April 6, 2010
To: Secretariat of Intellectual Property Strategy Headquarters, Cabinet Secretariat
Council for Intellectual Property Protection on Internet (CIPP)

CIPP Report for FY 2009
As you have already known as a participant, the CIPP, since FY 2005, has been committed to thecollaborative activities on the private-sector level by inviting the Secretariat of Intellectual Property
Strategy Headquarters, Cabinet Secretariat, National Police Agency, Ministry of Economy, Trade andIndustry, Ministry of Internal Affairs and Communications, Agency for Cultural Affairs, and Japan
Patent Office as observers in order to solve the problem of the distribution of intellectual property rights(IPR) infringing goods arising from Internet auctions.
We hope this report will help you plan IPR protection policies for FY 2010 as it represents a
consensus of right holders (individuals and organizations) and Internet auction operators.

[Outlines]
1. Report of the Effectiveness Verification Committee
We successfully continued to keep the percentage of auctioned infringing goods at a low level asa result of the implementation of certain measures including voluntary patrols by auction
operators and removals upon notice from right holders. Furthermore during this year, there has
been a large improvement compared to the previous year in the number of auction operators
participating as new observers. We will contact auction operators as they become identified andcontinue to expand membership.
2. Results of Publicity Activities (Increasing Awareness of “Japanese Approach”)
To promote the “Japanese Approach”, our report has been prepared in English, and published on
our web site. In addition to conducting explanatory talks about the Japanese Approach in meetings
between the Japanese and Chinese governments, the Japanese Approach has been suggested toforeign rights-holders organizations such as the IACC for their consideration and comment.
3. Institution of Removals Guidelines Committee
4. Institution of the Education Committee
5. Examination of Expansion in the Scope of Discussion of CIPP
6. Requests to Japanese Government

11. Report of the Effectiveness Verification Committee(1)

SurveyThis fiscal year we again established an “Effectiveness Verification Committee” consisting of theindividuals who were actually in charge of removal requests / voluntary removals, and carried out averification by dividing targets into two groups: those which were judged as infringement of a
copyright or trademark based on their on-screen descriptions and images and would allow rightholders to make suspension requests to auction operators (Table 1), and those which were highly
likely to be infringing goods from an objective viewpoint despite the lack of decisive factors (Table
2).
Outlines of the implemented verification are as indicated in the annex. As in the previous fiscal year,
the current effectiveness verification did not cover the auctioned items which did not allow rightholders and operators to determine on the screen whether or not they were infringing goods, or whichwere not identifiable before actually buying the items.
In addition to Group 1 (3 member companies) as stated in the implementation overview, this fiscal
year, we have verified Group 2 (2 member companies, Table 3, and Table 4), and non-member Group3 (2 Control Companies, Table 5 and Table 6) that are inferred to implement almost no strategy withrespect to IP infringing goods.

<Group 1 (Yahoo, DeNA, Rakuten>

2008
2009
Table 1:

2008
2009

TrademarkVerification
Percentage
Parameter
13,334
1.39%
4,540
1.28%

Copyright
Verification
Percentage
Parameter
6,740
0.91%
7,433
1.22%

Total
Verification
Percentage
Parameter
20,074
1.23%
11,973
1.24%

Percentages of auctioned IPR-infringing goods meeting the requirements specified in the guidelines

TrademarkVerification
Percentage
Parameter
13,334
0.19%
4,540
0.24%

Copyright
Verification
Percentage
Parameter
6,740
1.75%
7,433
0.93%

Total
Verification
Percentage
Parameter
20,0740.72%
11,973
0.67%

Table 2: Percentages of auctioned items which right holders deemed were highly likely to be infringing goods
from an objective viewpoint although the requirements specified in the Guidelines were not met

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<Group 2 (Other member companies, 2)>

2008
2009
Table 3:

2008
2009

TrademarkVerification
Percentage
Parameter
225
6.22%

Copyright
Verification
Percentage
Parameter
38
0.00%

Total
Verification
Percentage
Parameter
263
5.32%

Percentages of auctioned IPR-infringing goods meeting the requirements specified in the guidelines

TrademarkVerification
Percentage
Parameter
225
4.89%

Copyright
Verification
Percentage
Parameter38
26.32%

Total
Verification
Percentage
Parameter
263
7.98%

Table 4: Percentages of auctioned items which right holders deemed were highly likely to be infringing goods
from an objective viewpoint although the requirements specified in the Guidelines were not met<Group 3 (Non-member companies, 2)>

2008
2009
Table 5:

2008
2009

TrademarkVerification
Percentage
Parameter
451
69.62%

Copyright
Verification
Percentage
Parameter
19
0.00%

Total
Verification
Percentage
Parameter
470
66.81%

Percentages of auctioned IPR-infringing goods meeting the requirements specified in the guidelines

TrademarkVerification
Percentage
Parameter451
25.50%

Copyright
Verification
Percentage
Parameter
19
0.00%

Total
Verification
Percentage
Parameter
470
24.47%

Table 6: Percentages of auctioned items which right holders deemed were highly likely to be infringing goods
from an objective viewpoint although the requirements specified in the Guidelines were not met(2)AnalysisGroup 1 displays stable and prioritized strategies and shows only an extremely small increase
which is at the lower end of the overall scale. Although the requirements specified in the Guidelines
have not been met, there has been a reduction in the percentages of auctioned items deemed highly
likely to be infringing goods from an objective standpoint. Consequently, the protection system was
sufficiently maintained and as a result provides a verification of the effectiveness of the "Japanese
Approach".
The figures in Group 2 compare unfavorable with the figures for Group 1, and we believe that there
is a need for further improvement by implementation of increased patrols, personal confirmation, or3substitute strategies. One company of the two companies has demonstrated a large improvement froma level of infringement prior to joining the CIPP that was similar to Group 3. These results also verify
the effectiveness of the “Japanese Approach”.
Verification of the Group 3 of non-member companies that were newly discovered by member
companies was performed and attention must be drawn to the fact that more than half of the total
goods for auction were goods infringing trademark rights. Although goods infringing copyright are
not present in Group 2 or Group 3 (refer to Table 3 and Table 5), since the verification parameters are
small, these figures should be merely treated as reference figures.

As discussed above, some points have been highlighted in relation to a sector of auction operators.
However even when this is taken into account, on the basis of the study performed by the Union desFabricants, the recent share in relation to fashion brands of Group 2 and Group 3 together is less than
3%, and therefore has little effect on the overall state of the auction market.
Going forward, it is important that continuous inducement is given in a stepwise direction of
improvement in the form of Group 3 moving to the position of Group 2 and Group 2 moving to theposition of Group 1. In this context, we will strive to continue improvement activities by incorporating
outsiders who will probably demonstrate a share future increase.

Operators implementing continuousand cooperative strategies

Occupies
almostentireshare

Operators initiating
strategies
Operators not
implementing strategies

42. Results of Publicity Activities (Increasing Awareness of Japanese Approach)(a) The reports for last year and two years ago have been translated into English, displayed on the
CIPP website to thereby commence international notifications.
(b) By invitation of the Ministry of Economy, Trade and Industry, etc., the CIPP has been
involved in negotiations between the Japanese and Chinese governments in which we have
explained the activities of the CIPP, its results, and the effectiveness of the Japanese
Approach.
(c) We received a visit from the Chairman of The International Anti-Counterfeiting Coalition(IACC) which is an American rights-holders organization, and we have explained theactivities of the CIPP, its results, and the effectiveness of the Japanese Approach.
(d) We have been contacted by Ebay Inc. which is the largest auction operator in the world, andsubsequently received a visit from Ebay at our conference.
In today’s world in which the public is more engaged with borderless transactions such as internet
auctions, we will continue to develop our international publicity activities based on a recognition thatthe adoption of the Japanese Approach as a global standard is a matter of high priority.

3. Institution of tthe“Guidelines for Prevention of the Distribution of Intellectual Property Rights
Infringing Goods”Committee
After preparing the “Guidelines for the Prevention of Distribution of Internet IP Infringing Goods”
in 2008, each company has refined its internal removal standards. After coordinating overlapping
matters, we have established a Removals Guidelines Committee with the goal of improving thecommon awareness including new members.

4. Institution of the Education Committee
A decision has been made to examine education strategies for the aim of attracting attention to theactivities of the CIPP, of course by users of internet auctions, but also by rights holders that are notactively pursuing strategies in relation to IP infringing goods, and to include rights holders andrights-holders organizations together with internet auction operators. For that purpose, we are
examining the establishment of an Education Committee.

5. Examination of Expansion in the Scope of Discuttion of CIPP
Since our foundation, the CIPP has solely performed activities related to the examination ofstrategies for the prevention of distribution of “IP infringing goods” by internet auctions as an urgent

5issue. And, as indicated in this Report, our effort has been successful to the extent that the “Japanese
Approach” has attracted attention from around the world.
The current problems occurring related to IP infringement on the internet are related toinfringement onstorage services or video sharing sites in particular with reference to copyrights. Ourcurrent members include operators developing such services and parties also include rights holders.
In view of these circumstances, in addition to problems related to internet auctions, the CIPP
intends to examine the possibility of whether dialogue can be promoted between these private-sector
parties within some framework in relation to the problems associated with storage services or video
sharing sites.

6. Requests to Japanese Government
As discussed above, in relation to strategies for IP infringement via the Internet in Japan, the private
sector has, through its own efforts, already achieved world leading successes centering on internet
auctions, and is currently considering an expansion in the scope of its activities. We have created theframework for a flexible response to problems that may arise in the future. On the other hand, there
has been little development of rights infringement strategies in the countries of East Asia, and it is not
an exaggeration to say that the situation is somewhat chaotic and is liable to cause damage toJapanese consumers. This situation not only is a cause of serious economic damage to domestic
rights-holder companies, but also results in a situation of unfair competition to internet operators fromforeign operators that continue to develop international business in a vacuum without any rights
infringement strategies.
Therefore we request the Japanese Government to given their consideration to this situation, and wehope examination and implementation of an international policy transcending the governmental
framework that cannot not be achieved by the private sector in relation to increasing the overseas
awareness of the Japanese Approach to thereby enable some means for preventing infringing actsfrom overseas and infringing acts in other countries.

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(Annex)
Changes in Number of Voluntary Removals, Total Number of Items, and Number of Removal Requests(a)Voluntary removals
Table 7 shows the voluntary removals by auction operators. As in the previous fiscal year,
proper operation was carried out in accordance with the “Guidelines for Prevention of theDistribution of Intellectual Property Rights Infringing Goods.”

2007
2008
2009

Trademark748,416 cases
524,802 cases
180,253 cases

Copyright
187,909 cases
52,801 cases
29,202 cases

Total
936,325 cases
577,603 cases
209,455 cases

Table 7: Changes in Voluntary Removals by Operators in Past Three Years*

In 2008, there is a transient effect of a large number (300,644 cases) of items for auction from a
specified entity, and from 2009 that effect ceased. When that effect is discounted, 2008 includes
276,959 cases. Furthermore although this is related to the method of counting the number of requests
for removal by rights holders, we have adopted a method of counting more closely aligned with therealities of some operators.

(b)

Changes in Total Auctioned Items in Major Auction Sites
The total number of auctioned items maintains an increasing trend.

2007
2008
2009

Yahoo! Auction
1650 million cases
1817 million cases
2250 million cases

Rakuten Auction
53 million cases
107 million cases
205 million cases

Bidders
280 million cases
537 million cases
638 million cases

MOBAOKU
310 million cases
334 million cases
364 million cases

Table 8: Changes in Total Auctioned Items in Major Auction Sites*

The figures on Yahoo! Auction, Rakuten Auction and MOBAOKU represent their daily averagevalues in December while the figures on Bidders represent the total of auctioned items at the end of
December.

(c)Changes in Removal Requests from Right Holders

2007
2008
2009

Trademark30,907 cases
46,747 cases
34,129 cases

Copyright
365 cases
294 cases
6,542 cases

Design Right
2 cases
0 cases
0 cases

Total
31,274 cases
47,041 cases
40,671 cases

7*

Removal requests were directed to five companies: Yahoo! Auction, Rakuten Auction, Bidders
Auction, MOBAOKU, and girls auction. (Note that girls auction was added in December 2007.)*

The figures on removal requests from right holders include the cases where individual auctioned
items or IDs of the sellers were suspended.

*

Since the object varied by year in relation to which infringing goods of an auction are monitored
by rights holders, the number of removal request by rights holders is different depending on
which auction is the object of monitoring. Therefore a simple comparison across years is difficult.

*

The increase in the number of copyright-related requests for removal during 2009 was due toinfringing goods routinely offered on auction in relation to specific contents, and therefore
removal requests concentrated on copyright holders.

8(Reference)Principles of the Japanese Approach

1. Both parties (right holders and auction operators) shall be aware that they should fully respect eachother’s positions and then make collaborative efforts in standing up against their common enemies,
that is, infringers, in order to protect not only their own interest but also interest of consumers among
others.

2. Right holders shall be aware that they should enforce their own rights, which are not automaticallyprotected.

3. Auction operators shall be aware that they should make active efforts to protect intellectual property
rights for sound development of the Internet.

4. Both parties shall be aware in the course of the promotion of countermeasures that they should agree
on the equal importance of the protection of intellectual property rights and the securement of users’
freedom for business and secrecy of communication, and that they should take actions not toundermine values of both aspects.

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