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Anti-counterfeiting

2014

JapanContributing firm Kyowa Patent & Law Office

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Japan

Contributing firmKyowa Patent & Law Office

AuthorsMasashi Kurose and Manabu Miyajima

Legal frameworkIntellectual property features increasingly prominently on the Japanese government’s agenda to strengthen the country’s industrial competitiveness. This stance was mirrored in the establishment of the Council for Intellectual Property Strategy (CIPS) under the chairmanship of the prime minister in 2002. The CIPS was created to enhance the protection of IP rights, in cooperation with relevant government agencies. In 2004 the CIPS announced the Intellectual Property Strategic Programme, which consists of approximately 30 important initiatives, including six directly addressing the issue of counterfeit goods, showing a clear and strong determination to resolve this problem.

Due to the strength of the Japanese yen, with the exception of software piracy, the majority of counterfeit goods in Japan are imports. In an attempt to prevent counterfeit goods from entering Japan, the Japanese

Customs Office has strengthened the applicable border measures. Customs now seizes not only goods that infringe trademarks, but also products that infringe any other IP rights or constitute unfair competition under the Unfair Competition Prevention Act. In this context, the following statutes govern anti-counterfeiting in Japan: • the Patent Act; • the Utility Model Act;• the Design Act;• the Trademark Act;• the Copyright Act;• the Seeds and Seedlings Act;• the Unfair Competition Prevention Act;• the Customs Act;• the Penal Code;• the Civil Code; and• the Limitation of Liability for Damages

of Specified Telecommunications Service Providers and the Right to Demand Disclosure of Senders’ Identification Information Act.

Border measuresThe Customs Act has been revised and the

system of import injunctions has been strengthened in order to tackle counterfeiting. Under the existing law, the owners of trademark rights, copyrights, neighbouring rights, patent rights, utility model rights, design rights and plant breeders’ rights are entitled to seek import or export injunctions through Customs. Moreover, issues of unfair competition relating to famous indications of goods and the configuration of goods can now also be targeted by injunctions.

Requesting import or export injunctionThe import and export injunction system at Customs is an effective way to stop goods that infringe IP rights at the border. When requesting an injunction based on an IP right, an applicant must make a prima facie showing of the fact of its IP rights infringement. In practice, an applicant usually has meetings with customs officers before filing an application for injunction in order that may explain that the goods that are subject to injunction infringe its IP rights, and that there is a concrete possibility that such infringing goods may be imported. When there is a possibility that imports of such goods constitute parallel imports, Customs often requires the applicant to provide information on the manufacture and sale of genuine goods outside Japan, and the differences between infringing goods and genuine goods, in order to prevent the mistaken seizure of genuine goods. The review of import and export injunction applications by customs officers was traditionally strict, in both substantive and procedural respects. However, some practitioners feel that in recent times, Customs’ review of such applications has become less stringent in practice, although there has been

no change in the relevant laws or regulations. Additionally, it is recommended that applicants provide information on possible importers and/or exporters of infringing goods that are subject to injunction, if identifiable, as Customs cannot open all containers or packages for inspection and thus such information will help Customs to detect infringing goods.

The applicant can request an injunction term of up to two years. Three months before the expiration of the term, the applicant can request renewal of the injunction period. At the time of renewal, if the circumstances of the case have not changed, new documentation need not be filed.

Customs examination proceduresCustoms may suspend the import or export of infringing IP goods ex officio. When Customs considers that certain goods infringe IP rights, the release of such goods is suspended and the rights holder and importer are notified in order to undertake identification procedures. They are also informed in writing of the name and address of the other party, and the name and quantity of the goods suspected of infringement.

If the application for suspension of import is based on a trademark right or copyright and the importer fails to submit a counterstatement within 10 days, Customs will suspend release of the suspected goods without requesting the rights holder to submit its opinion or further evidence. This simplified identification procedure was introduced in 2007.

Customs officers are trained in IP law and have the authority to judge themselves whether the suspended goods infringe IP rights. If the suspended goods are found to be infringing, Customs can destroy or confiscate them on its own initiative.

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Consulting with the police and urging them to initiate investigations can be a powerful option, especially in cases involving socially harmful forces or anonymous infringers whose identity cannot be ascertained through private investigations

Goods in transitAccording to the Customs Act, the transit or transshipment of counterfeit goods is treated as an infringement of IP rights. When counterfeits are transshipped within Japanese territorial waters, the transshipment constitutes a crime of transit. In addition, even if the counterfeit goods are not unloaded, when a ship carrying counterfeit goods is alongside a Japanese pier, the counterfeit goods may be seized by a customs officer. There are no free trade zones or free trade warehouses in Japan.

Dealing with counterfeit goods imported by an individualMore recently, counterfeit goods have been imported in small packages, containing small amounts of goods through international postal or courier services.

In 2012 Customs seized counterfeit goods in 26,607 cases; of these, 93.4% were private imports. When counterfeit goods are imported via international post, the consignee is usually an individual. According to the Trademark Act, when goods are imported “for private use”, even if they are counterfeit, the import itself is not deemed to infringe trademark rights.

Customs has introduced a practical way to prevent infringing goods from being disguised as private imports. Customs substations are in place at all post offices that handle international packages, and customs officers perform inspections inside post offices. If a suspicious package is discovered, a customs official sends a postcard to the addressee requesting him or her to explain the package’s content. The recipient must provide the requested documents within one month of receipt of the postcard; if he or she fails to do so, the package will usually be returned to the sender. This practice works effectively because almost all recipients do not respond to such inquiries in practice.

When customs officials find counterfeit goods in a traveller’s private luggage at an airport, they will question whether the items are being carried commercially. Even if the items in question have been purchased for private use, the officials will explain the importance of respecting IP rights and ask the owner to dispose of the counterfeit goods voluntarily at Customs.

Criminal prosecutionIn order to prevent counterfeit goods from being sold on the domestic market, the National Police Agency has reinforced its anti-counterfeiting team. As a result, arrests of sellers of infringing goods have increased.

In Japan, the infringement of an IP right constitutes a criminal offence.

Although the police may initiate a criminal investigation involving counterfeit goods on their own initiative, an investigation typically starts when the rights holder brings a case to the police. Consulting with the police and urging them to initiate investigations can be a powerful option, especially in cases involving socially harmful forces or anonymous infringers whose identity cannot be ascertained through private investigations.

However, the criminal intent of the alleged infringer must be established in order to prosecute the infringement. There can be problems proving criminal intent in cases of infringement of relatively minor trademarks. Additionally, it is at the police’s discretion whether and when to initiate investigations. Since the police have limited resources and must also investigate more serious cases (eg, murders), criminal investigations might not be conducted in a timely manner.

Therefore, in many cases, civil enforcement should be considered as the first option for effective countermeasures against counterfeits.

Civil enforcementA rights holder may take legal action against alleged infringers to seek civil remedies, such as permanent injunction, destruction of the counterfeit goods and compensatory damages. The rights holder may also file a preliminary injunction seeking suspension of the alleged infringing goods. However, the courts treat procedures in preliminary injunction cases similarly to those in ordinary civil lawsuits, while procedures in preliminary injunction cases are speedier than those in ordinary civil lawsuits. Typically, it may take between five and seven months for a preliminary injunction to be granted in trademark cases.

Since counterfeiting activities are usually on a small scale and thus it is not cost effective to initiate civil actions before the courts, it is customary practice for rights holders to send a

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cease-and-desist letter to the alleged infringer requesting cessation of the infringement. Although it is difficult to collect damages from infringers through out-of-court negotiations in counterfeit cases, sending a cease-and-desist letter is a relatively effective way to stop infringement in Japan – probably because in many cases infringers are ordinary individuals or small shops which are trying to generate extra revenue and thus usually will not risk involvement in lengthy and costly legal actions or criminal charges.

Anti-counterfeiting onlineRecently, attention has been focused on counterfeit goods sold on the Internet, and particularly through internet auctions. Working out how to deal with online sales of counterfeits is a hot topic for Japanese IP professionals.

Requesting disclosure of seller’s informationA rights holder whose rights have been infringed through the online sale of counterfeit goods may request the internet service provider (ISP) to disclose the seller’s identification information.

In order to obtain disclosure of the seller’s information, it must be established that:• the rights of the party requesting disclosure

have been infringed by distribution of the infringing products;

• the seller’s identification information is necessary in order for the party requesting such disclosure to exercise its right to claim damages; and

• there are justifiable grounds for the party to receive the disclosed identification information.

If the ISP refuses to disclose the information without reasonable grounds, the rights holder can sue the ISP in court. The court may then order the ISP to disclose the information to the rights holder.

Requesting removal of illegal online contentA rights holder may also request that an ISP remove an online platform through which counterfeit goods are sold. For the removal request to be granted, it must be established that: • there is evidence that the goods shown

on the website infringe the rights of the requester; and

• the seller has failed to reply within seven working days of receiving notice to remove the infringing goods.

‘Japanese model’In Japan, cooperation between online auctioneers and rights holders is well established and the removal of counterfeit goods from auction sites has been carried out effectively. Such cooperation is known as the ‘Japanese model’, which has succeeded in dealing with the problem of counterfeiting via auction sites. In 2008 a group of internet auctioneers and rights holders established the Guideline for Prevention of Distribution of Counterfeits Goods via the Internet and started cooperative measures to intensify enforcement actions against counterfeit goods in internet auctions.

According to the guideline, auctioneers will remove counterfeit goods from their auction sites under the following conditions:• The internet auctioneer finds counterfeit

goods on its auction site; or• A rights holder submits a complaint with

evidence that the goods on the site are counterfeit.

Some auctioneers take a further step. For example, Yahoo! JAPAN launched a special programme to protect IP rights on its auction site. Companies which join this programme can send a request to remove alleged infringing goods from the Yahoo! auction site to a special email address exclusively used for this programme. When a request is made through this programme, alleged infringing goods that are subject to a request are removed in a short timeframe (eg, within a few hours). However, in order to join this programme, a company must pass a screening process conducted by Yahoo! JAPAN, in order to establish that it is credible and trustworthy. According to the members’ list published by Yahoo! JAPAN, many famous Japanese and foreign companies in the content, media, manufacturing, toy, publishing, entertainment and food industries have joined this programme.

Additionally, the major Japanese internet auctioneers voluntarily monitor their own auction sites and remove any counterfeit goods.

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Court decisionThe IP High Court rendered a landmark decision on February 14 2012, regarding the liability of a company running an online shopping mall when a store within that mall dealt with counterfeit goods. The court in Perfetti Van Melle SpA v Rakuten KK (Rakuten is one of the most famous online shopping malls in Japan) held that a trademark owner may seek an injunction and damages on the grounds of trademark infringement directly from an online shopping mall if the online mall:• manages and controls online stores in the

mall by means such as: providing the online stores with

operating systems; permitting or rejecting applications for

opening a store in the mall; temporarily suspending the provision of

services in the mall; and/or terminating stores in the mall;

• obtains profits from online stores in the mall by receiving payments such as basic charges and/or a usage fee for the online mall’s system; and

• does not delete infringing content within a reasonable period, despite the fact that it knew or reasonably could have known of trademark infringement by an online store in the mall.

In this case, since Rakuten had removed infringing goods from its mall within one to eight days of receipt of a cease-and-desist letter from the trademark owner’s attorneys or a complaint from the court, the court rejected the trademark owner’s claim.

This is the first published court decision in Japan to hold that an online shopping mall might be liable for trademark infringement by an online store within the mall. Although the ruling is controversial and it is unclear how it will be applied to other cases, this decision should encourage trademark owners in the fight against online infringement.

Preventive measures/strategiesRegistering IP rights in Japan, including with the Customs Office, and monitoring infringements in the marketplace and websites are the most common preventative strategies.

Programmes to educate consumers about

the purchase of counterfeit goods are also being implemented. With respect to general consumers, the Anti-counterfeiting Association is conducting campaigns to tackle counterfeit goods and holding symposia to raise awareness of the problems posed by counterfeit goods. Such educational programmes are considered vitally important to the fight against counterfeiting.

In order to facilitate cooperation and effective action in dealing with foreign counterfeiting issues, in 2003 Japanese companies organised the International Intellectual Property Protection Forum (IIPPF). This organisation was formed through the collaboration of many Japanese companies and organisations (eg, the Intellectual Property Association and the Automotive Industry Group). The IIPPF, in cooperation with the Japanese government, sends a mission to China every year for a conference with Chinese government officials with respect to the problem of counterfeit goods. The countermeasures against counterfeiting that companies previously undertook individually can now be undertaken as part of concerted action between many Japanese companies, and can thus contribute towards a stronger effort to fight counterfeiting. WTR

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Contributor profilesKyowa Patent & Law Office

Kyowa Patent & Law OfficeNippon Life Marunouchi Building,Marunouchi 1-6-6 Chiyoda-ku,Tokyo 100-0005, JapanTel +81 3 3211 2321Fax +81 3 3211 1710Web www.kyowapatent.co.jp

Masashi KurosePatent attorneykurose-m34@ kyowapatent.co.jp

Masashi Kurose graduated from the Department of Production and Mechanical Engineering at the Kyoto Institute of Technology in 1970. After working for a machine manufacturer, he joined Kyowa Patent and Law Office and registered as a patent attorney in 1977. He obtained an MBA from Hitotsubashi University in 2002. He is an international counsellor of the Asian Patent Attorneys Association, a board member of the Licensing Executives Society Japan, a planning committee member for the International Intellectual Property Protection Forum and a visiting professor of the IP master’s programme at the Specialist Graduate School, Tokyo University of Science. Mr Kurose possesses vast experience of IP dispute settlements in Asia.

Manabu MiyajimaAttorney at lawmiyajima-manabu@kyowapatent.co.jp

Manabu Miyajima graduated from the Department of Engineering at the University of Tokyo in 1997. He was admitted to the bar and registered as a patent attorney in 2001. He received his LLM in trade regulation from New York University School of Law (Fulbright scholar) in 2008 and was admitted to the bar in California in 2009. Since he joined Kyowa Patent and Law Office in 2001, he has handled numerous IP infringement lawsuits, administrative lawsuits against trial decisions of the Japan Patent Office, negotiations to settle IP disputes, arbitration, licensing, and infringement and validity searches. He has considerable experience in dispute resolution in patent, design, trademark, copyright and unfair competition cases.