CHAPTER 8. DISPOSAL OF TRADEMARK RIGHTS (Transfer of TrademarkRights)
I. Separation from Business Operation
1. Trademark Rights and Business
Consumers perceive trademarks is being associated with the persons using thetrademarks. The former Trademark Law considered trademarks to be inseparable frombusiness, and therefore the law approved the transfer of trademarks only together with atransfer of the relevant business in order to avoid confusion over the source of goods
and services or misconception of the quality of goods (Former Trademark Law, Section
12 (1)).
However, in practice, enterprises needed to be able to transfer trademarks alone in theirbusiness activities. As both production and consumption increased, greater importance
was attached to the function of trademarks to guarantee the quality of goods andservices by indicating their source. For this reason, the application of this regulation
was not strictly enforced. Initially, the business associated with a trademark wasregarded as being a specific or actual business activity. However, afterwards, businessunder the Trademark Law came to be regarded as something non-physical, existing forthe designation covered by the trademark right; that is, conceptual business, or the statusof a person doing the business, or the person's inward intention of doing the business(Vol. 18, Daishinin (former Supreme Court), Minshu, p. 261, Mar. 29, 1931; Vol. 6, No.
4, Tokyo District Court, p. 718, Apr. 15, 1955). The transfer of a trademark wasapproved with only a written business transfer certificate attached, and no substantive
examination was conducted. Internationally, trademarks have been consideredseparable from business in an increasing number of cases, and this trend has begun toallow the use of transferred trademarks.
2. Separation From BusinessIn light of these circumstances, the current Trademark Law permits the transfer of
trademark rights independently from business. This provision of the Law has made thenature of trademark rights more proprietary (Toshin Report No. 13 (1); The New
German Trademark Law of 1995 also provides for the transfer of trademarks separatelyfrom business).
Even if trademarks are transferable separately from business, the transfer of a famous
trademark is accompanied by the transfer of the reputation of the goods covered by thetrademark, and consumers' recognition cannot immediately be directed to a new source.
The controversy over whether the transfer of a trademark is separable from businessmay never be concluded; however, the current Law has too strictly separated thetransfer of a trademark from business (Kaneko/Someno, p. 718; Toyosaki, p. 442;
Former Amino, p. 603). The Trademark Law of Germany regards the transfer of a
trademark without an assignment of business theoretically ineffective. However, theGerman Law regards any transfer of a trademark to be effective if it does not mislead
the public or if its effectiveness has not been disputed for a long period after the transfer.

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The Law in Japan regards that "publication" is sufficient to make consumers aware of
any transfer of a trademark (however, publication is made in the official gazette of theMinistry of Trade and Industry - current Ministry of Economy, Trade and Industry which is not usually read by the public). More consideration must be given to whether
this procedure is really sufficient. However, unrestricted granting of the use oftrademarks may raise more serious questions than this.
3. Registration of Transfer and Abolition of Publication System
Any transfer of a trademark shall be of no effect unless it is registered. Thisrequirement is for clarification (Section 35; Patent Law, Section 98 (1) (i)); therefore, atransferred trademark would not actually take effect if it is merely registered as aformality.
The former Trademark Law stipulated that any transfer of registration must be
published in daily newspapers pursuant to the Ordinance of the Ministry of Trade andIndustry so as to prevent confusion among consumers with respect to the designatedgoods or services (Former Trademark Law, Section 24 (3)). However, the Trademark
Law Treaty, Section 11 (4), removed the obligation of an applicant for a transfer
registration to publish the transfer in daily newspapers, so that the publication system
was discontinued.
The purpose for the obligation of Kokoku publication in daily newspapers was toprevent confusion resulting from transfer by widely publicizing the transfer. However,actually, Kokoku publication was regarded as sufficient if made, as in most cases, in theofficial gazette of the Ministry of Trade and Industry, which is not usually read byordinary consumers. Moreover, since the registered trademark concerned was notshown in such publications, the effect of publication had long been questioned.
Accordingly, the discontinuance of this system had almost no effect on ordinary
consumers.
II. Division and Transfer of Trademark Rights(1) Division of Trademark Rights
The Trademark Law prior to the Law as amended in 1996 prohibited the division of a
trademark right unless one of the divided trademark rights was transferred to any otherperson. (Section 24 (1) of the former Trademark Law was identical to Section 24 (2) ofthe current Law. Section 24 of the current Law did not exist in the former Law.).
However, according to the Trademark Law Treaty, the owner of a trademark right may
divide his own trademark without transferring any one of the trademarks divided assuch. (Treaty, Article 7 (2)). The Law as amended in 1996 approves the division of atrademark right not in connection with the transfer to others (Section 24 (1)) as called
for in the Treaty. The division of a trademark right may be made even after
extinguishment of the trademark right only during pendency of the case in a trial orretrial examination or during litigation (Section 24 (2)).

2(2) Division and Transfer of Trademark Rights
An application for a trademark registration may designate one or more goods or services
in respect of which the trademark is to be used (Section 6 (1)). According to the 1996
amendment of the Law, a single person may possess two or more trademarks that are
similar to each other (referred to as associated trademarks under the former Trademark
Law) and may transfer any one of those trademarks to another party. Two or moretrademarks conflicting with each other (associated trademarks under the former
Trademark Law) may also be owned and registered, if the owner of the trademark rights
is a single person; the ownership by that person is the very reason for the registrabilityof such trademarks. In contrast, prior to the amendment, one of the similar trademarks(associated trademarks under the former Trademark Law) was not transferable toanother party (Proviso of Article 24 (1) of Section 24 of the former Trademark Law).
After the amendment, however, the restriction ceased to exist, leaving the unansweredquestion about whether a system that permits the coexistence of such similar trademarks
is appropriate or not. On the other hand, where there are two or more designated goods
or designated services, the trademark registration shall be deemed to have been effected,
or a trademark right shall be deemed to exist, for each of such designated goods ordesignated services (Section 69). Therefore, where there are two or more designatedgoods or designated services, a trademark right may be divided into each of such items
and each item is transferable separately (Section 24 (1)).
Because this system was established, if a trademark owner intends to transfer one of histrademarks, which are similar to but independent from each other, or if any of thedesignated goods or designated services with respect to the trademark to be divided fortransfer is similar to any other designated goods or designated services with respect tothe original trademark, the transferor is required to transfer the trademark on his ownresponsibility. Once one of such similar trademarks has been transferred, it becomes an
independent trademark owned by the other party. Consequently, the effect of theprohibitive right of the transferred trademark extends to the original trademark, and if
the original trademark owner subsequently files a new application for registration of any
trademark similar to his original trademark, the trademark application may become
unregistrable, because the trademark covered by the application is similar to thetrademark owned by the other party (commonly called "mutual kick-out" or "mutualexclusion" of associated trademarks prior to the amendment).
III. Restriction on Transfer of Trademark Rights of National or Local Public
Entities
Trademark rights with respect to trademarks that are identical to or similar to famous
marks indicating national or local public entities or agencies thereof, or non-profit
organizations or enterprises working in the public interest, may not be assigned (Section
4 (1) (vi), (2) and 24 -2 (2)).
This is because such trademarks have been registered for the reason that they indicate
non-profit organizations.
IV. Restriction on Transfer of Trademark Rights of Non-Profit Organizations

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Working in the Public Interest
Trademark rights with respect to trademarks that are identical to or similar to famous
marks indicating non-profit organizations or enterprises working in the public interest
may be transferred only together with the organization or enterprise itself (Section 4 (1)(vi), (2) and 24-2 (3)).
This is because such trademarks have been registered for the reason that they are usedby non-profit organizations working in the public interest.
V. Transfer of Shares of Joint Owners
Each of the joint owners of a trademark right may, except as otherwise prescribed bycontract, use the trademark without the consent of all the other joint owners. However,each of such joint owners may not grant either an exclusive license or a non-exclusive
license without the consent of all the other joint owners (Section 35; Patent Law,
Section 73 (2) & (3)).
The number of joint owners seriously affects the interests of such owners. Therefore, if
the trademark right is jointly owned, each of such joint owners may transfer his sharewithout the consent of all other joint owners (Section 35; Patent Law, Section 73 (1)).

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