On September 30 2015 the IP High Court upheld the Japan Patent Office (JPO) trial decision that rejected the non-use cancellation action sought against the registration for the trademark EUROPEAN (in Japanese katakana) with respect to the designated goods "coffee and cocoa, coffee beans" in Class 30. The court ruled that the defendant trademark owner had adequately proved its use of the mark under Article 50(2) of the Trademark Law (127/1959, as amended).

Background

Article 50(1) of the Trademark Law provides that:

"Where neither the owner of the trademark right, nor the owner of a right of exclusive use, nor the owner of a right of non-exclusive use has been continuously using, in Japan for three years or more, the registered trademark (including a trademark consisting of identical characters only with their fonts modified, trademarks which, with their indication mutually replaced with hiragana and katakana characters (Japanese phonetic characters) and letters of the Latin alphabet may imply an identical pronunciation and concept, a trademark consisting of figures common in appearance and other trademarks generally accepted as identical to the registered trademark – hereinafter referred to in this Article as 'registered trademark') in respect of each item of the designated goods or designated services, any person may demand a trial for the cancellation of registration of the trademark with respect to such designated goods or designated services."

Article 50(2) of the Trademark Law provides that:

"In the case where a trial under the preceding paragraph has been demanded, unless the defendant can prove that either the owner of the trademark right, or the owner of a right of exclusive use or the owner of a right of non-exclusive use has used in Japan within three years prior to the registration of the demand for the trial the registered trademark in respect of any item of the designated goods or designated services to which the demand referred to relates, the owner of the trademark shall not avert the cancellation of the registered trademark for the designated goods or designated services. However, this provision shall not apply where the defendant provides legitimate reasons for the failure to use the registered trademark in respect of the designated goods or designated services."

Article 2(3) of the Trademark Law provides that 'use' with respect to a mark under this law refers to any of the following acts:

  • applying the mark to goods or their packaging;
  • assigning, delivering, displaying for the purpose of assignment or delivery, importing, exporting or providing through electrical telecommunications lines the goods to which a mark has been applied (or their packaging);
  • applying a mark to articles that are used in connection with services by recipients of those services (including articles assigned or leased);
  • providing services for the use of articles to which a mark has been applied;
  • displaying articles to which a mark has been applied and supplied for use in the provision of services (including articles for use by recipients of services);
  • applying a mark to articles related to the provision of such services;
  • providing services through an image viewer (ie, by electromagnetic means – an electronic or magnetic method or other method which is not perceptible by human beings) on which a mark is indicated; and
  • displaying or distributing advertisements, price lists or business papers relating to goods or services bearing a mark by electromagnetic means, or offering such goods or services with information relating thereto.

Facts

On December 12 1996 defendant Mafujiya Shokuhin K K applied to the JPO to register the trademark EUROPEAN (in Japanese katakana) for the designated goods "coffee and cocoa, coffee beans, etc" (see Figure 1 below). The mark was registered on December 25 1998 (Registration 4225824).

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Figure 1

The plaintiff, the Coca-Cola Company, requested a trial for cancellation of the EUROPEAN trademark with respect to the designated goods "coffee and cocoa and coffee beans" under Article 50(1) of the Trademark Law, which was recorded on January 15 2014.

JPO decision

On October 14 2014 the JPO dismissed the plaintiff's request for a trial hearing. The JPO based its reasoning on the following grounds.

Use of trademark

The packaging of the subject goods featured the word 'European' in Japanese katakana, followed by the registered trademark symbol in the upper-right corner (see Figure 2 below).

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Figure 2

The word 'European' was indicated in Japanese katakana in the same way as the EUROPEAN trademark in question. The JPO thus recognised that the mark featured on the packaging was identical to the EUROPEAN trademark.

Although the registered trademark symbol attached to the EUROPEAN trademark is not a legally prescribed method of indication in Japan, it should be understood as indicating that the words to which it is attached constitute a registered trademark. In this case, it thus indicated that the word 'European' was a registered trademark.

The word 'coffee' below the word 'European' was understood to indicate the contents of the packaging. Thus, although use of the EUROPEAN trademark provided that the word 'coffee' be written in the same style and size below the registered trademark, the JPO found that the unified expression 'European coffee' was not evoked by the packaging. Therefore, use of the word 'European' on the packaging did not constitute proper use of the EUROPEAN trademark.

Trademark user, used goods and timing of use

The EUROPEAN trademark was featured on the subdivided packaging of instant coffee.

The JPO found that the trademark owner, Mafujiya Shokuhin K K, had sold the subject goods using the relevant packaging to Ippei Sakamoto and Masaru Adachi through a website on November 16 2013 and December 5 2013, respectively.

Conclusion

The JPO found that the trademark owner had sold instant coffee to customers using packaging which bore a mark that was generally accepted as identical to the EUROPEAN trademark on November 16 and December 5 2013 (ie, within the period during which use had to be proved). This use by the trademark owner thus constituted the "act of assigning the goods on which or on the packaging of which a mark has been applied" under Article 2(3)(2) of the Trademark Law.

The JPO ruled that the trademark owner had adequately proved its use of the relevant trademark for instant coffee, which fell within the scope of the designated goods "coffee and cocoa", in the three years before the plaintiff filed its non-use cancellation claim. Therefore, the registration for the EUROPEAN trademark could not be cancelled under Article 50 of the Trademark Law.

IP High Court decision

The defendant appealed to the IP High Court. The court affirmed the JPO trial decision on September 30 2015.

The court held that use of the expression 'European coffee' on the relevant goods by the defendant, as owner of the EUROPEAN trademark, constituted trademark use which distinguished the designated goods. Further, this use had occurred in the three years before January 15 2014 – the date on which the plaintiff filed its non-use cancellation action.

The court identified two primary issues in the case:

  • whether the defendant's use of the mark on the packaging constituted proper use of the relevant trademark in terms of distinguishing the goods from others; and
  • whether the defendant had used a trademark that was identical to its registered EUROPEAN trademark on the packaging.

Whether use of mark on packaging distinguished designated goods

The court noted that in many instances the word 'European' has been used simply to indicate the quality of coffee. As such, it was difficult to admit that 'European' could be used as a trademark to distinguish goods.

However, in this case the expression 'European coffee' was used on the packaging. The indications 'No sugar' and 'Just pour hot water' also featured on the packaging, as well as an image of a coffee cup filled with hot coffee. The court considered it obvious that these additional indications constituted a simple explanation of the quality and content of the relevant goods – not a trademark. No other trademark was used to distinguish the relevant goods.

Further, the expression 'European coffee' on the packaging was uniform in font and size, but larger than the other elements. The registered trademark symbol followed the expression, placed in a conspicuous position at the corner of the packaging. In view of these facts, traders and consumers would inevitably consider the expression 'European coffee' to be the trademark for the relevant goods. The court recognised the concepts evoked by this expression as "European-style coffee", "coffee using deeply roasted beans", "coffee with a strong bitter taste" and "coffee with a strong body".

As mentioned above, the expression 'European' is frequently construed as a simple mark of quality when used for coffee or coffee beans in combination with other trademarks that adequately distinguish the goods. However, in this case the court held that the expression 'European coffee' on the packaging – while not a strong distinguishing mark – nonetheless constituted a trademark which distinguished the goods from others, as it was not used together with another trademark which distinguished the goods.

Whether mark on packaging was identical to registered trademark

In connection with the expression 'European coffee' used on the packaging, 'coffee' merely referred to the relevant goods and it was thus evident that this element had no distinguishing function. Therefore, according to the court, only the element 'European' could distinguish the goods. Consequently, the full expression 'European coffee' could be construed in the same way as the registered EUROPEAN trademark and used independently. The court thus held that the two were essentially identical.

The plaintiff contended that traders and consumers would understand the expression 'European coffee' to be a unit; consequently, the EUROPEAN trademark could not be recognised separately. However, the court noted that even if the expression was understood as a unit, affixing the word 'coffee' to the packaging could serve no distinguishing function, as this merely indicated the nature of the goods in question. Based on this grounds – in addition to the finding that the expression was essentially identical to the registered trademark – the court rejected the plaintiff's claims in this regard.

Conclusion

The court found that the JPO had not erred in its trial decision, and that the defendant had proved that it had used a trademark generally accepted as identical to its registered trademark for the designated goods in Japan in the three years before the plaintiff filed its claim. The court accordingly rejected the plaintiff's claim for cancellation.

Comment

In the context of non-use cancellation actions, industry groups have criticised the JPO and the IP High Court for their relatively loose interpretations of trademark use. However, in this particular case, the IP High Court upheld the JPO's finding that the mark at issue adequately distinguished the relevant goods on the following grounds:

  • The mark was used independently and not in combination with any other trademark having a strong distinguishing function.
  • The mark was displayed in a conspicuous place on the packaging of the goods, in a larger font than other word elements on the packaging.
  • The registered trademark symbol was attached to the mark.

Notably, House Shokuhin K K had previously brought an opposition to the EUROPEAN trademark, but the JPO upheld the registration on April 26 1999. It is generally understood that the JPO upheld the registration because the evidence and claims submitted by House Shokuhin K K were insufficient at the time.

The final decision in this most recent case has been widely criticised, with many contending that the EUROPEAN trademark should have been cancelled, as the expression 'European coffee' on the packaging had no distinctiveness and was thus not properly used as a trademark.

For further information on this topic please contact Eiichi Fukushima at Nishimura & Asahi by telephone (+81 3 5562 8500) or email (e_fukushima@jurists.co.jp). The Nishimura & Asahi website can be accessed at www.jurists.co.jp.

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