Mar 26, 2024
Japan: Summary of the IP Lump-sum Law to be enforced on April 1, 2024
The following is a summary of the law to partially amend the Unfair Competition Prevention Law, etc. (IP Lump-sum Law), which will come into effect on April 1, 2024.
● Effective as of April 1, 2024
● Patent Law Revision of the system for reduction or exemption of fees for requesting the examination of applications [Patent Law, Article 195-2, etc.
● Trademark Law Introduction of a consent system [Trademark Law, Article 4, Paragraph 4].
● Relaxation of requirements for registration of trademarks containing the name of another person [Trademark Law, Article 4(1)(viii)].
● Non-Competition Law Prevention of imitative acts in digital space [Non-Competition Law, Article 2, Paragraph 1, Item 3].
● Strengthening of protection of trade secrets and limited provision data 【Uncompete Law, Article 2]
● Expansion of provisions for calculating damages [Non-Competition Law, Article 5]
● Expansion of presumption of use, etc. [Non-Competition Law, Article 4
● Expansion of presumption of use, etc. [Article 5-2 of the Noncompete Law
● Strengthening of jurisdiction over international trade secret infringement cases [Article 19-2, etc. of the Noncompete Law].
● Strengthening and expansion of penalties for bribery of foreign public officials [Article 21, etc. of the Noncompetition Law
● Improvement of penalties depending on whether or not a corporation is subject to both types of punishment, and revision of provisions to clarify when an act constituting a penalty is committed.
Patent Law
Proviso to Articles 195-2 and 195-2-2 of the Patent Law
The system of fee reductions and exemptions for patents for small and medium-sized enterprises, which came into effect in 2028, has been revised, however, there have been many applications from small and medium-sized enterprises, etc. for reduction or exemption, which exceed the average number of applications granted to large enterprises for examination. Such applications are not in line with the purpose of the system, which is to encourage inventions and promote industrial development for those with limited financial resources.
It was not fair to the applicants who benefited from the support system by having their fees unreasonably reduced or exempted. For this reason, a certain limit has been set on the number of requests for fee reductions or exemptions for application examination for persons other than those who are recognized as having particular financial difficulties (proviso to Article 195-2 of the Patent Law).
It is expected that no limit will be set for startups, small businesses, small and medium-sized enterprises authorized under the Fukushima Special Measures Law, and universities and research institutes, etc., which are expected to have a high ability to create new industries and are different in nature from businesses (proviso to Article 195-2-2 of the Patent Law).
Trademark Law
1. Introduction of the consent system (Trademark Law Article 4(iv)
A consent system is a system that allows the concurrent registration of a trademark that is identical or similar to a previously registered trademark of another party, if the owner of the previously registered trademark consents to the registration of both trademarks. To prevent confusion of origin, a trademark that is similar to another person’s registered trademark may not be registered (Trademark Law, Article 4 (1) (11)).
A lot of countries and regions overseas, such as the U.S., Europe, Taiwan, Singapore have already introduced the consent system, which allows to conclude consent agreements between multiple countries, but since Japan never had such a system, it made the trademark registration process much more challenging.
In order to solve this problem, Japan introduced the consent system, which allows the registration of a trademark that is identical or similar to a previously registered trademark of another person, even if both trademarks have been filed with the consent of the proprietor of the previously registered trademark. (Article 4(4) of the Trademark Law)
However, even with the consent of the proprietor of a previously registered trademark, if there is still a likelihood of confusion of origin, the registration will be refused and the existence of likelihood of confusion of origin will be examined. After registration, it is possible to request an indication to prevent confusion (Trademark Law Article 24-4-1) or a request for a trial for cancellation of unfair use (Trademark Law Article 52-2), in order to protect the interests of consumers.
In addition, with regard to trademarks registered in accordance with the above, the act of using the registered trademark without an unfair purpose is no longer treated as unfair competition (Article 19 (1) (iii) of the Unfair Competition Prevention Law). The Unfair Competition Prevention Law also takes into consideration the fact that the owner of a trademark that has become well-known and famous cannot demand an injunction against the other trademark owner.
Also, since the coexistence of similar trademarks may infringe business interests, the trademark owner may demand that the other party affix an anti-confusion marking (Article 19 (2) (ii) of the Unfair Competition Prevention Law).
For more information, please see Introduction of the Japanese Trademark Consent System.
2. Relaxation of requirements for registration of trademarks that include the name of another person (Trademark Law Article 4(1)(8)).
Previously, in order to protect the personal interests of others, a trademark containing the name, etc. of another person in its composition could not be registered without the consent of that person (Article 4 (1) (8) of the Trademark Law before the amendment).
However,
(i) Academic experts have pointed out that this provision gives the impression of overly protecting the personal interests of others.
(ii) Needs such as name trademarks are indispensable for brand strategy, especially in the fashion industry.
(iii) In foreign countries such as the U.S., Europe, China, and Korea, a system has been introduced that requires the name of another person to be well known as a requirement for trademarks that include the name of another person, which resulted in Trademark Law relaxing the requirements for registration of a trademark that includes the name of another person who is widely recognized by consumers in the field of goods and services in which the registered trademark is used (Article 4(1)(viii) of the Trademark Law).
Article 4(1)(viii) of the Trademark Law.
Article 4 Notwithstanding the preceding Article, a trademark registration shall not be granted for any of the following trademarks
8. a portrait of another person, or a name of another person (limited to a name that is well known among consumers in the field of goods or services in which the trademark is used)
9. a trademark containing the likeness of another person, a name, a well-known pseudonym, a stage name, a pen name, or a well-known abbreviation thereof (except those for which the approval of the said person has been obtained)
The name of another person is subject to two requirements:
1) it needs to have a certain degree of notoriety and
2) it has to consider the applicant’s circumstances (Government Ordinance Requirement).
The requirement to consider the applicant’s circumstances (Government Ordinance Requirement) is imposed on the applicant if:
(1) an application for trademark registration containing the name of another person that does not have a certain degree of name recognition would be uniformly excluded from the scope of Article 4(1)(viii) of the Trademark Law; and
(2) there is a possibility that someone unrelated to the name contained in the trademark application will abuse the application.
If these two requirements are met, Article 4(1)(viii) of the Trademark Law does not apply (a trademark can be registered if the other registration requirements are met without the consent of others).
The name of another person shall mean a name widely known among consumers in the field of goods or services in which the trademark is used, where there is a high probability that an infringement of personal rights will occur due to the registration of the trademark by another person.
(1) Requirement of a certain degree of familiarity (Is there any other person whose name has a certain degree of familiarity?
If there is no other person whose name has a certain level of name recognition, no approval is required.
(2) Requirements for the administrative order (Are the requirements for consideration of the applicant’s circumstances satisfied?
The following two requirements must be met:
(1) There is a reasonable relationship between the name of another person included in the trademark and the applicant for trademark registration.
(2) There must be no wrongful purpose on the part of the applicant to obtain the trademark registration.
The revised Article 4.1.8 Examination Process
The provisions of Article 8(1)(viii) of the revised Trademark Law will apply to applications filed on and after the effective date (April 1, 2024).
Unfair Competition Prevention Law
1. Prevention of imitations in the digital space [Article 2(1)(3), Article 19(1)(6) of the Noncompete Law
Before the amendment, the so-called dead copy prevention provision of Article 2(1)(iii) of the Noncompete Law was provided on the premise of preventing acts of imitation of tangible product forms.
However, economic transactions of product forms in digital space, such as metaverse and SNS, have become more active, and acts of form imitation in elaborate digital space have increased.
In light of the current situation, in order to protect products in the digital space, the new law was amended to make the act of imitation in the digital space an act of unfair competition, and to make the right to demand an injunction, etc. enforceable. Specifically, the act of “offering through a telecommunication line” a product that imitates the form of another’s product is also considered unfair competition, and was added to Article 2 (i) (3) of the Unfair Competition Law.
Article 2(1)(iii) of the Unfair Competition Law
The term unfair competition as used in this Act shall mean any goods that imitate the form of another person’s goods (excluding forms that are indispensable for ensuring the function of such goods) and the act of assigning, leasing, displaying for the purpose of assignment or lease, exporting, importing, or offering through a telecommunication line, goods that imitate the form of another person’s goods (excluding forms that are indispensable for ensuring the function of said goods).
Source/Editorial: 2023 Ministry of Economy, Trade and Industry, Intellectual Property Policy Office, Draft Policy for Revision of the Article-by-Article Explanation,
etc. Accompanying the Revision of the Unfair Competition Prevention Law
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(1) Acts of imitating and providing the form of a real product in a real space. In addition to the above, the following acts are now subject to dead copying
(2) Acts of imitating and providing the form of a real product in a digital space
(3) Acts of imitating and providing the form of a digital product in a real space
(4) Acts of imitating and providing a digital product form in a digital space
2. Strengthening protection of trade secrets and limited provision data [Non-Compete Law, Article 2, 7].
In services that share big data (limited provision data) such as 3D high-precision map data to other companies, it was previously assumed that big data shared with other companies was not subject to confidentiality control was subject to protection.
However, in recent years, there has been a corporate practice of providing big data to others even if it is under the company’s own confidential management, so the scope of protection has been expanded to include limited provision data, including cases where big data is under secret control.
Article 2(7) of the Non-Competition Law
Limited Provision Data means technical or business information (excluding trade secrets) that has been accumulated and managed in substantial quantities by electromagnetic means as information to be provided to a specific person as a business.
3. Introduction of a claim for compensation for an increase in the amount equivalent to the license fee
(1) Expansion of provisions for calculation of damages1 [Article 5 (i) of the Non-Competition Law
The amount of damages (lost profits) for trade secrets, etc. used to be difficult to prove in many cases where the causal relationship between the act of infringement and the damages was not clear so before the amendment, the burden of proof was reduced by estimating the amount of damages as quantity of infringing goods sold x profit per unit of the infringed (trade secret holder) in principle.
However, since claims for damages in excess of the infringer’s production and sales capacity were not allowed, in order to recover damages appropriately, the infringer was deemed to have licensed the excess amount to the infringer and a provision was added in accordance with the Patent Law, etc., which allows an increase in the amount of damages as an amount equivalent to the license fee. This allows an infringer and even a small or medium-sized company with limited production capacity to recover damages in excess of its production capacity in a suit for damages.
In addition, the scope of the new law, which was previously limited to transfer of goods has been expanded to provision of data or services due to digitalization.
(2) Expansion of provisions for calculation of damages2 [Article 5(iv) of the Non-Competition Law
It was possible for a person whose business profits were infringed by unfair competition to claim as damages an amount equivalent to the license fee for the use by the infringer, however,
(i) The infringer uses the trade secret, etc. without the permission of the infringed party, and the infringed party loses the opportunity to decide whether or not to grant the license.
(ii) Generally, the licensee is subject to various restrictions such as payment conditions of license fees, however, infringers have been committing infringement without any restrictions.
Details of the Amendment
The court found that the amount equivalent to the license fee should be increased by the amount of the license fee.
The court may consider the amount that would have been determined in the event of negotiations based on the assumption that there was unfair competition when determining the amount equivalent to the license fee.
In accordance with the provisions of Article 102(4) of the Patent Law, a provision was added to allow the court to consider the amount that would have been determined if it had been negotiated on the assumption that there was unfair competition.
4. Expansion of the presumption of use, etc. [Article 5-2 (2), (3) of the Noncompete Law
It was difficult for the plaintiff to prove whether the defendant (infringer) was actually using the trade secret (production method, etc.) that was illegally obtained from the plaintiff (trade secret holder).Therefore, if the defendant has wrongfully acquired a trade secret and is producing a product that can be produced by using that trade secret,a provision is established to presume that the defendant has used its trade secrets (Article 5-2(i) of the Noncompete Law).
However, the defendant to whom the presumption provision applies was limited to highly malicious persons such as industrial spies.
Details of the Amendment
Therefore, in light of open innovation and employment mobility, the presumption is applied (i.e., “the defendant has wrongfully acquired a ‘trade secret'”),
(i) those who originally had access (former employees) and (ii) those who acquired the trade secret without knowing the wrongful circumstances but learned of the circumstances after the fact,
the amendment was made to expand the scope of the presumption (Article 5-2(2) and (3) of the Noncompete Law) to include only cases where the defendant is deemed to be highly malicious.
5. Strengthening of jurisdiction over international trade secret infringement cases [Article 19-2, 19-3 of the Non-Competition Law].
In the past, when a trade secret of a company doing business in Japan was infringed, the infringement could be punished criminally (imprisonment and fines) even if the infringement was committed overseas (foreign criminal punishment).
On the other hand, in civil cases (injunction and damages), it was unclear in some cases whether the case could be tried in a Japanese court under Japanese law (Unfair Competition Prevention Law).
In other words, international jurisdiction is based on the “Code of Civil Procedure” and the governing law (the law applicable to the case) is the “Act on the General Rules for the Application of Laws,
The international jurisdiction depended on how the court determined “the place where the infringement occurred” based on the “Act on General Rules for the Application of Laws”.
Therefore, depending on the judgment, there was a possibility that the international jurisdiction and governing law would not be Japan or Japanese law.
Details of Amendment
A provision has been established to clarify that a civil action may be brought in a Japanese court under the Japanese Unfair Competition Prevention Law (Article 19-2 of the Unfair Competition Law).
However, if the trade secret in question is exclusively used for business purposes outside Japan,
The court will make a decision based on the “Code of Civil Procedure” and the “Act on General Rules for Application of Laws” (proviso to Article 19-3 of the Noncompetition Law).
6. Strengthening and Expansion of Penalties for Bribery of Foreign Public Officials [Article 18 (1), Article 21 (4) (10) (11), Article 22 (1) (1) of the Non-Compete Law].
In order to accurately implement the OECD Convention against Bribery of Foreign Public Officials at a higher level, the statutory penalties for natural persons and legal entities were increased, and the amendment also made the act of sole overseas bribery by a foreign employee of a Japanese company (regardless of the employee’s nationality) punishable (the double penalty provision also expands the scope of punishment to include legal entities).
(1) Increased statutory penalties for natural persons and juridical persons [Article 21(iv), Article 22(i)(1) of the Noncompete Law
Natural person: Fine not exceeding 30 million yen and imprisonment not exceeding 10 years.
Corporations: Increased to a fine of up to 1 billion yen.
The statute of limitations for filing an appeal will be 7 years instead of 5 years.Since the imprisonment penalty was raised from 5 years to 10 years, the applicable article of the Code of Criminal Procedure was also changed from Article 250 (2) (5) to Article 250 (2) (4), andas a result, the statute of limitations for appeal has also been changed.
(2) Expansion of Punishments for Independent Overseas Bribery by Employees of Japanese Companies [Article 21, Paragraph (11) of the Non-Compete Law
Previously, only Japanese employees were subject to this law, but it is now possible to punish employees of foreign nationality.
7. Revision of the provisions for penalties
The Unfair Competition Prevention Law has been revised to clarify the penalties depending on whether or not a juridical person is subject to both types of penalties, and to clarify the timing of acts that fall under the requirements for constituting the penalties.