Japan – Defendant Shelved – IP High Court Judgement Finds For Unfair Competition.

18 May, 2018

 

The Intellectual Property High Court (IPHC) rendered a judgement on 29 March 2018, granting a permanent injunction on the sale of shelving units marketed by the defendant. The IPHC found that the shelving units had similar characteristics to shelving units marketed by the plaintiff, and thus violated the Japanese unfair competition regulation. Both parties are well-known stores that sell furniture, stationary, and other home amenities.

 

In the first instance, the Tokyo District Court (TDC) had also granted a permanent injunction to the plaintiff on 31 August 2017. In this litigation, the principal issues in dispute were:

 

• whether the design of the plaintiff’s shelving units would be sufficiently distinctive to be protected by the Unfair Competition Prevention Act (Act No. 47 of 1993, as amended); and
• whether the defendant’s products are sufficiently similar to those sold by the plaintiff, so that consumers would confuse them with the plaintiff’s products.

 

The TDC acknowledged that the shelving units sold by the plaintiff should be protected by the Unfair Competition Prevention Act because it was objectively clear that they have significant characteristics that could distinguish them from other products in the same category. The TDC pointed out in the judgement that the plaintiff’s products have the main characteristics that (a) each vertical pillar consists of two narrow metal rods; (b) there are two crossed diagonal bars on the back side of the shelf; (c) the number of slim shelf boards is smaller than the number of crossbars; (d) the diameters of the diagonal bars on the back side and the crossbars are similar to that of the narrow rods of the pillars; and (e) as a result, the shelving units have a skeleton-like appearance. As to the second issue, the TDC pointed out that the defendant products have all the aforementioned characteristics of the plaintiff’s shelving units, and only differ slightly from the in the size of the rods and shelf boards.

 

The judgement of the IPHC cites the substantial part of the TDC’s judgement, and emphasises that other designs could have been used in shelving units, especially in the joints between the shelf board and the crossbars. In addition, with regard to the market surveys conducted by the defendant, showing that 98% of all general consumer respondents and 9 out of 10 respondents in the furniture industry found that the product was not distinguishable as a product of the plaintiff, the IPHC decided that they were not sufficiently credible to provide a basis to rebut the judgement of the TDC, based on the grounds that (i) the respondents to the questionnaire, which was sent to the general public, were not restricted to people who are interested in furniture, (ii) the questions in the questionnaire were oriented to lead the respondents to answer in a particular way, and (iii) the 10 respondents to a questionnaire in the furniture industry were employed by one of five business partners of the defendant.

 

The takeaway then is that the near-exact copy of the plaintiff’s products  may well have led the Japanese courts to consider malicious intent on the part of the defendant to deceive consumers (see p. 22-26: plaintiff’s products, and p. 27-29: defendant’s allegedly infringing products here). On distinctiveness, in the eyes of the IPHC, the skeleton-like, slim and simple appearance of the plaintiff’s products seems to be the quality that enables consumers to distinguish them from other companies’ shelving units. It will be interesting to see how this case reflects on future IP enforcement cases and the resulting strength of Unfair Competition law as an alternative to enforceable design or trademark rights.