This is a remarkable case regarding cross-border trademark infringement. The issue was whether the postingd by a Malaysian sushi restaurant “Sushi Zanmai” (defendant’s indication) on a website which contents was written in Japanese constitutes trademark infringement in Japan. The plaintiff (trademark owner of a similar trademark registration to “Sushi Zanmai”) in the first instance is Kiyomura Co., Ltd., which provides sushi restaurants “Sushizanmai” which are well known in Japan. The first instance (Tokyo District Court) found that the defendant’s (Daisho Japan) use of their indication on its Japanese website constitutes trademark infringement.

On the other hand, the second instance (Intellectual Property High Court, referred to as “IP High Court” hereafter) denied trademark infringement since the use of the defendant’s indication does not fall under the definition of “use as a trademark” under the Trademark Law and referred to territorialism and the WIPO Joint Recommendation (Recommendation Concerning The Protection of Marks, and Other Industrial Property Rights in Signs, On The Internet). For more details, please see the following.

Judgment of the first instance (Tokyo District Court, Reiwa 3rd year (Wa) No. 11358)

The act of posting defendant’s indication “Sushi Zanmai” on the Japanese website of the Malaysian sushi restaurant is “use of the trademark” (Article 2, Paragraph 3, Item 8 of the Trademark Law) because it impairs the origin indication function and quality assurance function of the plaintiff’s trademark in Japan. The Court granted a claim for injunction and damages due to trademark infringement, and calculated the amount of damages taking into account the average trademark royalty rate of 3.8% and various circumstances related to the provision of food and beverages.

Judgment of the second instance (Intellectual Property High Court Reiwa 6 (Ne) No. 10031)

Should the act of posting defendant’s indication “Sushi Zanmai” on the Japanese website be recognized as “use of trademark” (Article 2, Paragraph 3, Item 8 of the Trademark Law)? – The judgment was negative:

• Whether or not the website is recognized as an advertisement for the services of a sushi restaurant is not determined simply by whether the logo was used, but it should be determined by taking the manner of use of the indication and content of the entire website into consideration.
• According to the IP high court, the defendant’s indication was only used to introduce the defendant’s business on the website, and was not used for advertising purposes to consumers in Japan, and there is no evidence that its commercial effect on Japanese market is actually occurring.

Does the defendant’s conduct constitute trademark infringement? – The judgment was negative:

• The defendant’s indication is not used for the services which are provided in Japan.
• Even if some consumers in Japan can be misled as to the source of the services provided under the defendant’s indication, the result of the misleadingness occurs only outside Japan (beyond the scope of Japan’s trademark rights), so the origin indication function of the trademark right is not infringed (because of territorialism).
• Further, according to the WIPO joint recommendations, the use of signs on the Internet constitutes use in a Member State only if it has a commercial effect in that Member State (Article 2).
• Considering the fact that the services are not provided in Japan by defendant, this website is only for advertising the “food exports services from Japan” and for introducing “restaurant chains that use ingredients overseas imported by defendant”. Therefore, even if the website’s contents were written in Japanese, it does not constitute trademark infringement.

Comments (Takeaways and significance of the case)

This is a very important ruling on cross-border trademark infringement in Japan.

The Tokyo District Court found that the defendant’s indication was used with an explanation “Rolling Sushi which is affordable and can be enjoyed by a wide range of customers. It is gaining popularity with carefully selected ingredients and a wide variety of menus.”, and stated the defendant’s indication is used for advertising purpose and hence, it infringes on trademark right of the Plaintiff.

On the other hand, the IP High Court carefully examined the entire content of the website on which the defendant’s indication was posted, to determine the manner of use of the trademark and the composition and content of the entire website, including the part where the defendant’s indication was used, and as a result, it was judged that the defendant’s indication was only used to introduce the defendant’s business on the website, and was not used for advertising purposes to consumers in Japan. Furthermore, since the defendant did not provide any services in Japan using the defendant’s indication, the court determined that trademark infringement could not be established on the grounds that the commercial effect of posting the defendant’s indication did not occur in Japan based on the territorial principle and the WIPO joint recommendation.

In conclusion, from this IP High Court judgement, in order to establish cross-border trademark infringement, the following should be considered.

• It should be proved that a mark identical or similar to the registered trademark is being used as a trademark for services identical or similar to the designated goods or services.
• It should be proved that such use has a commercial effect in Japan (the suspect is providing goods and services using the mark in Japan).

This IP High Court decision is not surprising, as it conforms to the principle of “territorialism” and the WIPO joint recommendation (2001). Therefore, this judgement provides a landmark guideline for future cases regarding cross-border trademark use. In this decision, the IP High Court denied protection under the Unfair Competition Prevention Act since the use of the defendant’s indication did not fulfil the requirements under the Law.

We will continue to monitor how the Courts regulate cross-border freeriding acts on well-known trademarks in future case.