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E-commerce and Trademark Rights in Japan

1. Trend in Japan
2. Classification of e-commerce related marks
3. E-commerce and appearance of trademarks
4. Domain names and trademark registration
5. Countries in which trademark registration should be sought for e-commerce related trademarks

1. Trend in Japan

In Japan, the number of patent application directed to business model patents (what is called as "business method patent" in the U.S.) has been growing rapidly. According to statistics provided by the Japanese Patent Office, the number of patent application for business methods in the year of 2000 was more than 15,000, which is up from 2,400 cases in 1998, and 3,150 in 1999. With the rapid growth of internet related businesses, in addition to internet related companies, financial, insurance, and service companies, have rushed to file business method patent applications.

This trend has affected trademark applications in Japan as well. In particular, the influence is apparent in the field of service mark applications (International Classes 35 to 42). Table 1 shows changes in the number of trademark applications in class (35 to 42) in the period between April 1, 1992 and December 31, 1999. Note that April 1, 1992 is the very first day when service mark applications were accepted by the Japanese Patent Office. Many of applications were filed in 1992, due to the special exemption granted to applications filed within six months from April 1, 1992. After 1993, the number of trademark application increased at the rate of 3,000 cases to 4,000 cases per year. In 1999, 10,000 cases more than the previous year were filed. Although the statistics for the year 2000 are not yet available, it is said that the number will increase by more than 150 percent from the previous year.

Table 1

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2. Classification of e-commerce related marks

Since a wide range of goods and services are provided through the internet, one should be careful in designating proper classes (often more than one class) in the application. Table 2 shows relevant classes, examples of acceptable goods or services descriptions in each class, and examples of trademark registrations in each class.

Japan has used the International Classification since April 1, 1992. Thus, classification in Japan is generally similar to but not the same as that of other countries that have adopted the International Classification. For example, the services of "providing information" are classified according to the content of the provided information in Japan. Further, unlike in the U.S., retail services (International Class 35) are not allowed. For those who provide retail services in Japan, it is necessary to obtain registrations for each class to which the goods being sold belong.

As to the description of goods and services in the application, it is useful to review the acceptable identification of goods and services listed in the JPO's IPDL database at its web site. However, the English version of the database has not yet been completed. Therefore, it is recommended that Japanese patent attorneys be contacted for appropriate descriptions of goods and services.

Since the number of service mark applications has been rapidly growing, it is strongly recommended that trademark searches be conducted before filing the application or using the mark in Japan.

Recently, amendments to the Japanese patent and trademark laws have been scheduled with the aim of protecting software traded via internet. The main purpose of the scheduled amendments is to clarify infringing acts for patents relating to software available on the internet and to include "computer software that is downloadable on the internet" as protectable subject matter for trademark registration. The proposed amendments will be submitted to an ordinary session of the Diet in the year 2002 (source: NIHON KEIZAI SHINBUN, April 14, 2001).

Table 2

Class	Designated goods/services	Example of filed applications or registrations
9	Electrical communication apparatus and instruments (computer programs and software)
16	Manuals relating to computer software
35	Providing information relating to e-commerce; Advertising via internet homepages; management of auctions on the internet or other auctions; providing advice on sales of products
36	Providing information relating to stock prices, financial market, foreign exchange market, and other financial information
37	Repair and maintenance of computers
38	Telecommunication via computer terminals; providing connection to telecommunication network via provider's computer terminals
39	Providing information relating to travel (excluding that relates to accommodation)
41	Providing information relating to entertainment such as cinemas, television programs, vide/TV games; providing amusement facilities such as game centers, slot machine playing facilities, billiard rooms, amusement parks
42	Computer programming,/maintenance of computer software; rental of computer programs; design, preparing, maintenance, improvement of web site; providing information relating to accommodation facilities; providing information relating to restaurant,, bar, cafeteria; providing information relating to weather; providing information relating to maps

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3. E-commerce and appearance of trademarks

The rapid growth of e-commerce greatly affects the appearance of trademarks as well. For example, as shown in table 3, marks consisting solely of URL, domain names, such as "-.com"," -.co.jp", or marks having alphabetical letters or code that is related to internet related business, such as "i", "e", "@" and "net", have been applied for and registered.

Table 3

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4. Domain names and trademark registration

One may have doubts about advantages of obtaining trademark registration for URLs or domain names that are addresses on the Internet. Certainly, in Japan, there is possibility that another person's use of a registered mark merely as a URL may not be regarded as use of a registered trademark, and thus, the registrant may not be able to exclude such use. However, such a trademark is meaningful considering the possibility that a registered mark may be used to advertise goods or services on the internet not only by the trademark owner but also third parties.

There is a court decision relevant to this point (TOYAMA district court, H10-323 (appealed before NAGOYA high court, "JACCS" case). This case will be discussed later in this paper as the first court decision relating to domain names in Japan. The main issue of this case is whether a domain name is regarded as an "indication of products and the like" as prescribed in the Unfair Competition Prevention Law (UCPL) Art. 2-1-1 and 2-1-2. The decision held that the domain name, together with the indication of "JACCS" in the web site, functions as a source indicator of the goods shown in the web site, and therefore, the domain name falls under the "indication of goods, etc". The court issued an injunction preventing the defendant from using the domain name "http://www.jaccs.co.jp" and the use of "JACCS" on its web site.

Based on this decision, domain names can function as a source indicator of goods or services depending on how they are used. In other words, domain names, in a sense, have the same function as trademarks. Thus, it is reasonable to say that obtaining a trademark registration for a domain name is meaningful to protect the trademark aspect of the domain name use.

Of course, if the above court decision is interpreted to the contrary, there is possibility that a trademark or the UCPL cannot be used to prevent the use of a domain name merely as an URL indication. Although amendments to the UCPL are scheduled, which will be discussed later, under the present situation, where prevention of unfair domain name registration by solid legal means is somewhat uncertain, trademark registration should be considered a reliable self-defense measure.

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5. Countries in which trademark registration should be sought for e-commerce related trademarks

In e-commerce, there is possibility that goods or services may go beyond national borders. If infringement of a business method patents occurs in connection with goods or services provided beyond a national border, the situation is expected to be complicated in view of the possible problems relating to jurisdiction and applicable laws. Therefore, if such problems can be foreseen, one should file trademark applications in relevant countries.

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