IP High Court rejects collective trademark

Japan
The IP High Court has affirmed a trial decision of the Japan Patent Office in which the latter had upheld the rejection of an application to register KITAKATA RAMEN as a special collective trademark. Ramen are a type of noodle, typically served in broth.

The plaintiff, Business Cooperative Association Kuranomachi Kitakata Romen-kai, filed an application to register the mark KITAKATA RAMEN in standard characters for "ramen noodles produced in Kitakata City, Fukushima Prefecture, and instant ramen produced in Kitakata City, Fukushima Prefecture" in Class 30 of the Nice Classification, and "service of ramen in Kitakata City, Fukushima Prefecture or originating from Kitakata City, Fukushima Prefecture" in Class 43 on April 1 2006. It subsequently deleted the designated goods in Class 30 and amended the designated goods in Class 43 to read "service of ramen in Kitakata City, Fukushima Prefecture".

The Patent Office rejected the application on March 31 2008, finding that it did not satisfy the requirements of Article 7bis(7-2)(1) of the Trademark Law (127/1959, as amended). The plaintiff filed an application for trial with the Patent Office on May 7 2008.

On November 12 2009 the Patent Office issued a trial decision, upholding the original decision. Its reasoning was that:
  • the trademark could not be recognised as having become well known among consumers as an indication of the service connected with the plaintiff or its members as a result of use - for example, among consumers in Fukushima and its neighbouring prefectures;
  • as such, the trademark did not satisfy the requirements of Article 7bis(7-2)(1); and
  • therefore, the original decision based on this reasoning was correct and should not be cancelled.
The plaintiff appealed to the IP High Court on December 25 2009. The court affirmed the trial decision on November 15 2010.

On the question of the interpretation of Article 7bis(7-2), the court held as follows:
  • Looking at the history of the legislation, the reason for establishing the system of special collective trademarks for geographical names was to lessen the requirements for registration in respect of word marks consisting of local geographical names and the names of goods and services - often termed 'local brands' - in order to maintain the business reputation of local products, reinforce Japan's industrial competitiveness and stimulate the local economy through brand protection.
  • Before the establishment of this system, word marks consisting of geographical names and the names of goods or services, which originally fell under any item of Article 3(1) of the law, could not obtain registration unless the requirements for acquiring distinctiveness under Article 3(2) of the law were met. Thus, third-party free riding could not be prevented until such trademarks became well known throughout Japan. The registration of a trademark with a device mark could not effectively prevent use of the word or words by a third party. The new system remedied this by permitting the registration of word marks consisting of local geographical names and the names of goods or services, thus protecting the goodwill in local products of this type.
  • The purpose of the main text of Paragraph (1) - which considers the position where such a trademark, as a result of use, has become well known among consumers as indicating that goods or services are connected with the user's business or that of its members - is to discern the value of the trademark that has gained the goodwill of the applicant association to the level necessary for protection, or to a certain level of likelihood of free riding by third parties, since such use will be restricted following registration of a collective trademark for a geographical name as a word trademark consisting of the local geographical name and the name of the goods or services.
  • The lessening of the requirements extends to distinctiveness (ie, the scope of the consumers in question and the qualitative degree of recognition). However, there is no lessening of the requirement for recognition of the connection between the trademark and the goods or services in question from the standpoint of consumers and commercial parties.
The court concluded that the Patent Office had not erred in its trial decision. In order to decide whether a trademark has become well known among consumers through use, the following factors should be examined:
  • trademarks in actual use and services rendered;
  • the date on which use began;
  • duration of use;
  • territory of use;
  • scale of business (eg, number of outlets, business area and total sales);
  • the timing and methods of advertisement;
  • number of advertisements in newspapers, magazines and similar publications;
  • use or non-use by other parties; and
  • other factors.
On the question of the applicability of Article 7bis(7-2), the court held as follows:
  • On the date of the trial decision, there were 92 ramen shops in Kitakata, of which 43 (or 47%) were members of the plaintiff organisation. Of the 73 shops using the words 'Kitakata ramen', members of the plaintiff represented 59%.
  • Thus, the ramen shops that were members of the plaintiff represented, at most, 60% of the ramen shops in Kitakata. Furthermore, several ramen shops in the city that were well known throughout Japan were not members at that time.
  • It was clear that certain ramen chain shops, such as Kitakata Ramen Kura, had been operating as ramen shops and using indications or marks incorporating the words 'Kitakata ramen' for a long time before the trial decision.
  • Therefore, the connection between the indication or name 'Kitakata ramen' and the service identified in the trademark application was remote from the perspective of consumers and retailers in areas outside Kitakata, particularly in the Tokyo metropolitan area and other parts of Japan that are a long way from Kitakata.
  • Even if the plaintiff or its members had been using the name or indication 'Kitakata ramen' and serving the ramen in Kitakata, as well as aggressively conducting an advertising campaign with respect to the designated service, the trademark KITAKATA RAMEN could not be recognised as having become well known, among consumers in Fukushima and its neighbouring prefectures, as indicating the service connected with the plaintiff or its members. This conclusion could not be overturned on the basis of the sales results of ramen noodles by the manufacturers of such noodles in Kitakata, or by other factors. It took account of:
    • the status of the plaintiff's membership among ramen shops in Kitakata as a whole;
    • the fact that non-members had been operating ramen shops using the indication or name; and
    • the fact that, for a long time, non-members had been using the various trademarks incorporating the words 'Kitakata ramen' by obtaining such trademarks outside Kitakata.
  • The plaintiff asserted that, in several Article 7 cases, collective trademarks had been accepted as registrable by applying Article 3(2) even if members of the applicant association represented less than 50% of the total number of operators in the relevant industry. The court held that this argument was irrelevant because the application was to be determined under Article 7bis(7-2), not under Article 3(2).
  • The plaintiff asserted that it had been established to maintain the reputation of the business embodied in the trademark and to maintain and promote the quality of Kitikata ramen. It had filed an application for the trademark on behalf of the ramen shops that had been serving a certain type of ramen in Kitakata. It asserted that all of the non-member ramen shops in Kitakata had consented to its application, and that the city authorities supported the application in order to protect economic activity in the region. This argument was rejected, the court finding that it could not neglect the requirement that a special collective trademark for a geographical name must be based solely on the rationale of supporting the region's economic interests.
  • The plaintiff asserted that the trademark application indicated the service provided by certain ramen shops, which serve a certain type of ramen that originate from Kitakata. The plaintiff argued that this was well known, not only in Fukushima and its neighbouring prefectures, but all over Japan. The court did not accept that the trademark indicated the service provided by the plaintiff and its members (ie, that of serving a certain type of ramen with a particular taste) or that this was as well known as the plaintiff had claimed.
The system of special collective trademarks for geographical names (being a combination of the geographical name and the name of goods or services) was introduced under Article 7bis(7-2) in 2006. This system was established to foster local brands. A total of 468 special collective trademarks for geographical names had been registered with the Patent Office as of March 1 2011. Two are special collective trademarks for foreign geographical names, registered in the name of foreign associations: PROSCIUTTO DI PARMA and CANADA PORK.

This is the first court decision on the issue of whether a trademark should be registered under this system. The court's consideration of the extent to which the system can protect a geographical name is particularly significant. The main factors in this case were the existence of:
  • many non-members of the plaintiff in Kitakata City; and
  • many examples of the use of the words 'Kitakata ramen' by third parties outside Kitakata, including users that had obtained registration for trademarks incorporating the words 'Kitakata ramen'.
As a result of this case, it is likely to become more difficult to obtain registration under the system if the marks involved are considered famous and are already sufficiently generic, such as 'Sapporo ramen' and 'Hakata ramen'.

The case has been appealed to the Supreme Court.

Eiichi Fukushima, Nishimura & Asahi, Tokyo

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