The Internet and the effect of trademark rights

Introduction - Trademark risk in the Internet era

Nowadays, it has become very easy to purchase products from overseas and sell products overseas through the Internet. With the spread of e-commerce sites, SNS, and cross-border e-commerce platforms, opportunities for businesses to cross borders are increasing dramatically.

However, this borderless business environment causes various problems under trademark law. This is because trademark rights are rights established on a country-by-country basis, and are fundamentally inconsistent with the borderless nature of the Internet.

In this article, we will explain trademark issues that can occur on the Internet using specific cases, and will also delve into domain name disputes, problems with SNS accounts, and trademark risks associated with purchasing products from overseas sites.

Case 1: When launching an overseas online shop

You are company X who sells bags in Japan, and you have acquired trademark rights in Japan for trademark A in the scope of bags. Since our business in Japan is doing well, we aim to expand overseas and have launched an online shop, complete with an English page, to sell bags in the United States. What kind of problems would arise under trademark law in this case?

About the scope of trademark rights

The basic premise is that Japanese trademark rights are only valid within Japan (this is called the "territorial principle"). Therefore, if you are expanding your business in the United States, you will need to obtain separate trademark rights for Trademark A for bags in the United States as well.

If someone else has registered a trademark in the United States that is the same as or similar to A, then X will infringe on the other person's trademark rights in the United States.

Countries to keep in mind when expanding overseas

When expanding overseas through an online shop, you should consider acquiring trademark rights in the following countries/regions.

Case 2: Third party operating a Japanese site on an overseas server

You are company X who sells bags in Japan, and you have acquired trademark rights in Japan for trademark A in the scope of bags. While searching the internet, I found that someone else Y displayed A on their website. Upon closer inspection, it appears that they are using an overseas server to deploy Japanese pages.

If the trademark is being used on an overseas server, i.e. physically not in Japan, can X insist that Y shut down the website?

Criteria according to WIPO joint recommendation

As stated in Case 1, the effect of Japanese trademark rights does not extend outside of Japan. Therefore, if you think about it normally, Y's actions when the website server is located overseas cannot be considered to be the use of a trademark in Japan.

The reference here is the "Joint Recommendation on the Protection of Industrial Property Rights for Trademarks and Other Signs on the Internet" adopted by WIPO (World Intellectual Property Organization) in 2001*1. Article 2 of this recommendation stipulates as follows:

In light of this standard, even if Y uses a server overseas, if Y operates a website in Japanese and accepts orders from Japan, it is likely to have a "commercial effect" in Japan. Therefore, there is a good chance that X can insist that the website be shut down.

Determining factors for "commercial effect"

The WIPO Joint Recommendation lists the following points as factors to be considered when determining whether there is "commercial effect".

• Website language (target country language or not)
• Currency display (is the price displayed in Japanese Yen?)
• Is the country included as a shipping destination?
• Actual number of accesses and users from the country
• Transaction history with consumers in the country
• Does the contact information include a phone number and address in the country?

Case 3: Third party operating a foreign language site on a Japanese server

You are company X who sells bags in Japan, and you have acquired trademark rights in Japan for trademark A in the scope of bags. While searching the internet, I found that someone else Y displayed A on their website. Unlike case 2, it seems to be using a Japanese server, but it appears to be a French website. In this case, can X insist that Y shut down the website?

In this case, I think it is possible to insist that Y shut down the website according to the principle of territoriality*2. However, from Y's point of view, if they are doing business in France, there is little necessity for them to go to the trouble of using a Japanese server, so in reality such a situation would be rare.

Domain name and trademark disputes

One of the most common trademark issues on the Internet is disputes over domain names. Domain names are unique throughout the world, and the basic rule is ``first come, first served,'' in which the first person to register gets the right to use it. Therefore, the act of pre-emptively registering domains that are the same or similar to someone else's trademark (so-called "cybersquatting") has been a problem for a long time.

Methods for resolving domain name disputes

The main methods for resolving domain name disputes include:

In a UDRP proceeding, the complainant must (1) ensure that the domain name is identical or confusingly similar to the complainant's trademark; (2) that the registrant of the domain name has no rights or legitimate interest in the domain name; and (3) You must prove three points: that the domain name was registered and used in bad faith.

SNS account and trademark rights

In recent years, brand protection on SNS has become a major issue. On SNS platforms such as X (formerly Twitter), Instagram, Facebook, and TikTok, there are many cases of people using account names that are the same as or similar to other people's trademarks.

Types of trademark issues on SNS

• Impersonation account:Case where an account is created that pretends to be a famous brand or company, confusing consumers
• Account name preemption:Similar to domain cybersquatting, a case where someone else's brand name is registered as an account name first
• Unauthorized use of hashtags:Case of using someone else's registered trademark as a hashtag to promote your own products
• Trademark use in advertising:Case in which someone else's trademark is included in keywords or text in SNS advertisements

Countermeasures

Many SNS platforms have a declaration system based on trademark rights. Trademark owners can request the removal of accounts and content that infringe on their trademark rights through the platform's reporting form. However, these systems are based solely on the platform's terms of use, and there are limits to their legal enforcement.

Purchasing products from overseas sites and trademarks

Trademark law issues may also arise when individuals purchase products from overseas e-commerce sites. Particular attention should be paid to "parallel imported products" that do not have the permission of the Japanese trademark holder, and "counterfeit products" manufactured by third parties unrelated to the trademark holder.

Parallel import and trademark rights

Parallel import, which involves importing genuine products that are legally sold overseas into Japan, is not considered to be an infringement of trademark rights under certain requirements. Specifically, this applies when the following three requirements are met.

1. The overseas trademark right holder and the Japanese trademark right holder are the same person, or have a relationship that can be evaluated as the same legally and economically
2. The parallel imported product must have been legally trademarked by the foreign trademark owner
3. There is no substantial difference in quality from products directly controlled by the Japanese trademark owner

On the other hand, the act of importing counterfeit products sold on overseas sites into Japan may fall under trademark infringement. In recent years, the number of seizures of goods infringing on intellectual property at customs has been on the rise, and it is important to be aware that even goods for personal use may be subject to trademark infringement charges.

Summary - Trademark strategy in the Internet era

With the ease of crossing borders in the Internet world, there are also more opportunities for trademark disputes. When it comes to trademark strategy in the Internet era, keep the following points in mind.

When considering overseas expansion, please conduct a prior investigation and trademark registration to see if there are any prior trademarks.

Annotation

*1 About "Joint Recommendation on the Protection of Industrial Property Rights Regarding Trademarks and Other Signs on the Internet"
https://www.jpo.go.jp/news/kokusai/wipo/1401-037.html
https://www.jpo.go.jp/news/kokusai/wipo/document/1401-037/kyoudoukannkoku.pdf

*2 The interpretation of "use" may differ between non-use revocation trials and infringement cases. For example, if X has acquired trademark rights in Japan and conducts business by displaying A on a website in French directed to France using a server in Japan, the use of the trademark on this website may not qualify as "use" of the trademark in Japan.