Tightening of Regulations on Cross-border Transactions of Counterfeits (design/trademark)

This is good news for those who have given up blocking private import of counterfeits, thinking that, in the case of private import, even the counterfeits infringing IP rights cannot be sufficiently regulated by IP laws in Japan (“private import” means that an individual as a purchaser purchases a product directly from a foreign mail-order company, etc. and imports it for the purpose of his/her personal use). Please refer to this newsletter and consider strengthening import suspension procedures at the Japanese customs. Our firm can handle such procedures before the customs authorities on your behalf, so please feel free to consult us.

Overview

The crackdown on counterfeits, such as fake brand-name products, flowing in from overseas will be intensified in Japan. In recent years, there has been a rapid increase in cases where importers use loopholes, such as being exempted from regulation by claiming that the imported counterfeits are for personal use. The upcoming legal revision will make it clear that, even when counterfeits are imported for personal use, such counterfeits are to be confiscated at customs in many cases.

According to statistical information from the Japanese customs, most of the counterfeits found at customs are products infringing trademark rights or design rights. In the case of patent rights or utility model rights, it takes more time and effort to determine that the product is a counterfeit than in the case of trademark rights and design rights. Thus, this year, legal revision regarding trademark rights and design rights will be advanced at first. Continued discussions will be held on the possibility of similar revision regarding patent rights and utility model rights.

[Conceptual diagram of legal revision]

(Prepared by us with reference to “Schematic diagram of laws, etc. that partially revise the Patent Act, etc. on 2021” prepared by the JPO)

Background

In Japan, cross-border transactions of counterfeits infringing IP rights, such as trademark rights, are clearly stipulated by law as acts of infringement of IP rights, if the business operator (importer/seller) resides in Japan and this domestic business operator imports the counterfeits (see Pattern (i) in the diagram above).

However, in the case where an individual imports a counterfeit for personal use from an overseas business operator, such an act is difficult to regard as infringement under Japanese law, which has been problematic (see Pattern (ii) in the diagram above).

Therefore, there have been cases in which a business operator who is planning to resell the imported counterfeits in Japan is exempted from regulation by disguisedly claiming that such import of the counterfeits is nothing but private import.

When counterfeits are found at customs, if the purchaser (importer) of the counterfeits makes a “personal use claim” and disputes whether it falls under infringement of trademark rights or other rights, it has been difficult for the customs authorities to refute the claim, thus failing to block inflow of the counterfeits in some cases. Recent problems have been that such “personal use claims” are rapidly increased, thus failing to sufficiently stop increase in the inflow of counterfeits.

Further, in recent years, there has been a rapid increase in cases where overseas business operators directly sell and deliver counterfeits to domestic individuals, due to development of e-commerce, reduction of delivery fees for international cargo, and so on. Originally, regardless of whether the importer of the counterfeits is a business operator or an individual, the importer’s act should be cracked down as infringement of rights.

After Revision

To solve the above-described problems, it will be clearly stipulated in Trademark Act and Design Act that an act of importing counterfeits with a registered trademark (or a trademark similar thereto) or with a registered design (or a design similar thereto), even for personal use, is deemed as infringement of trademark rights or design rights, respectively.

In other words, an act, by an overseas business operator, of bringing counterfeits into Japan by mail or any other means shall be regarded as infringement of trademark rights or design rights in Japan, regardless of whether the recipient of the brought-in counterfeits intends private import. Accordingly, this legal revision will make it possible to claim import suspension of such counterfeits before the customs authorities as products infringing IP rights.

Reference

For reference, we will reproduce below the amended provisions in Design Act and Trademark Act.

The bill, including these amendments, was passed and enacted in the Diet on May 14, 2021, and promulgated on May 21, 2021. The date of implementation is yet to be determined, but these amendments will be implemented within a year and six months of promulgation.

Article 2

(2) “Working” of a design in this Act shall mean the following acts:

(i) acts of manufacturing, using, assigning, leasing, exporting or importing (including an act, by a foreign resident, of having another person bring it into Japan from overseas, the same applies hereinafter), or offering for assignment or lease (including displaying for the purpose of assignment or lease, the same applies hereinafter) of an article to the design.

<Revised Trademark Act>

Article 2

(7) An act of importing in this Act shall include an act, by a foreign resident, of having another person bring it into Japan from overseas.

Edited by Rieko Yoshimoto

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