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Covid-19 outbreak has really impacted our normal everyday lives that we enjoyed before the year 2019. Every business and corporation in the world have undergone massive shifts to online trading and e-commerce. While it is easy and steady to run a business with just the fingertips, but we could not close our eyes on the risk and probabilities that online trading will invite floodgates to many cases of infringements and copycats all around the world.
This gives policymakers and regulators the urge to rejuvenate and give stronger protections to their country’s IP rights. Japan for example has come up with amendments in their Trademark Law that highlight on the expansion of infringement and increment of damages amounts. This article will focus on these two elements, so keep on reading!
Meaning of Infringement Expanded
Japan law regulators have intended to expand the meaning of infringement since the year 2019 and 2020. Previously, under Articles 2(1)(i), 2(3)(ii) and 25 of Trademark Act, Japan will regard an act “import…goods or package of goods to which a mark is affixed” to be a trademark infringement if that act is done “as a business”. The phrase “as a business” was practiced to be conducted repeated or continually and did not necessarily mean for a commercial purpose. For instance, individual ABC imports goods for the first time for private use to Japan, this will not constitute an infringement as it does not meet the “as a business” requirement. For trading company, in case they repeatedly import their products to Japan for distribution, this will constitute an infringement. Here, we can see that there is a loophole in individual cases as we could not authenticate whether the importation is done “as a business” or otherwise. Therefore, Japan came up with the new Article 2(7) stating that “…act of importing includes an act of a person in a foreign country causing another person to bring into Japan from the foreign country”. Here, a foreign entity that imports products to Japan “as a business” can be an infringer. This is such a notable change for companies to do any business in Japan to ensure that they are not charged for trademark infringement. Thus, any foreign business that plans to import goods to Japan, they need to carry out a free-to-operate (FTO) research of Japanese trademark to avoid any infringement mark.
Increment of Amount of Damages
Japan has also made another notable change to the trademark owners by increasing the amount of damages given to the aggrieved party. This is such a big relief to the trademark owners in Japan as this gives them the upper hand of their protected trademarks. Japan has amended due to the difficulty in proving the amount of damages suffered by the trademark owners. This is calculated based on three types of damages namely trademark owner’s profit or infringer’s profit or a reasonable royalty ordered by the court. This section of article will discuss on the types of damages presumption that will use by the court in awarding the damages to the trademark owners.
- Presumption based on trademark owner’s profit.
Article 38(1) of the Trademark Act laid down that the damages amount is presumed to be the trademark owner’s marginal profit per unit multiplied by the number of products assigned by an infringer. For instance, in case the trademark owner’s marginal profit per unit is USD50 and the infringer assigned 10,000 units, the presumed damages could be USD500,000.
However, the court will still have the discretion whether to reduce the amount or otherwise especially if the trademark owner was in fact unable to sell such quantity in the market. To make it clear, the damages is calculated based on the trademark owner’s sales or manufacturing capacity.
In addition to that, the owner is in liberty to seek reasonable royalty damages for amount that exceeds its capacity, at least when there is a loss of licence opportunity. We could see that amendment gives such a high hope to small business especially that has limited capacity in seeking fair damages for their own business. - Presumption based on infringer’s profit.
Article 38(2) of the Trademark Act further stated on the amount of damages that is presumed to be the infringer’s profit earned by the trademark infringement. For instance, if the infringer’s marginal profit per unit is USD40 and the infringer assigned 10,000 units, the presumed damages amount is USD40,000. But when the trademark owner’s capacity is limited to 1,000 units, the damages are limited to USD40,000.
It is reported that the recent amendment did not concern much on Article 38(2), but reasonable royalty damages can still be seek by the owner. - Presumption based on a reasonable royalty.
The current amendment really protects the trademark owners by giving reasonable royalty damages to them. This is decided by discretion of the court considering many factors such as sales and manufacturing of the owners and infringers. Court also has the power to decide a royalty fee amount higher than the agreed amount between the owners and infringers.
The recent development in trademark law in Japan is pro-owners and this will further protect the trademark owners from any infringement. Not only they are protected but if they can prove their case to the court, they are eligible to the damages and royalties. This development also highlighted that Japan is getting stricter in allowing foreign party to operate business in Japan in order to protect the owners’ trademarks. However, let’s give our mind a rest by appointing experts and IP professionals like PINTAS to register trademark or to check business or trademark infringement in Japan! Free Consultation Available.