teiritsuhô [2005 Revised custom tariff law], Law No.54 of 1910, art 21, para 1, item 10.

[34] The maximum punishment for the person who performed unfair competition act of assigning, leasing, displaying for the purpose of assignment or lease, exporting or importing goods which imitate the configuration of another person's goods for the purpose of acquiring unfair profit is three years in prison and a ¥3,000,000 fine. 2005 Fukyôhô, art 21, para 2.

[35] Fuseikyôsô bôshihôtou no ichibu wo kaisei suru hôritsu, Law No. 75 of 2005, art 2.

[36] Art 3.

[37] Art 4.

[38] Art 5.

[39] Art 7.