Protection to three-dimensional mark refused

On November 29 2006 the IP High Court reversed a Patent Office trial decision that denied the invalidation of a three-dimensional trademark consisting of the shape of a chick for 'manju' confectionery (a bun with a bean-jam filling). The court ruled that the trademark was not yet famous as required under the Trademark Law (127/1959, as amended).

The three-dimensional trademark system was introduced on April 1 1997 by amendment to the Trademark Law (68/1996) and is defined in Article 2, Paragraph 1 of the law. Although the Patent Office has accepted applications for three-dimensional trademarks in a few instances, this is the first court case in which the applicability of the provisions of Article 3, Paragraph 2 of the law was discussed by the court.

Article 3, Paragraph 1, Item 3 of the law provides that trademark registration cannot be obtained:

"in the case of a trademark which consists solely of a mark indicating in a common way the place of origin or sale, quality, raw material, efficacy, use, quantity, shape (including packaging) or price of the goods, or the method, time of manufacture or use, or the location of the provision of services, or the quality, articles used, efficacy, use, quantity, modes or price, or the method or time of provision of services."

Article 3, Paragraph 2 of the law provides that:

"in the case of a trademark falling under Items 3 to 5 of the preceding paragraph, where, as a result of the use of a trademark, consumers are able to recognize goods or services as being connected to a certain person's business, the trademark registration may be obtained notwithstanding the provisions of the preceding paragraph."

The applicant, KK HIYOKO (the Japanese word 'hiyoko' means 'chick'), which is engaged in the manufacture and sale of confectionery (including manju confectionery), filed an application with the Patent Office for the registration of a three-dimensional trademark consisting of the shape of a chick for goods falling under Class 30 of the Nice Classification.

The application was filed on April 1 1997, the same day as the three-dimensional trademark system was introduced into law.

The examiner in charge of the Patent Office issued a preliminary notice of rejection on June 10 1998. The examiner indicated that the trademark applied for was recognized as one of the three-dimensional shapes that are commonly adopted for the designated goods because of the relationship between the shape and the designated goods. Therefore, the trademark referred only to the shape of the goods themselves. Thus, the application fell under Article 3, Paragraph 1, Item 3 of the law.

KK HIYOKO appealed the preliminary rejection, but the Patent Office issued a final rejection on August 13 1999. Consequently, KK HIYOKO filed a petition for a trial hearing; on July 7 2003 KK HIYOKO amended the description of the designated goods from confectionery and bread under Class 30 to manju.

On July 24 2003 the Patent Office reversed the original decision and ruled that the application for registration should be granted. In view of the evidence submitted by KK HIYOKO, the Patent Office found that consumers recognized that the goods in question were connected with KK HIYOKO's business as a result of its long and widespread use of the trademark for manju confectionery. Therefore, the Patent Office held that the application should be admitted under Article 3, Paragraph 2 of the law.

Subsequently, on March 29 2004 KK HIYOKO filed a suit for infringement of the three-dimensional trademark against Yugen Kaisha NIKAKUDOU - which manufactures and sells confectionery in the shape of a chick - before the Fukuoka District Court.

Yugen Kaisha NIKAKUDOU filed a petition for invalidation of KK HIYOKO's trademark registration before the Patent Office. Yugen Kaisha NIKAKUDOU asserted that the trademark could be recognized as one of the three-dimensional shapes commonly adopted for manju confectionery; thus, the trademark referred only to the shape of the goods themselves. Therefore, the trademark fell under Article 3, Paragraph 1, Item 3 of the law, but did not fall under Article 3, Paragraph 2. The Patent Office ruled in favour of KK HIYOKO on July 28 2005. The Patent Office's reasoning included the following points:

• The predecessor of KK HIYOKO, created and sold manju confectionery in the shape of a chick in Iizuka City (Fukuoka prefecture) as early as 1912.
  
  
• The confectionery at issue was KK HIYOKO's main product and the latter had a daily production capacity of 0.5 million pieces in 1986. It is sold as a gift not only in metropolitan areas, but also throughout the country. Among other locations, KK HIYOKO sold its confectionery in kiosks and department stores in the Kyushu area, and in kiosks, supermarkets, department stores and at Haneda airport in the Kanto area. Annual sales approximated Y2 billion in 1970, Y3.9 billion in 1981, Y5.8 billion in 1991 and Y5 billion each year until 2003. KK HIYOKO's confectionery has been advertised in newspapers and magazines since 1960, and on television from 1963 to 1990. The amount spent on advertising was approximately Y0.7 billion from 1987 to 2003.
  
  
• In view of the findings made during the original trial and the evidence submitted to support these findings, dealers and consumers recognized that the three-dimensional trademark at issue was connected to KK HIYOKO business at the time of the original trial decision. Therefore, the Patent Office found that the original decision (ie, that the trademark conformed to the requirements of Article 3, Paragraph 2 of the law) was proper and acceptable.
  

Yugen Kaisha NIKAKUDOU appealed to the IP High Court. The court requested an opinion of the director general of the Patent Office by virtue of Article 180(2), Paragraph 3 of the Patent Law (121/1959, as amended), which was applied mutatis mutandis under Article 63, Paragraph 2 of the Trademark Law in connection with the construction of Article 3, Paragraph 2 of the law and other provisions. The director general submitted his opinion to the court on July 11 2006; he stated that the original trial decision applying the provisions of Article 3, Paragraph 2 of the law was proper. The court eventually reversed the Patent Office invalidation trial decision on November 29 2006. The case is now pending before the Supreme Court. The reasoning of the IP High Court included the following aspects:

• The purpose of Article 3, Paragraph 2 of the law is to provide an exception where a trademark - which is not distinctive in relation to the source of the goods under Article 3, Paragraph 1, Item 3 or others - has become famous due to the fact that a certain product configuration has acquired the function of indicating the origin of the goods, as such product configuration has been used continuously and exclusively over a long period of time and has become distinctive.
  
  
• This rule also applies to three-dimensional trademarks. However, whether the trademark complies with the requirements of Article 3, Paragraph 2 of the law should be independently determined based on the documents showing the three-dimensional trademark. Moreover, as trademark law has uniform application nationwide, the issue of whether a three-dimensional trademark has become distinctive should be determined based on nationwide criteria.
  
  
• The court then examined other factors, including:
  
  
  • the configuration of the three-dimensional trademark at issue;
    
    
  • the level of sales of KK HIYOKO (eg, time of launch, development of shops, number of dealers, advertising, manner of sale, annual sales volumes and advertising costs); and
    
    
  • the manufacture and sale of baked confectionery in the shape of a chick by parties other than KK HIYOKO and Yugen Kaisha NIKAKUDOU.
    
    
• The court determined that although the trademark HIYOKO was widely recognized by consumers in certain areas (including Kyushu and Kanto), the three-dimensional trademark (as described in the documents) was not famous nationwide.
  
  
• Therefore, the court concluded that the three-dimensional trademark did not satisfy the requirements of Article 3, Paragraph 2 of the law (ie, "consumers are able to recognize goods or services as being connected with a certain person's business as a result of the use of such trademark"), as the trademark was not distinctive in relation to the source of the goods (special distinctiveness).
  

This is the first time that the IP High Court has requested the opinion of the Patent Office's director general under Article 180(2) of the Patent Law. It is expected that this practice will increase in the future.

The case is now pending before the Supreme Court. It remains to be seen how the court will interpret Article 3, Paragraph 1, Item 3 and Article 3, Paragraph 2 of the Trademark Law.

Eiichi Fukushima and Takashi Michishita, Asahi Koma Law Offices, Tokyo