Introduction to Legal Revisions in Japan and Relevant Matters
In this newsletter, we would like to inform you of the dates of enforcement of the IP-related Acts revised in Japan in 2021 and to introduce you to future trends in legal revisions.
2. Dates of Enforcement of the Acts Revised in 2021
In the Design and Trademark Acts revised in 2021, the definition of working of a design and the definition of use of a trademark (in other words, the definition of an act deemed to be an infringement) have been respectively reviewed. Specifically, a foreign resident’s act of having another person bring goods, etc., from a foreign country into Japan has become included in “working of a design” and/or “use of a trademark”. The date of enforcement of the revised Acts is October 1, 2022.
For specific details of the revised Acts regarding the definition of working of a design and the definition of use of a trademark, please refer to an article issued by us previously (https://patent.gr.jp/en/articles/p3136/).
Additionally, in the Acts revised in 2021, requirements for restoring patent rights lost following failure to comply with a time limit in the procedures have been relaxed. In other words, the determination standard for rights restoration has shifted from a “due diligence” standard to an “unintentional” standard. The date of enforcement of the revised Act is April 1, 2023.
For specific details of the revised Acts regarding requirements for restoring patent rights, please refer to an article issued by us previously (https://patent.gr.jp/en/articles/p3143/).
3. Future Trends in Legal Revisions
Next, we will introduce you to some agendas on the intellectual property system in Japan, which were discussed in the Policy Promotion Council hosted by the JPO. According to the material released by the JPO, the agendas covered in the Council include the following:
– review of the definition of “working” of a patent,
– introduction of a consent system for a trademark (a system enabling coexisting registration of a mark applied for with an earlier mark if there is a consent of a proprietor of the earlier mark), and
– relaxation of registration requirements for a trademark containing another person’s name.
(1) Review of the definition of “working” of a patent
With the recent spread of cloud services, SaaS services made available by accessing servers from user terminals, etc., are increasing. However, there are concerns about protection of the inventions provided in SaaS services. Examples of assumed forms of SaaS services include a case where overseas servers located outside of Japan are used, a case where multiple business operators use separate servers to provide services, and a case where a part of the processing is performed on a user terminal. Under the current system, these forms may not fall under “working” of the patented invention.
However, patent infringement is subject to criminal penalties, and if an act conducted abroad falls under patent infringement, problems may arise from the perspective of the principle of territorial jurisdiction. In light of such problems, the attendees appear to have discussed the review of the definition of “working” specified in Article 2, paragraph 3, items 1 to 3 of the Patent Act at the Council.
In relation to this, the IP High Court has recently issued a very interesting ruling. DWANGO Co., Ltd., a video distribution service provider, sued a U.S. company FC2 et al. for patent infringement within Japan. FC2 et al. had been distributing comment display programs to Japanese users via the Internet from servers in the U.S. DWANGO’s Japanese patent had been obtained with the comment display program claimed. The act by FC2 et al. could possibly be evaluated as working a comment display program outside of Japan (in the U.S.), and thus, formally it is considered not to fall under working of an invention under the Patent Act. In this court case, however, it was disputed whether such an act was infringing DWANGO’s Japanese patent. Then, according to an article in the Nihon Keizai Shimbun (a leading Japanese business daily) dated August 13, 2022, a ruling affirming patent infringement by FC2 et al. was issued on July 20, 2022, and DWANGO won the case.
The IP High Court ruled that “if it can be evaluated that the patented invention was worked substantially and wholly within Japan even if all the elements (recited in the claims) are formally not concluded fully within Japan, the effect of the Japanese patent is applicable to such working, and if so, it does not go against the principle of territorial jurisdiction”. Additionally, the IP High Court also indicated that “it would be remarkably contrary to justice to permit evasive acts such as relocating servers overseas to avoid liability for patent infringement”. Moreover, regarding video distribution by FC2 et al. using the comment display program, the IP High Court considered the following factors:
(1) it is started and concluded by access from the users within Japan, and thus, it is difficult to distinguish the part within Japan and the part outside Japan,
(2) it is controlled by the users within Japan,
(3) it is directed to the users within Japan, and
(4) obtained effects emerge within Japan.
Then, the IP High Court judged that “it is proper to evaluate the act by FC2 et al. as having been done within Japan (and as a result of such evaluation, the act by FC2 et al. falls under infringement of DWANGO’s Japanese patent)”.
On the other hand, FC2 et al., which lost the case, appealed to the Supreme Court. We will continue to keep a close eye on the developments in the court proceedings between DWANGO and FC2 et al.
(2) Introduction of a consent system for a trademark
Under the current system, pursuant to Article 4, paragraph 1, item 11 of the Trademark Act, a later-filed trademark that is identical or similar to another person’s earlier-filed registered trademark cannot be granted a registration. Currently, in Japan, in such cases, it is necessary for the applicant of the later-filed trademark to employ a so-called assign-back approach while obtaining the consent of the proprietor of the earlier-filed trademark, in order to obtain the registration of his/her own later-filed trademark. However, under the “consent system” that has been introduced in other countries, if only the “consent” of the proprietor of an earlier-filed trademark can be obtained, which is relatively lighter in the burden of procedures than the assign-back approach, coexisting registration of the earlier-filed registered trademark with the later-filed trademark may be enabled. In recent years, there has been an increase in the number of countries where the consent system is available. On the other hand, Japan has not introduced the consent system, and such a difference in the system could be a barrier to global business.
At the Council, the introduction of the consent system appears to have been discussed positively, but it appears that there was an opinion that, in introducing the consent system, consideration should be given to “protection of consumers”, which is one of the legal purposes of the Trademark Act. Specifically, it appears that there were an opinion that, even if the consent system is to be introduced in Japan, coexisting registration should not be granted at the discretion of the examiner if there is a risk of confusion of origin; and an opinion that a system should be established in which, even if coexisting registration is granted based on the consent of the proprietor of an earlier mark, the trademark registration could be canceled in the event of confusion of origin at a later date due to use of the trademark for the purpose of unfair competition.
(3) Relaxation of registration requirements for a trademark containing another person’s name
Under the current system, pursuant to Article 4, paragraph 1, item 8 of the Trademark Act, a trademark containing another person’s name, etc., cannot be granted a registration except the case that the consent of the another person has been obtained. This provision is strictly interpreted and applied in courts and examinations, and it tends to be difficult to have a trademark containing a personal name registered. In the fashion industry, etc., on the other hand, there is a tendency to adopt personal names of founders or designers as brand names. However, due to the strict interpretation of this provision, there are cases where registration of a trademark consisting of a personal name is refused due to the existence of another person with the same name, thus making it difficult to protect a brand name consisting of a personal name.
At the Council, it appears that there was a suggestion that it would be appropriate to impose a certain requirement as to name recognition on another person’s “name” provided in this provision, from the viewpoints of user needs, the balance between the moral interests of another person and the interests of a trademark owner, the harmonization of systems with other countries, and so on. If legal revision is made based on the thought underlying such a suggestion, there is a risk that a third party may apply for a trademark containing a name unrelated to his/her own name in order to pre-empt the trademark rights. Thus, it appears that there were discussions, including an opinion that it would be appropriate to reject such an application on the grounds of doubts about use of the trademark, violation of public order and morals, and so on.
Edited by Makoto Kumazaki