IP High Court confirms cancellation of mark for unfair use

The IP High Court has affirmed a Japan Patent Office (JPO) trial decision that admitted a cancellation action for unfair use against the registration for the mark MULTIPROGREENS/MULTIPROGREEN (in Japanese 'Katakana') for the designated goods "processed food in the form of powder with main components of wheat, barley, oats, spirulina, chlorella, pollen, Japanese green tea, seaweed, seeds and bulbs, spinach, Korean ginseng, alfalfa, etc" in Class 30 of the Nice Classification.

The court ruled that the use by the trademark owner of Mark 1, which was similar to the cited trademarks PROGREEN in English and Japanese with respect to the designated goods, was intentional and caused confusion with the goods handled by the petitioner.

Mark 1

Therefore, the mark should be cancelled under Article 51(1) of the Trademark Law (127/1959, as amended). Article 51(1) provides as follows:

"Where the owner of the trademark right intentionally uses a trademark similar to the registered trademark in respect of the designated goods or designated services, or intentionally uses the registered trademark or similar trademark in respect of goods or services similar to the designated goods or designated services in a way that may be misleading as to the quality of the goods or services or which may cause confusion with goods or services connected with any other person's business, any person may demand a trial for the cancellation of the trademark registration."

Plaintiff Kabushiki Kaisha M N Japan filed a trademark application with the JPO for the words 'MultiProGreens' above the words 'MultiProGreen' (in Japanese 'Katakana') (Mark 2), for the designated goods "processed food in the form of powder with the main components of wheat, barley, oats, spirulina, chlorella, pollen, Japanese green tea, seaweed, seeds and bulbs, spinach, Korean ginseng, alfalfa, etc" in Class 30 on December 8 1995, which matured to registration on December 12 1997 with Registration 4091664.

Mark 2

Defendant Nippon Yakuhin Kaihatsu Kabushiki Kaisha filed a trademark application with the JPO for the word 'Progreen' (in Japanese Katakana) and the word 'Progreen' (in English) for the designated goods "processed food, processed vegetables and fruits, frozen vegetables and fruits in the form of powder, capsule, granular, liquid, granule with main components of green leaves of wheat, barley and oats" in Class 29 on June 3 2005, which matured to registration on February 3 2006 with Registrations 4925351 and 4925352 (Marks 3 and 4).

Marks 3 and 4

The defendant alleged that Mark 1, used by the plaintiff with respect to the designated goods, was causing confusion with the goods handled by the defendant bearing Marks 3 and 4, and demanded a trial for cancellation of Mark 2 under Article 51(1) of the Trademark Law on June 27 2011.

On April 17 2012 the JPO issued a trial decision that admitted the defendant's demand for a trial hearing and cancelled the trademark registration of Mark 2.

The reasoning of the JPO trial decision was as follows:

• Article 51(1) of the Trademark Law makes it a violation of the obligation of fair use of the trademark assumed by the mark owner to use a trademark similar to a registered trademark that intentionally causes confusion with the quality of the goods or services, or with the goods or services handled by others, by exceeding the scope of the exclusive right given to the registered trademark in connection with the designated goods. Such use is considered not only to infringe the right and interests of others, but also to be detrimental to the general public. Therefore, a penalty is imposed against a mark owner that makes such unfair use of the trademark exceeding the scope of the registered trademark and the rights and interests of others. The benefit of the general public is protected by giving every person the right to challenge the registered trademark by trial.



• In connection with the comparison between Mark 2 and Mark 1, both marks were considered to be similar in terms of pronunciation, as they both produce the same pronunciation of 'multi progreens'. As Mark 1 was thus similar to Mark 2, the use of Mark 1 should be considered to infringe on the scope of the exclusive right of Mark 2. Further, the JPO trial decision admitted that the mark owner had been using Mark 1 in a similar way to Mark 2 in connection with the designated goods in April 2007 or November 2008.



• In connection with the familiarity of Marks 3 and 4, it was admitted that they were widely recognised among consumers in the health food industry as indicating the petitioner's products in April 2007 or November 2008 when the use of Mark 1 by the trademark owner was admitted.



• In connection with the comparison between Mark 1 and Marks 3 and 4, Mark 1 produced the sound 'progreens' and Marks 3 and 4 produced the sound 'progreen'; thus, they were similar in terms of pronunciation. Mark 1 was similar to Mark 3 in terms of appearance, but Mark 1 was not similar to Mark 4 in terms of appearance. Marks 1, 3 and 4 were all coined words and thus could not be compared in terms of meaning.



• In connection with the comparison between the goods for which Mark 1 was used and the goods of the petitioner, they both belonged to the category of health food. In view of these facts, the health food bearing Mark 1 reminded consumers of the petitioner's products bearing well-known Marks 3 and 4, as the word 'ProGreens' was emphasised. Thus, there was a likelihood of confusion and misunderstanding as to the source of origin of the goods.



• Regarding the intention of the trademark owner, it was reasonably assumed that the trademark owner had been using Mark 1 in connection with health food in the knowledge that it might cause confusion as to the source of origin with the petitioner's products bearing Marks 3 and 4. In addition, after it received the notification from the petitioner on April 13 2007, the mark owner used Mark 1 for its health food and continued to sell such food over the Internet. Such act by the trademark owner was considered to be intentional.

The JPO therefore held that the mark owner's intentional use of Mark 1, similar to Mark 2, in connection with the designated goods caused confusion with the goods handled by the petitioner. Thus, the registration of Mark 2 should be cancelled under Article 51(1) of the Trademark Law.

The plaintiff appealed to the IP High Court, which affirmed the JPO trial decision.

The reasoning of the IP High Court was as follows:

• Article 51(1) of the Trademark Law has the purpose of preventing a situation where the interests of the general public are hampered by the unfair use of a trademark. Imposing a penalty on a trademark owner in such situation has the function of protecting consumers.



• In view of this purpose of Article 51(1), in order to comply with the requirement that "the use of the trademark is causing confusion with the goods or services of other's business", it was necessary to admit the existence of a concrete likelihood of confusion between the use of Mark 1 and the goods of the other party. The existence of the likelihood of confusion had to be collectively determined in view of:
  • the extent of the similarity between the trademark used by the trademark owner and the other party's trademark;
  • the existence or extent of the wide familiarity and uniqueness of the other party's trademark;
  • the extent of the nature and connection in terms of use or purpose between the goods used by the trademark owner and the goods handled by the other party;
  • the common nature of the dealers and consumers of the goods; and
  • the various circumstances of relevant transactions, with the criteria being the ordinary care taken by dealers and consumers.
     
• In connection with the similarity between Mark 2 and Mark 1, Mark 1 produced both the sounds 'progreens' and 'multi pro greens' from the structure of the words. As Mark 1 produced the sound 'multi progreens', which was one of the sounds produced by Mark 2, Mark 1 was considered to be similar to Mark 2.



• In connection with the similarity of composite trademarks in general, if and when it is recognised that the plural composite portions are inseparably combined to such an extent that it is unnatural to compare each composite portion of the trademark separately, it is prohibited in principle to select a composite portion and compare it with the other party's trademark in order to consider the similarity of the trademarks. On the other hand, if a composite portion is recognised as giving a strong controlling impression to dealers and consumers as the source identifier of the goods or services, or if the source identifier function such as pronunciation or meaning could not be recognised from other portions, a composite portion of the trademark may be compared with other trademarks in order to consider the similarity of the trademarks.



• Under this theory, Mark 1 was considered to produce the sound 'multi progreens' not only arising from the complete structure, but also from the portion 'progreens'. In view of the similarity in terms of appearance, pronunciation and meaning, Mark 1 was considered to be similar to Mark 3. Further, as the sound 'progreens' produced by Mark 1 was similar to the sound 'progreen' produced by Mark 4, Mark 1 was considered to be similar to Mark 4.



• Concerning the extent of the connection with respect to the nature of the goods on which Mark 1 was used and the goods handled by the defendant, the goods on which Mark 1 was used and the products handled by the defendant had a common character in that both products were in the field of health food.



• According to the evidence submitted by the defendant, it admitted that the products bearing Marks 3 and 4 were sold to drug stores around 1993. Therefore, it was proper to admit that the defendant's products bearing Marks 3 and 4 were first sold around 1993 at the latest.



• It was also admitted that there were more than 400 All Japan Green Association member shops selling the defendant's products bearing Marks 3 and 4 in 2008. A photograph of the defendant's products bearing Marks 3 and 4 appeared in magazines published by well-known publishers from around 2001 to around 2008. As a result, the defendant was ranked fourth or fifth in the shares of sales combined with its other products in the market for green vegetable juice around 2008, when the plaintiff used Mark 1 for its products. In view of these facts, it was proper to admit that Marks 3 and 4 had obtained recognition at a certain level not exceeding the level of notoriety among dealers and consumers in the field of green vegetable juice and other health food products.



• As mentioned above, Mark 1 and Marks 3 and 4 were similar to each other and the goods to which these trademarks were attached were similar. Furthermore, the uniqueness of Marks 3 and 4 was not so high and it was admitted that they had obtained recognition to a certain level on the health food market around 2008, when the plaintiff used Mark 1 on its products. The defendant's products were sold at drug stores, while the plaintiff's products bearing Mark 1 were sold on the Internet. Thus, the manner and method of sale were different. Therefore, for dealers at drug stores who were familiar with the circumstances, the risk of confusion and misunderstanding with the goods handled by the defendant was not high, even if Mark 1 appeared on the designated goods. However, for those general consumers who knew of the existence of Marks 3 and 4, but who were not familiar with the sales circumstances, there was a concrete likelihood of confusion and misunderstanding with respect to the plaintiff's products on the Internet and the goods handled by the defendant, due to the similarity between Mark 1 and Marks 3 and 4.



• In connection with the intention of the plaintiff, it was proper to admit that after the plaintiff received notification from the defendant to the effect that the trademark MULTIPROGREENS infringed Marks 3 and 4, it still promoted its sales using Mark 1 around November 2008. By such sales promotion, the plaintiff recognised the likelihood of confusion and misunderstanding with the defendant's goods, and accepted such situation.

Thus, the court rejected the plaintiff's claims and affirmed the JPO's trial decision.

There have been few court precedents regarding Article 51(1) of the Trademark Law, particularly cases that admitted the application of that article. This is understandable, considering that, under Article 51(1), the petitioner must prove that the mark owner has the intention of causing confusion or misunderstanding with the goods or services of the petitioner.

Although the respondent strongly argued that it had no intention of causing confusion or misunderstanding with the goods of the petitioner, the court eventually determined that such intention could be assumed from the circumstances.

Therefore, if and when future cases under Article 51(1) of the Trademark Law are brought before the courts, the real discussion will be whether sufficient circumstances exist surrounding the use of the trademark by the mark owner that are similar to the use of the petitioner's trademark, based on which the court could then determine such use to be intentional.

Eiichi Fukushima, Nishimura & Asahi, Tokyo