When we hear the term "intellectual property," we tend to think that it only applies to industries that produce things, such as manufacturers and IT companies. However, in reality, intellectual property strategy is becoming the lifeline of management for the used car sales industry.
The store's brand name was registered as a trademark by another company. Vehicle photos from our company's website were reprinted without permission on a fraudulent website. A retired employee took his customer list with him and opened a competing store. These are all real troubles that can occur in the used car industry.
In this article, for owners and managers of used car businesses, we provide a comprehensive explanation of the basic knowledge of intellectual property that you should know, industry-specific risk examples, and even the benefits of consulting with a patent attorney. If you're thinking, "We're a small company, so it doesn't matter," please read to the end.
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Do you think that "intellectual property is not necessary for used car sales"? However, the current environment surrounding the used car industry is undergoing major changes, and management that is not conscious of intellectual property can now be described as a risk itself. I will explain the necessity of an intellectual property strategy for the following three reasons.
The used car market is becoming more competitive every year. The rise of major franchise chains and the proliferation of online sales platforms are making it difficult for independent used car stores to differentiate themselves. In order to survive in this situation, it is essential to establish your own brand power and become a presence that makes customers want to shop at that store.
Intellectual property rights are what legally support brand power. Even if another company copies the store name and logo you've worked so hard to build, you won't be able to say anything if you don't have intellectual property rights. On the other hand, if you secure the rights, you will be able to take firm action against counterfeiters.
💡 Importance of brand power
In the used car industry, trust is everything. By protecting brand elements such as store names, logos, and slogans through trademark registration, you can create an environment where customers can do business with peace of mind. Legally protecting your brand is directly linked to improving customer satisfaction and repeat business rates.
The wave of DX is also hitting the used car industry. New business models that utilize technology are appearing one after another, such as online business negotiations, vehicle appraisal systems using AI, vehicle inspections in VR, and proprietary inventory management systems.
Theseproprietary systems and service methodsmay be protected by patents and copyrights. It is important to protect your company's technological superiority with intellectual property before your competitors take over. Conversely, if you unknowingly use technology for which another company has already acquired the rights, you may be exposed to the risk of unexpected infringement.
Nowadays, many people considering purchasing a used car collect information on the Internet. Activities to attract customers online, such as posting on your company's website, SNS, and portal sites, are essential. However, as online exposure increases, the following problems also increase.
⚠ Risk of unintended rights infringement
Without knowledge of intellectual property, your company may not only become a ``victim,'' but also unknowingly become a ``culprit.'' For example, a manufacturer's logo may be used in an advertisement without permission, or a catchphrase that belongs to another company may be misappropriated. In the world of intellectual property, you can't just say "I didn't know".
There are mainly five types of intellectual property related to the used car business. Let's take a look at an overview of each and specific usage situations in the used car industry.
Trademark rights are rights that protect brand elements such as storefronts, logos, service names, slogans. This is the most familiar and important intellectual property right for used car dealers. By registering a trademark, you can request an injunction against other companies using the same or similar name and claim compensation for damages.
📘 Examples of trademark rights utilization in the used car industry
Copyright is a right that protectscreative expression. Photos, texts, illustrations, videos, programs, etc. are eligible. It is characterized by the fact that there is no need to register, and the rights are automatically acquired the moment the work is created. In the used car industry, the importance of copyright is increasing as information is increasingly disseminated through websites and SNS.
📘 Example of copyright usage in the used car industry
Patent rights protect novel technical inventions, and utility model rights protect devices related to the shape and structure of articles. You may think that "patents have nothing to do with used car sales," but in the used car industry, where digital transformation is progressing, the number of technologies that need to be protected by patents is increasing.
📘 Examples of utilization of patent rights and utility model rights in the used car industry
Design rights are rights that protectdesigns of goods, buildings, and images. Due to recent legal reforms, protection now includes the exterior and interior designs of buildings, as well as the screen designs of websites and apps. The range of applications for used car dealers is also expanding.
📘 Examples of the use of trademark rights in the used car industry
The Unfair Competition Prevention Act is a law that serves as a source of intellectual property protection that does not require registration. Even if you have not registered your trademark, you can defend against your famous store name being used by another company or your trade secrets being illegally taken away. In the used car industry, this is important as a countermeasure against problems associated with employee resignations and "free riding" behavior by competitors.
📘 Example of using the Unfair Competition Prevention Act in the used car industry
| Intellectual property type | Protected target | Registration required | Example of use in the used car industry |
|---|---|---|---|
| Trademark rights | Name/Logo/Mark | Registration required | Protection of store name and service name |
| Copyright | Photos/Text/Videos | Not required (automatically generated) | Vehicle photo, site content protection |
| Patent rights/utility models | Technical invention/device | Registration required | AI appraisal, inventory management system |
| Design rights | Design (including interior) | Registration required | Store design, app screen |
| Unfair Competition Prevention Act | Trade secrets, trust, etc. | Not required (protected by law) | Customer list, purchasing route protection |
Here we will introduce three typical cases of intellectual property problems that can actually occur in the used car industry. All of these are risks that may make you think, ``I couldn't believe it happened to my company,'' but they are risks that can happen to anyone if you don't take precautions.
``○○ Motors'' is a used car dealership that has been popular in the area for many years. We were highly trusted by local customers and were able to attract a steady number of customers through word of mouth. However, one day, a business with no connection to the neighboring prefecture started selling used cars under the name ``○○ Motors.'' Moreover, the company had alreadyregistered the trademark for ``○○ Motors.''
Under trademark law, there is afirst-to-file system, which means that the first person to file an application is entitled to the right. As a general rule, no matter how many decades you have used a trademark, you have no legal rights to it unless it is registered. In the worst case scenario, you may not be able to continue using your business name.
⚠ Risk of unauthorized use of trade name
Japan's trademark law is based on a first-to-file system. "It's okay because I've been using it for a long time" doesn't work. Even if you have used a trade name for many years, if another company registers it as a trademark first, you may be prohibited from using it. You should consider applying for a trademark for your store name or service name as soon as possible. Although this may be protected as a "public notice" under the Unfair Competition Prevention Act, the hurdles to proving it will be high.
This is a case in which high-quality vehicle photos posted on our company's website were unknowingly reprinted on a fraudulent website. Fraudulent sites used the photos to defraud potential buyers of their money by falsely claiming that they were selling vehicles at low prices.
When the affected consumers searched, it was discovered that the original photo was from their own website, leading to a widespread misunderstanding that``That store may be involved in fraud.'' Due to reputational damage, the number of customers visiting the store will drop dramatically, and business will suffer significant damage.
⚠ Risk of unauthorized reproduction of photos
Unauthorized reproduction of vehicle photos is a copyright violation, but that is not the only problem. If your site is used by a fraudulent site, your company's credibility will be greatly damaged. As a countermeasure, it is important to add watermarks to photos, regularly check for unauthorized use with reverse image searches, and promptly apply for DMCA or request deletion to the provider if you discover copyright infringement.
This is a case of a long-time salesman who, after retiring, took his customer list with him and opened a competing used car store in his neighborhood. The former employee directly marketed to regular customers at his previous place of employment, telling them, ``We'll be cheaper than the previous store.'' Many customers left and the original store suffered a significant drop in sales.
A customer list may be protected as atrade secret under the Unfair Competition Prevention Act, but in order to do so, it must meet the three requirements of "confidentiality," "usefulness," and "non-public knowledge." Unless you have an appropriate management system in place on a daily basis, you will not be able to receive legal protection in the event of an emergency.
⚠ Risk of taking out customer list
In order to protect a customer list as a "trade secret," three requirements must be met: (1) access is restricted and passwords are managed (secrecy control), (2) the information is useful for business (utility), and (3) the information is not publicly available (non-public knowledge). Furthermore, clearly stating confidentiality obligations and non-competition obligations in work rules and employment contracts is the first step to preventing trouble.
Japanese used cars are in high demand overseas due to their high quality, and an increasing number of companies are expanding their export business to Africa, Southeast Asia, the Middle East, Russia, and other countries. However, overseas expansion involves intellectual property risks that are different from those in Japan.
"Misappropriated application" is an act in which a third party who is not the original right holder first registers another person's brand name or logo as a trademark. Particularly in China and other Asian countries, there are many cases where Japanese company brand names are registered as trademarks by local third parties without permission.
If you are a used car exporter, there is a possibility that your trade name or service name may be registered as a trademark by a local company in the country you are exporting to. If this happens, you will not be able to operate under your own brand in that country, and in the worst case scenario, you may even be treated as a "counterfeit."
⚠ Be careful of fraudulent applications
It would be too late to deal with fraudulent overseas applications once they are discovered, and filing an opposition or invalidation trial would take a lot of time and cost. If you are even considering expanding overseas, the best preventive measure is to file a trademark application in the country in which you plan to expandin advance. You can advantageously file an application by claiming priority under the Paris Convention within six months of filing your application in Japan.
When considering registering a trademark overseas, what you need to know is the international trademark application system based on the Madrid Protocol (MadPro). Using this system, you can apply for trademarks in multiple countries at the same time with a single procedure through the Japanese Patent Office.
Compared to filing separately for each country, the major advantage is that it simplifies procedures and reduces costs. Many African and Asian countries to which used cars are exported are members of MadPro, making it an extremely useful system for businesses engaged in export business.
📘 Advantages of MadPro application
Even if you are aware of the issues related to intellectual property, many people may think, ``I don't know where to start'' or ``Maybe I can file the application myself.'' Here, we will introduce the specific benefits that you can get by hiring apatent attorney who is an intellectual property expert.
✅ Early detection and prevention of risks
A patent attorney can perform an "intellectual property diagnosis" to identify potential intellectual property risks after hearing the details of the business. It is possible to identify trademark conflict risks and intangible assets that need to be protected that your company was unaware of, and take appropriate measures.
IP Management strategy/customer attraction consulting
Patent attorneys who are well-versed in intellectual property can not only assist with application procedures, but also provide advice on management strategies that utilize intellectual property. We have the knowledge to support business growth, including branding, differentiation strategies, and the use of intellectual property in attracting customers online.
✅ Quick response when trouble occurs
When an intellectual property problem occurs, the speed and accuracy of the initial response greatly influences the outcome. By consulting with a patent attorney on a regular basis, you will be able to take appropriate action promptly when a problem arises.
Intellectual property strategy in the used car industry has two main aspects: ``defensive intellectual property'' and ``offensive intellectual property''.
🛡 Protective intellectual property
⚔ Offensive intellectual property
The earlier you start IP measures, the greater the effect and the lower the cost. Once a problem occurs, it takes a lot of time and money to deal with it. Now is the perfect time to reconsider your IP strategy, even if you think things are still going well.
Why not start by consulting with a patent attorney who is an intellectual property expert to understand what kind of intellectual property risks your business faces and what kind of rights you should acquire?
We are accepting free consultations on intellectual property strategies for used car business
Please feel free to contact us with any concerns you may have regarding intellectual property, such as trademark registration, copyright measures, overseas applications, etc.
A patent attorney will propose the best intellectual property strategy for your business.
AUTHOR
Takefumi SUGIURA （杉浦 健文）
EVORIX Intellectual Property Law Firm Managing Patent Attorney
Supports clients across IT, manufacturing, startups, fashion, and medical industries, covering patent, trademark, design, and copyright filings through trials and infringement litigation. Specialized in IP strategy for AI, IoT, Web3, and FinTech. Member of the Japan Patent Attorneys Association (JPAA), Asian Patent Attorneys Association (APAA), and Japan Trademark Association (JTA).