Injunction request based on trademark rights held to constitute abuse of rights

Japan

In Oak Co Ltd v The Japan Kanji Aptitude Test Association (Year 2011 (Wa) Case 3460, January 17 2013), the Osaka District Court has held that the act by the plaintiff of seeking an injunction against the defendant’s use of two trademarks constituted an abuse of rights.

The two trademarks at issue were:  

Trademark 1

(meaning 'The Japan Kanji Aptitude Test Association' in Japanese)

Registration No

3074190

International Class

41

Designated services

Testing services relating to the reading, writing, use and other knowledge of kanji characters

 

Trademark 2

(abbreviated form of 'Kanji Aptitude Test' in Japanese)

Registration No

3102731

International Class

41

Designated services

Educational and instructional services relating to arts, crafts, sports or general knowledge

Kanji characters are ideograms that were imported from China.

At issue in this case was whether the plaintiff’s act of seeking an injunction against the defendant’s use of the abovementioned trademarks based on the abovementioned trademark rights constituted an abuse of rights (the plaintiff also sought an injunction against the defendant’s use of another registered trademark, but this has been omitted from the article for the sake of simplification).

The court made the following factual findings:

  • In 1975 the plaintiff started to run a kanji certification test under the same name as Trademark 2. A team using the same name as Trademark 1 was established within the plaintiff’s organisation.
  • In June 1992 the defendant was established as an incorporated foundation. P (the representative director of the plaintiff) became the chairman of the defendant. The defendant succeeded to the kanji aptitude test business of the plaintiff.
  • In September 1992 the plaintiff filed an application for registration of the abovementioned trademarks without obtaining the consent of the defendant’s executive board.
  • In 1995 the trademarks were registered in the name of the plaintiff. The plaintiff granted to the defendant the exclusive right to use the trademarks at no charge.
  • In 2002 the annual examinees sitting for the Japan Kanji Aptitude Test exceeded 2 million.
  • In April 2009 the fact that the defendant was engaging in transactions involving conflicts of interest with the plaintiff and others was called into question, and P resigned from his position as the defendant’s chairman.
  • In June 2009 the defendant requested that the plaintiff assign to it all the trademarks relating to the defendant’s business (including the trademarks at issue) for approximately Y13.5 million, and notified the plaintiff that it would file an action for the invalidation of the trademarks if its request was refused. The plaintiff refused the request.
  • In August 2009 the defendant filed a civil lawsuit against P and the plaintiff, seeking damages in the amount of Y2.7 billion as a result of past transactions involving conflicts of interest.
  • In November 2009 the plaintiff transferred the trademarks at issue, as well as nine other trademarks relating to the defendant’s business, to three individuals who had no connection with the defendant (ownership of these trademark rights was subsequently returned to the plaintiff).
  • In March 2010 the defendant filed an action for the invalidation of the trademarks before the Japan Patent Office.
  • In January 2011 the plaintiff notified the defendant that it should discontinue its use of the trademarks, based on the fact that the defendant had filed a trial for the invalidation of the marks.
  • In March 2011 the plaintiff filed the present lawsuit against the defendant.

The Osaka District Court held that the plaintiff’s act of seeking an injunction against the defendant’s use of the trademarks based on its rights in the trademarks constituted an abuse of rights and was thus not permitted. 

In particular, the court found that the defendant owned the rights in the trademarks: Trademark 1 corresponds to the name of the defendant and Trademark 2 is an abbreviation of Trademark 1. Both trademarks represent the services that are provided by the defendant, so the defendant should have filed applications for registration of both of these trademarks.

The plaintiff’s continued ownership of the rights in the trademarks in the face of the situation described above meant that there was a risk that the plaintiff, a private business, could destabilise the business of the defendant, which was established as a public interest corporation.

Even after the plaintiff transferred the Japan Kanji Aptitude Test business to the defendant, the plaintiff’s continued ownership of the rights in the trademarks was not illegal because it was understood that the plaintiff would grant an exclusive licence to the defendant.

The court further found that, from the time of their registration up to the present date, the trademarks had been used to represent the Japan Kanji Aptitude Test business, which is the defendant’s core business. This had become widely and generally recognised in conjunction with the increase in the number of examinees. 

The plaintiff had transferred the rights in the trademarks to third parties who had no connection with the defendant, asked the defendant to discontinue its use of the marks, and finally filed this lawsuit seeking an injunction against the defendant’s use of the trademarks. This showed the risk that resulted from the plaintiff’s ownership of the rights in the trademarks, as the plaintiff had lost the basis under which its ownership of the rights in the trademarks was permitted. By filing this lawsuit, the plaintiff took advantage of the fact that it owned the rights in the trademarks, and sought to counter the claim for damages filed by the defendant. Therefore, the lawsuit was filed for the purpose of protecting rights and interests that are far removed from those that the trademark system is intended to protect. 

The plaintiff’s claim in this lawsuit seeks only to jeopardise the continuation of the business of the defendant, which should be the owner of the trademarks. Moreover, the lawsuit has no connection with the original function of trademarks, and uses trademark rights as a countermeasure against the defendant's claim for damages. Therefore, the lawsuit is not legitimate and constitutes an abuse of rights. Accordingly, the court held that the plaintiff could not seek an injunction against the defendant’s use of the trademarks based on the plaintiff's rights in the trademarks.

Shigeru Miki, Squire Sanders Miki Yoshida Gaikokuho Kyodo Jigyo Horitsu Tokkyo Jimusho, Tokyo

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