1. Introduction

Recently the Internet has developed explosively. Its users have rapidly increased. It has become very important to business. Many companies now use the Internet for their business. For example, they advertise their goods or services on their Web-site or sell them through the Internet. Under these circumstances, many legal problems regarding trademarks on the Internet have appeared.

When advertising or selling goods or services through the Internet, companies sometimes use their trademarks on their Web-site. This is one example of the case where legal problems about trademarks on the Internet arise. If a party uses another party's trademark on its Web-site, is such an act considered to be an infringement against a trademark right? It is a serious question whether "use of a trademark" under the Trademark Law ("TML") covers displaying a trademark on a Web-site.

If a party is to register a trademark to use it on its Web-site to advertise or sell goods or services, what should the scope of the designated goods or services be? Is it restricted to the goods or services shown on the page where the trademark is shown, or does it include the goods or services shown on the linked pages? This is also part of the question of whether a similar mark on a Web-site infringes a trademark right.

A domain name dispute produces an analogous problem. As an address in the Internet, a domain name's importance in business has been increasing. Many companies register their own domain names. In them they usually use their company names and the names of their goods or services. These names are sometimes also registered as trademarks. This has brought about so-called cyber-squatters, who register domain names that include other parties' trademarks, and who use them for improper purposes. Sometimes they use the trademark holders' reputations to get unjust benefits.

Sometimes they interfere with the trademark holders' businesses. Sometimes they offer to sell domain names to the trademark holders and demand unfairly high consideration. In such cases, a trademark holder may sue a domain name holder or file a petition with an alternative dispute resolution facility ("ADR"). Recently, in Japan, court decisions and ADR decisions have issued on such cases, as discussed below.

2. Present Japanese Legal System For Displaying A Trademark On A Web-Site

There are many trademarks displayed on business Web-sites. If a party uses a mark that is the same as or similar to another party's trademark on its Web-site, does such an act infringe the other party's trademark right? There is no direct domestic law on this point. Whether the TML can cover such a case is a question. This depends on whether the "use of a trademark" under the TML covers displaying a trademark on a Web-site.

Article 2, Paragraph 3, Item 7, of the TML provides that the "use" of a mark includes the acts of displaying or distributing ads on which a mark is shown. Under the Japanese practice, this can cover TV commercials. Considering this, an ad on a Web-site may be covered by the "use" under the TML. At least, as far as it is considered to be a kind of ad, displaying a mark on a Web-site can be covered by the Japanese "use of a trademark" under the TML.

Then, what should the scope of designated goods or services of a trademark displayed on a Web-site be? A trademark clearly covers goods or services shown on the page where the trademark is shown. Does it cover goods or services shown on linked pages? There can be various interpretations. This may be decided case-by-case. Generally, it may be understood to cover goods or services on the linked pages if average consumers who access the Web-site feel that "all of these pages are the same party's Web-site."

If an act of displaying a mark on a Web-site is decided to be an infringement against a trademark right, the trademark holder can sue the owner of the Web-site. The trademark holder can sue for an injunction under the TML. It can also sue for damages. The TML also provides for criminal penalties.

The Unfair Competition Prevention Law ("UCPL") can also be applied to such cases. Actually, in some cases discussed below in which each defendant displayed a confusing mark on its Web-site, the court applied the UCPL and enjoined the display of such a mark on the Web-site. Whether under this law displaying a mark on a Web-site is covered by the "use of product labeling" is a question.

Under the UCPL, if a trademark registrant's right is infringed, it can also sue for damages and for an injunction. Also, criminal penalties are provided. The limit of the UCPL is that it can be applied where well-known trademarks are infringed.

To clearly solve such questions or problems, more study should be made.

3. A Judgment Concerning The Display Of A Confusing Mark On A Web-Site

On December 28, 1999, the Tokyo District Court issued a judgment. In this case, Nihon Zeon Company Limited (the plaintiff) was already a well-known firm in Japan among users of synthetic plastics and rubbers, before it had established itself among users of construction materials for wastes, parks, river improvement projects, road pavements, and similar constructions. The defendant, Kokusai Kogyo Company Limited, a company engaged in geological, oceanic, and environmental investigations, land surveys, and planning, designing and administrative services for engineering and construction, started using the marks "EARTHEON" and for its Web-site and for other advertisements. The plaintiff considered this to be an act of unfair competition, alleging the marks to be similar to its name.

The main issues were whether: (1) the plaintiff's name was well known to consumers, (2) the marks of the parties were similar, (3) the use by the defendant of the "EARTHEON" mark and its transliteration, would suffice to cause confusion with the plaintiff's business, and (4) plaintiff's business interests were or would be hurt as a result of this confusion, and thereby suffered or would suffer damages.

The Tokyo District Court found that the plaintiff's name was well known to consumers. The court ruled that the defendant's mark was similar to plaintiff's name, which includes the term "Zeon." The "theon" part of defendant's mark can be expressed the same way as "Zeon" in Katakana. The court also found that there are overlapping areas between the businesses of the plaintiff and the defendant. It decided that the defendant's use of its mark would cause confusion with the plaintiff's business.

The court concluded that defendant's use of its mark fell under Article 2, Paragraph 1, Item 1, of the UCPL. It ordered defendant to remove from its Web-site and advertisements the Katakana transliteration of "EARTHEON," in whatever form it took, and was asked to pay plaintiff 5,000,000 yen as damages.

In this case, the court did not decide whether the "use of a trademark" under the TML covers displaying a trademark on a Web-site. It only accepted the possibility that displaying a trademark on a Web-site may be covered by the "use of product labeling" under the UCPL. But, in this case, defendant used its mark not only on its Web-site, but it also used the same mark in various types of ad, e.g., ads in newspapers, brochures, employee's name cards, etc. Thus, if defendant's act had been limited only to displaying a mark which is similar to plaintiff's trademark on its Web-site, a question would still remain on whether the court would consider such an act as being covered by the "use of product labeling" under the UCPL.

4. Present Japanese Legal System In Respect To Domain Name Issues

The rights and obligations arising from domain names have not been provided for in any Japanese law. Users of domain names have been resolving disputes or possibilities of disputes by referring to domestic laws such as the TML and the UCPL. But these laws are not in fact suitable for such cases. Applying these laws provides an issue as to whether the use of a domain name is covered by the "use of a trademark" under the TML or the "use of product labeling" under the UCPL. The UCPL can provide a test only where well-known trademarks are infringed.

On March 27, 2001, the Ministry of Economy, Trade and Industry ("METI") published a bill partially amending the UCPL to protect the holder to the rights to the domain name against cyber squatting by injunctive relief and other means. The bill was introduced to the current ordinary session of the Diet. On June 29 the bill passed the Diet and it will be enforced within six months from the above date. This is the first law that directly deals with domain name issues.

METI explains the purpose of this amendment as follows: Considering the recent developments in information technology in business, it is necessary to provide injunctive relief against such an act as obtaining the right of a domain name that is identical or similar to another party's product labeling, etc., to obtain unjust enrichment from or damaging that party. This bill was presented to establish a legal framework where any party can safely engage in e-commerce.

The main points of this amendment are these:

  1. To be defined as a kind of unfair competition is any act to obtain or maintain the right to use a domain name that is identical or similar to another party's label for its product (a name, a trade name, a trademark, a mark, etc. indicating goods or services related to a party's business), or to use such a domain name to obtain unjust enrichment or to damage any other party.
  2. As a result of this amendment, a party whose business interests have been injured by such act can request injunctive relief or can claim damages against the infringer.

A party whose business interests have been injured by such an act as specified in item No. 1 can claim damages for such unjust enrichment in a sum equaling the money it would have obtained by using the domain name from the infringer who intentionally or negligently injured such business interests.

This amendment will resolve some of the above problems. The use of a domain name is clearly covered by an act of unfair competition under the UCPL. Not only the holders of well-known trademarks but also other holders can be relieved by the UCPL.

Despite this amendment, there still remain many kinds of problems. For example, under this amendment an injured party can demand an injunction against the use of the domain name but it cannot demand its transfer. Thus, even if the plaintiff wins the case, it is uncertain that it will become entitled to use the domain name.

5. Recent Judgments On Domain Name Disputes

On December 6, 2000, the Toyama District Court issued a judgment in a case where Jaccs Co., Ltd., ("Jaccs"), a well-known company that owns the well-known trademark "JACCS," sued a user of the domain name "jaccs.co.jp."

Jaccs is well known and is mainly engaged in credit sales nationwide, with 124 branches. The company has a long history, its name having been changed to the present one in April 1976 from its original name, "Japan Consumers Credit Service." It obtained registrations of its trademark in classes 35, 36, 38, and 42, all service mark classes, in 1996 and 1999, the domain name containing "jaccscard.co" being for use with its business.

A company called Yugen-Kaisha Nihonkai Pact ("NP") had been producing and selling simply-constructed water closets, etc. It registered its domain name "jaccs.co.jp" with JPNIC (Japan Network Information Center) on May 26, 1998, and opened its home page, linked to ads for its water closets, cellular telephones, etc.

In the meantime, NP suggested to Jaccs, according to the court's findings in its reasons for the judgment, that it was willing to assign or license the domain name for an unreasonably high price. The court also found that NP opened and used its home page to benefit its own business, and clearly NP was using its domain name to indicate its goods and business.

Against NP's position that a domain name just functions to show the address of a certain computer, the court held that its business is not limited to just the ads of specific goods or services, but it includes those of its business itself, that if "jaccs" is shown in its domain name the users of the Internet would be confused and would mistakenly consider that the domain name is somehow connected to Jaccs or its affiliates, and that there would be confusion between the businesses of NP and Jaccs.

The court thus concluded that NP's use of its domain name fell under Article 2, Paragraph 1, Item 2, of the UCPL, and enjoined its use.

This is the first court decision on domain name disputes. NP appealed this judgment. No decision on the appeal has yet issued.

In this case, NP not only used its domain name, which included "jaccs," but also displayed the word "JACCS" on its Web-site. The court considered this fact in deciding whether the domain name functions to show the origin of the goods or services. Thus, this case somewhat differs from the case where the registrant only uses in its domain name marks that are the same or similar to another party's trademarks, etc.

On April 24 this year the Tokyo District Court issued a judgment on a domain name dispute. In this case, J-Phone East Co., Ltd. ("J-Phone East") sued a user of the domain name "j-phone.co.jp."

J-Phone East is mainly engaged in mobile communication services using cellular telephones. On April 1, 1994, it started its services. At this time, its name was "Tokyo Digital Phone Co., Ltd." It tied up with two companies and provided services in the Kanto, Chubu, and Kansai areas, three large areas on the main island of Japan, Honshu. On February 7, 1997, it tied up with six more companies and expanded its service area nationwide. About this time, it began to use "J-PHONE" for the name for its services and its group companies.

The defendant was Kabushiki-Kaisha Daikou Tsusho ("Daikou"). It mainly imports and sells marine and other food products. On August 29, 1997, it registered the domain name "j-phone.co.jp" and opened its Web-site about October of 1997. It was using the marks "J-PHONE and on its Web-site just before it temporarily closed its Web-site on December 7, 2000. (The latter two marks are partially or totally in Katakana, one of the two syllabaries used in Japanese, Katakana being used for foreign names.) These latter two marks are transliterations of the first mark.

In this case, the court issued almost the same decision as in the "JACCS" case in its general part. It found that a domain name not only functions to show the address of a certain computer in the Internet, but that it can also function to show the origin of goods or services. In a case where a domain name is found to function to show the origin of goods or services, it will satisfy the "product labeling" in Article 2, Paragraph 1, Item 1, and Item 2, of the UCPL. Whether the use of a domain name actually falls under "use of product labeling" is decided on a case-by-case basis. On deciding this, the situation in which the domain name is being used, the contents displayed on the Web-site, etc., should be considered comprehensively.

The court found that the domain name "j-phone.co.jp" functions, in combination with the "J-PHONE" mark on the Web-site, to show the origin of goods or services displayed on the Web-site. Thus, use of the domain name falls under the "use of product labeling" under the UCPL. The act of displaying the "J-PHONE" mark on its Web-site also falls under the "use of product labeling" under the UCPL. The court also found that, after February 7, 1997, J-Phone East began to use "J-PHONE" and intensively advertised its new name for services to be known widely through newspapers, magazines, and TV and radio broadcasts. As a result of this, the name "J-PHONE" had become well known nationwide by August 29, 1997, when Daikou registered the domain name.

The court ordered Daikou not to use the marks "J-PHONE," and and to delete them from its Web-site. The court also ordered it not to use the domain name "j-phone.co.jp."

In this case, the same as in the "JACCS" case, the defendant not only used a confusing domain name but also displayed a confusing mark on its Web-site. The court considered this fact on deciding on the domain name's function.

Among various domain name disputes, there can be many where the registrant only uses such a mark in its domain name, but does not display such a mark on its Web-site. No judicial decision has yet issued on such cases. But we expect many more cases will develop.

6. Self-Imposed Rules And Using The ADR For Domain Name Disputes

An incorporated association, the Japanese Network Information Center ("JPNIC"), controls domain names whose top-level domain is "jp" ("JP domain name(s)"). JPNIC adopted such rules as "one organization can obtain only one domain name," "transfer of domain names being prohibited," and "non-use of domain names for one year being subjected to deletion of registration." It was considered that domain name disputes were few in Japan because these rules effectively prevented them. But JPNIC has changed its rules. Since October 19, 2000, it has allowed the transfer of JP domain names. JPNIC started a general-use JP domain name system on February 22 of this year. Under this system, one can obtain plural JP domain names. Under these circumstances, it is thought that domain name disputes will greatly increase.

Since October 19, 2000, JPNIC has enforced the Japan Domain Name Dispute Resolution Policy ("JP-DRP") based on ICANN's Uniform Domain Name Dispute Resolution Policy ("UDRP"). Under the JP-DRP, the Arbitration Center for Intellectual Property ("the Arbitration Center," which was called the "Arbitration Center for Industrial Property" before April 21 of this year) is the only ADR approved by JP-DRP. One can submit to the Arbitration Center such cases as where the registrant's domain name is identical or confusingly similar to a trademark in which the complainant has rights, and the registrant has no rights or legitimate interests in respect to the domain name, and the registrant's domain name has been registered and used in bad faith. The relief is of only two types: the transfer or deletion of the registration.

There have been ten cases submitted about domain name disputes to the Arbitration Center (as of April 25 of this year). Three have already been withdrawn and four rulings have been given.

On February 5 of this year the Dispute Resolution Panel of the Arbitration Center ("the Panel") gave its first ruling concerning a domain name dispute. The petitioner, NTT-X Corp., which holds the registered trademark "goo" and the domain name "goo.ne.jp," manages the Web-site of a search engine called "goo." It filed a complaint against the registrant of the domain name "goo.co.jp." The registrant registered its domain name before the petitioner started its services, and also registered its trademark. But the Panel said that not only registering a domain name in bad faith but also using it in bad faith violates Article 4, Section a, Subsection (2), of the JP-DRP. The Panel concluded that under Article 4, Section i, of the JP-DRP, the domain name should be transferred to the petitioner. But the registrant sued in the Tokyo District Court, asking that this ruling not be enforced. However, this case is still pending at the Court.

On March 12, 2001, the Panel gave its second ruling, about the domain name "itoyokado.co.jp." The petitioner, Ito Yokado Co., Ltd. ("Yokado") , manages 176 supermarkets nationwide, and manufactures, processes, and wholesales many of the goods sold in its stores. Yokado registered 43 trademarks (34 for goods and 9 for services) in Japan. Its trademarks were treated as well-known ones by AIPPI JAPAN. The registrant, Kabushiki-Kaisha Ginga, is a small company that is engaged in real estate rental services and managing game centers, shopping centers, etc.

In this case, the registrant showed on its Web-site that it wanted to sell the domain name "itoyokado.co.jp." It put the domain name in the Internet auction managed by Yahoo Japan at the minimum price of one billion yen. The registrant admitted such facts and gave as an excuse that it wanted to sell the domain name because it became unnecessary, and although the price asked was somewhat too high, it was a kind of joke. The registrant agreed to transfer the domain name but demanded at least proper consideration. But the Panel found that the registrant registered the domain name for the main purpose of selling it, namely, in bad faith as provided for under Article 4, Section a, Subsection (3), of the JP-DRP. The Panel concluded that under Article 4, Section i, of the JP-DRP, the domain name should be transferred to the petitioner without compensation.

On March 16, 2001, the Panel gave a ruling about the domain name "sonybank.co.jp." The petitioner was the famous company Sony Corp. In Japan it has 258 registrations for trademarks and 3 registrations for defensive marks. Its trademarks are treated as well known by the Patent Office and AIPPI. The registrant of the domain name is Goshi-Kaisha Ichi, which was assigned the registration of the domain name "sonybank.co.jp" on December 28, 2000. On February 15, 2001, the registrant requested of the Tokyo District Court that it give a provisional declaration of the ownership of the domain name, and requested that the Panel suspend its procedures in view of the registrant's request to the court. But the Panel decided not to stay the procedure just based on the registrant's request for the provisional declaration, citing a similar case in front of the WIPO Arbitration and Mediation Center (Case No. D2000-0187). The Panel found that the domain name "sonybank.co.jp" is confusingly similar to the trademark "SONY," since "bank" is merely a common noun that may indicate a bank, and the distinctive part is "sony." The Panel also found that the registrant was holding the registration without actually using the domain name, just to unjustly prevent the petitioner from using it. The Panel concluded that the registrant was considered to have registered or used a domain name in bad faith as provided for under Article 4, Section a, Subsection (2), of the JP-DRP, and the domain name should be transferred to the petitioner.

On March 30, 2001, the Panel issued a ruling on the domain name "icom.ne.jp." The petitioner was a company called Aikomu (ICOM) Kabushiki-Kaisha. It manufactures and sells amateur radio apparatuses. The registrant is a company called Kabushiki-Kaisha Aikomu. It had been dissolved by a decision of a general meeting of the shareholders and was undergoing dissolution. The registrant filed no response to the petitioner's petition filed with the Panel. The Panel decided to decide the case by not only reviewing petitioner's claim, but also considering its evidence, against which the registrant did not file any answer. The Panel decided that the registrant held no rights in or interests to the domain name, because when the dispute arose it was being dissolved, and it did not answer the request of the Panel to possibly assign the domain name. The Panel found that the registrant had at least recognized the interference and had not taken any action about it. The Panel therefore decided that the registrant registered the domain name in bad faith. The Panel concluded that the registrant was considered to have registered or used a domain name in bad faith, as provided for under Article 4, Section a, Subsection (2), of the JP-DRP, and the domain name should be transferred to the petitioner.

The ADR is considered to be suitable to resolve such domain name disputes because of its speed, low-cost, and the expertise used. Whether the Arbitration Center can provide effective solutions for domain name disputes depends on how quickly the Panel can issue rulings, and how reasonable they are.

7. Conclusion

Finally, the international jurisdiction issue is a serious question. The TML adopts the territoriality principle. Thus, a party who registered its trademark in a foreign country has to register the same mark in Japan to obtain trademark protection in Japan. On the contrary, even if a party registered a trademark in Japan, it cannot be protected in foreign countries if it has not registered the trademark in such countries. The protection for a trademark is not internationally uniform. In the Internet, if a party displays a trademark on its Web-site, people worldwide may readily access the page and see the trademark. Even if the party does infringe no one else's trademark right in its own country, there may be some holders, in other countries, whose trademark is the same as or similar to the trademark displayed in the Web-site. Which country has jurisdiction in such a case? Does the Web-site owner's country have such jurisdiction or the infringed trademark holder's country or another country ? This is also a serious and difficult question.

In any event, to solve such various types of issues concerning trademarks on the Internet, various types of solutions should be made or improved. Revising the present law may be one effective solution. But to clarify the provisions of the law, gathering decisions of the courts and those of the ADR would be necessary. We have to continue paying attention to the occurrence of issues on this aspect of the law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.