Japan IP High Court Ruling – Shape of “Unit Shelf” functions as a source indicator of Ryohin Keikaku

The Japan IP High Court has affirmed an earlier ruling by the Tokyo District Court, and sided with Ryohin Keikaku Co., Ltd, an operator of the MUJI retail chain, in a lawsuit accusing CAINZ Corporation, the second largest DIY store chain in Japan, of violating the Unfair Competition Prevention Act (UCPA) by distributing ready-to-assemble storage rack “Joint System Shelf” which is allegedly an imitation of MUJI’s “Unit Shelf”.

CAINZ (appellant) contested the early ruling made an error of judgment  in finding that relevant consumers conceive the shape of “Unit Shelf” as a source indicator of Ryohin Keikaku (appellee) based on the research results which showed approx. 98 percent of general consumers were unable to associate the shape with appellee, and 9 merchants out of 10 who daily deals with living ware and furniture could not identify the shape as “Unit Shelf”.

Besides, appellant claimed appellee violated clean hands doctrine and thus abused the right given he pursued the case knowing that his act to promote the “Unit Shelf” constitutes infringement of  design right belonging to a third party.

The IP High Court ruled the research was neither adequate nor persuasive  enough to negate distinctive function of “Unit Shelf” as a source indicator, stating that it just targeted people in their 20s to 40s despite consumers of goods in dispute cover whole generations having an interest in household furniture. The questionnaire to ask a specific name of retail shop was far from the case. Some of the researched merchants have business with appellant. In addition, opinions of 10 merchants are way too insufficient  to bolster appellant’s allegation.

Fact that an entity who suffered damage by unfair misconduct of competitor admittedly infringes design right belonging to third party  does not immediately hinder him from making a legal claim based on the UCPA. Being that appellant’s act to promote  the “Joint System Shelf” is likely to cause confusion with appellee’s “Unit Shelf”, the court finds  higher degree of necessity to put a restriction on appellant’s misconduct. From the foregoing findings, the court ruled in favor of appellee and dismissed the allegations as well as abuse of right.


When you conduct market research pertinent to trademark, you should be more careful to decide questionnaire and respondent. Non-existence of design or trademark registration does not guarantee risk-free transaction of a similarly shaped goods with hot-selling product if the shape functions as source indicator.

MASAKI MIKAMI, Attorney at IP Law – Founder of MARKS IP LAW FIRM

IP High Court ruled a commonly used shape of package is incapable of serving as a source indicator

On December 22, 2016, the IP High Court (Tokyo) upheld decision of Tokyo District Court (Case no. Heisei 27(Wa)33398), and ordered dismissal of appeal ruling that:

  • Appellant’s good serves as a source indicator due to designs, color, gloss, and texture depicted on external package of the goods, not merely by cube geometry of the package.
  • In view of severe difference in design, color, word mark appeared on the package, consumers will perceive such distinctive elements as “configuration of goods” provided under Article 2(4) of the Unfair Competition Law rather than shape of the package itself.
  • Configuration of goods is incapable of serving as a source indicator unless it comprises prominent distinction. Overall shape of package composed of appellant’s goods is quite simple and thus a mere fact of identical shape with respective package is insufficient to conclude that the shape plays a role of source indicator of goods in dispute.

package

Based on the foregoing, the court denied appellant’s motion to dismiss a decision of trial court on the grounds that overall package of appellant’s goods neither corresponds to “indication of goods” provided under Article 2(1)i of the Unfair Competition Law, nor “configuration of goods” under Article 2(1)iii without combination of designs, color, gloss, and texture depicted on the package.

Unfair Competition Law

Article 2(1)i
The termunfair competition” as used in this Act shall mean any of the following:

(i) creation of confusion with another person‘s goods or business by use of an indication of goods, etc. (which shall mean a name, trade name, trademark, mark, container or package, or any other indication of goods or trade pertaining to a person‘s business; the same shall apply hereinafter) that is identical or similar to an indication of goods, etc. wellknown among consumers used by said person, or assignment, delivery, display for the purpose of assignment or delivery, export, import or provision through a telecommunications line of goods bearing the such an indication of goods, etc.;

 

Article 2(1)iii
(iii) assignment, lease, display for the purpose of assignment or lease, export or import of goods which imitate the form of another person‘s goods (excluding forms indispensable to ensuring the functioning of said goods);

 

Article 2(4)
The term “configuration of goods” as used in this Act shall mean the external and internal shape of goods and their associated patterns, color, gloss, and texture, which may be perceived by users when making ordinary use of the goods.

Unfair Competition Law plays a key role in a dispute involving unregistered mark or trade dress. The case teaches us a good lesson.

A coincidence in the shape of package is insufficient in a lawsuit based on the Unfair Competition Law unless the shape contains prominent distinction in itself.

Appeal Case no. IP High Court Heisei28(Ne)10084

1187hirai%e4%bf%ae%e6%ad%a3003_2Masaki MIKAMI – Attorney at IP Law (Japan)

MARKS IP LAW FIRM