17 Trademark Act and Consumer Protection
with a Focus on a Comparative Study of the Sign Systems
in Japan, China, and South Korea（*）
Research Fellow: Risa Ide
Trademarks are designed to convey information on the source, quality, characteristics, etc., of goods or services(hereinafter referred to as “Goods, etc.”) provided by companies. Other signs indicating the quality andcharacteristics of Goods, etc., such as the place of origin, ingredients, etc., have been established based on systems
and legal provisions that are independent and different from those for trademarks. If both a sign and trademark areaffixed to the same goods, or when a sign is incorporated into a trademark as a component, it could cause
information asymmetry. We need to start with conducting studies and research on these situations. The issue that
requires urgent attention is that the lack of coordination among the current sign systems including the Trademark
Act in conveying similar information makes it difficult to meet the needs of companies and consumers. A similar
issue exists not only in Japan but also in China and South Korea. In particular, the difference between the trademark
system and other sign systems in terms of the theoretical grounds for granting rights has made the trademark systemvulnerable. In this research, various cases are analyzed based on the results of an international comparative study.
Based on the analysis results, the author proposes a new approach (the theory on the function of dynamic factors
from the perspective of information incompleteness on the side of consumers) and tries to give suggestions as to how
the Japanese sign systems should be revised, while taking note of the universality of the issue addressed in this report.

Ⅰ Introduction

companies, i.e., information providers, due to thelimited ability of consumers to process
information and the limited ability of companies
to provide information. The information
asymmetry between the two causes theincompleteness of information on the side of
consumers. Recently, public interest has been
growing over sign systems that are designed tomitigate the incompleteness of information. For
example, some food labeling systems have been
undergoing reform.1
This research has two major purposes. The
first purpose is to conduct a fact-finding study
based on a basic hypothesis that the protectionthat needs to be provided under the sign systems
including the Trademark Act is qualitatively
changed by dynamic factors such as theinformation, etc., on Goods, etc., that are subject
to temporospatial variation. The second purpose
is to conduct necessary analyses of relevant cases
and to propose a revision of sign systems basedon a new approach in order to remedy the
problems identified in the study.

Trademarks serve the private interest as theproperties of private individuals in one respectand serve the public interest as a tool to provide
consumers with information on the source, quality,
and other characteristics of Goods, etc., inanother respect.
This research establishes a theory from theperspective of consumers for the following two
reasons. First, an attempt to raise issues from theperspective of consumers would help us identify
the issues that avoid notice from the perspectiveof companies. Second, while this research
addresses the issue of the incompleteness of theinformation caused by signs, the theory on suchincompletenessisestablishedfromtheperspective of consumers, who play anintermediary role.
1

BackgroundResearchandPurposeof

This

This research focuses on the issue of theincreasing information asymmetry between
consumers, i.e., information recipients, and2

Method and Scope of This Research(*) This is an English translation of the summary of the report published under the Industrial Property Research
Promotion Project FY2011 entrusted by the Japan Patent Office. IIP is entirely responsible for any errors in
expression or description of the translation. When any ambiguity is found in the English translation, the original
Japanese text shall be prevailing.

IIP Bulletin 2012 Vol.21●

1 ●In this research, two working hypotheses
were made. The first hypothesis is that acomparative study of the sign systems of multiple
countries would reveal the existence of thefunction of dynamic factors across nationalboundaries. The second hypothesis is that, while
sign systems are expected to performconventional trademark functions such as thesource-indicating function, the quality-guarantee
function, and the advertising and publicity
function from the perspective of consumers as therecipientsofdisseminatedinformation(hereinafter referred to as the “System-based
Functions”), the System-based Functions could
become dysfunctional due to the function of
dynamic factors. In this research, in order toreach a conclusion that reflects the reality, I
collected relevant literature and also conducted
an interview with persons with relevant
knowledge and experience, practitioners, staff
members of public institutions, etc., in Japan,
China, and South Korea.
The scope of this research covers thetrademark systems and other quality-related sign
systems and relevant court precedents in Japan,
China, and South Korea.
3

efficient, or the existence of the market itself
could become difficult. 6 As far as market
transactions are concerned, there is asymmetry
between companies and consumers in terms of
the quantity and quality of information that they
have. Therefore, the information held byconsumers is incomplete.
The term “consumers” is defined as general
consumers
because
the
issue
of
trademark-related information asymmetry arises
mostly in cases involving general consumers. If
trademarks are considered to be a tool for
information provision, the information provided
by trademarks could be considered to be
responsible for the issue of information
asymmetry between companies and consumers.
In order to focus on the information conveyancefunction of trademarks, this research gives
special attention to general consumers, who areat a great disadvantage against companies interms of information processing capability, etc.,
and examines the issue of the protection of theinterests of consumers under the Trademark Act.
On the other hand, if consumers’ interests are notprotected, it would be impossible to protect theinterests of consumers including end consumers
under the Trademark Act. Based on thesegrounds, in this research, a theory is developedon the assumption that “consumers” have been
replaced with “consumers (end consumers),” whoare subject to the consumer protection policy.
Article 2, paragraph (1) of the Consumer Contract
Act specifies that “The term ‘Consumer’ as usedin this Act shall mean individual(s) (however, thesame shall not apply in cases where said
individual becomes a party to a contract as abusiness or for the purpose of business).”
One way of solving the problem of
information incompleteness is to make companies,
which have information, emit signals to indicate
quality.7 Since the recipients of the signals are
consumers, signals displayed in the form of marks
or indications including trademarks will remedy
the information incompleteness on the side of
consumers. In order to conduct research on theissues raised by the information incompletenesscaused by trademarks, etc., on the side of
consumers, it is the most effective to conduct
research from the perspective of consumers. The
essence of those issues would not be revealed
unless research is conducted from theperspective of consumers. This is why thisresearch is conducted from the perspective ofconsumers.

Definitions of Major Terms Used in This
Research

According to the definition of “quality” ingoods science, the quality of goods in a broad
sense can be divided into the primary quality andthe secondary quality depending on thecharacteristics of quality.2 The primary quality isdefined as “the primarily important quality fromthe perspective of the purpose of use of the goods.
The primary quality is a prerequisite fortransformation of materials into goods.” 3 The
secondary quality is defined as “the quality thatplays a secondary role by increasing themarketability and product value of goods on thebasis of the existence of the primary quality. The
secondary quality and the primary quality
comprise the quality of goods in a broad sense.”4
The “incompleteness of information” occurs
due to information asymmetry. In economics,
information asymmetry is considered to exist
between a seller and a buyer with regard to thenature of goods when the seller and the buyer donot share the recognition of the nature of thegoods involved in the transaction.5 It is said that,
if information asymmetry exists, the volume of
the goods traded in the market could become
smaller than the volume that is considered to be●

2 ●IIP Bulletin 2012 Vol.21

The “function of dynamic factors” isdetermined by the conditions, e.g., quality,
characteristics, etc., of the goods to which a
trademark is affixed (hereinafter referred to as“Trademarked Goods”). While dynamic factors
are related to the quality, more specifically the
primary quality of Goods, etc., the primary quality
has relative, fluid, variable characteristics. Suchvariable factor causes constant change in theinformation concerning Goods, etc. In some cases,
the difficulty in conveying such changing
information through a medium designed for
information conveyance causes information
asymmetry. This is the case where the function of
dynamic factors is at issue. If consumers’ searchcosts depend on how effectively signs such as
trademarks can convey information on Goods, etc.,
the incomplete information conveyed bytrademarks etc., would damage the interests ofconsumers.
Such problem is especially noticeable incases where a sign, either implicitly or explicitly,
conveys information on the quality andcharacteristics of Goods, etc. One way of dealing
with the function of dynamic factors is to properly
conduct inspections and evaluations on thestandards, quality, characteristics, etc., of Goods,
etc. It would provide companies with a means toclearly indicate quality, which would improvetheir competitiveness, and would provide
consumers with a reliable means to easily choose
appropriate goods from among many otherqualitatively indistinguishable goods thanks to thequality indication given by authorities and toprotect their interests as a result. 8 Typicalexamples are certification and verification marks
and geographical indications. The information
concerning the quality, etc, of Goods, etc.,
conveyed by such signs is different from theinformation about the quality (the secondary
quality) indicated based on the conventional
trademark system. If such sign as mentioned
above that indicates the primary quality is placedside by side with a trademark, or if such sign isincorporated into a trademark as a component of
the trademark, it would become even harder toproperly convey information to consumers. For
these reasons, this research focuses on various
signs indicating the quality and characteristics ofGoods, etc., and defines as dynamic factors thosefactors that cause signs to bring about information
incompleteness in market transactions because of
the inconsistency between sign systems or any
defects in those systems themselves. The action

IIP Bulletin 2012 Vol.21of these factors is defined as the function of
dynamic factors.

Ⅱ Quality-Guarantee Function under
the Trademark Law
1

Japan

The provisions of the Trademark Act of Japan
regarding quality include Article 3 (Requirements
for trademark registration), paragraph (1), item(iii), Article 4 (Unregistrable trademarks),
paragraph (1), item (xvi), the gist of Article 7-2(Regional collective trademarks), Article 26(Limitations of effects of trademark right),
paragraph (1), item (ii) and (iii), Article 51 (Trial
for Rescission of a Trademark Registration),paragraph (1), and Article 53 (Trial for Rescissionof a Trademark Registration), paragraph (1).
Regarding the registration of marks
indicating quality, the Japan Patent Officepresents relevant examination guidelines in
Chapter I, Part 5 (the guidelines concerning
Article 3, paragraph (1), item (iii) of theTrademark Act) and Chapter III, Part 14 (theguidelines concerning Article 4, paragraph (1),item (xvi) of the Trademark Act) of the revised
Examination Guidelines for Trademarks.
From the perspective of economics,
protection of the quality-guarantee function of
trademarks would guarantee that trademarks willfunction as the standards for consumers’ productchoices and would reduce the product searchcosts of consumers.9 In Japan, while there are thetheory that denies the quality-guarantee
function10 and the theory that highly values thequality-guarantee function, 11 the commonly
accepted theory concerning the quality-guarantee
functionoftrademarks
is
that
“the
quality-guarantee function of trademarks is afunction that indicates that all of the goods andservices bearing the same trademark have thesame quality.” 12 Under the Trademark Act, theterm “quality” does not mean the objective,
physical quality of Goods, etc., and the term
“guarantee” does not mean the guaranty ofliabilities in the sense that the quality of goods
and services is guaranteed and that, if a certain
quality standard is not satisfied, the goods would
be replaced, or the service would be provided
again, or the damages would be paid (even if suchguarantee is specified in an agreement, it is not alegal effect of trademarks.) but simply means that
consumers can expect that all of the goods andservices bearing the same trademark usually have●

3 ●the same quality.13
On the other hand, in the “Fred Perrycase,”14 the Supreme Court cited the legislative
purpose of the Trademark Act (Article 1) and heldthat “the so-called parallel import of genuine
goods would not damage the source-indicating
function and the quality-guarantee function,
which are the functions of trademarks, and would
not damage the goodwill of the company that uses
the trademark, the interests of consumers, and,should not be considered illegal in practice” andtherefore would not constitute trademark
infringement. The Supreme Court further held
that, in this case,” the limitations on the
manufacturing countries and subcontractors
imposed by the provisions of the license
agreement are important in order to enable thetrademark holder to manage the quality of thegoods and ensure the full performance of thequality-guarantee function” and that this case may
not be regarded as the parallel import of genuine
goods and therefore constitute trademark
infringement. The Supreme Court found that thequality-guarantee function of trademarks is thefunction that enables the trademark holders tocontrol the quality of the Trademarked Goods.

2

Protection of Well-known Trademarks, theProduct Liability Law, the Food Safety Law, andvarious legal interpretations, etc., of the Supreme
People's Court of the People's Republic of China.
Regarding the Trademark Examination
Guidelines, the guidelines related to Article 10,paragraph (1), item (iv) are presented in Chapter I,
Part 6 of the Guidelines, and the guidelines
related to Article 11, paragraph (1), item (iv) arepresented in Chapter II, Part 4 of the Guidelines.
According to academic theories, while there
are different perspectives, i.e., the perspectivesof trademark holders, the purchaser of goods, andconsumers, the theories established from theperspective of consumers include the following:
the theory stating that trademarks have thefunction of indicating the quality of the goods,22
the theory stating that the function of trademarks
is limited to enable trademark holders to control
the quality of the designated goods, etc., and theimportant function is to guarantee the quality of
the goods,23 the theory taking a critical stanceagainst the Chinese Trademark Law, whose
legislative purpose is to manage and supervise
the primary quality, and arguing that said law
distorts
thequality-guarantee
functionoftrademarks,24 and the theory arguing that “according
to the theory of information science, thelegitimacy of trademark rights has a basis in theeconomic function in the sense that the
information conveyed by trademarks reduces theconsumption costs, helps consumers makepurchase decisions, and encourages companies toimprove the quality of goods.”25 As pointed out
by Mr. WEN, the contents of Article 39, paragraph(1) and Article 40, paragraph (1) of the Chinese
Trademark Law have been established based on
the concept of the primary quality. If either ofthese provisions is violated, the trademark would
be rescinded. The System-based Functions under
the Chinese Trademark Law are different fromthe System-based Functions in Japan, particularly
in terms of the quality-guarantee function.

China

In China, the provisions of the Trademark
Law regarding quality guarantee include Article 3,
paragraph (3) concerning the definition ofcertification trademarks, 15 Article 7 concerning
the trademark user’s liability for the objective
quality of goods (the primary quality),16Article 10,paragraph (1), item (iv) concerning the reasons for
trademark unregistrability,17 Article 11, paragraph (1),item (ii) concerning the marks unregistrable astrademarks,18 Article 16, paragraph (2) concerning
the definition of geographical signs, 19 Article 39,
paragraph (1) concerning the guarantee of theobjective quality of the trademarked goods of the
trademark assignee,20 and Article 40, paragraph(1) concerning the objective quality oftrademarked goods, more specifically, theobligation of the licensor to supervise thelicensee and the obligation of the licensee toguarantee quality. 21 Furthermore, the following
laws and regulations were established under
Article 3 of the Trademark Law as other sign
systems concerning quality guarantee: theProcedures for the Management and Registrationof Collective Trademarks and Certification
Trademarks, the Anti-unfair Competition Law, theRegulations on Provisions on Recognition and

3South Korea

In South Korea, the provisions of the
trademark law regarding quality guarantee
include Article 2 (Definitions), paragraph (1),item (iii.bis) concerning the definition ofgeographical indication, item (iv) concerning thedefinition of certification marks, item (iv.bis)
concerning geographical indication certification
marks, Article 3ter (Those entitled to obtainregistrations of certification marks), Article 6●

4 ●IIP Bulletin 2012 Vol.21

(Requirements for trademark registration),paragraph (1), item (iii),26 Article 7 (Unregistrable
trademarks), paragraph (1), item (xi), 27 andArticle 9 (Application for trademark registration),paragraph (5). Other provisions include Article 51(Limitations of the effect of a Trademark Right),
paragraph (1), item (ii),28 Article 73 (Trial for the
rescission of a registered trademark), paragraph(1), item (ii) concerning misunderstanding andconfusion about quality, item (v) concerning
misunderstanding and confusion about collective
marks, item (vi) concerning the risk ofmisunderstanding and confusion about quality due
to a change in the articles of incorporation at thetime of the establishment and registration of acollective
mark,
item
(viii)
concerning
misunderstanding and confusion about quality
among trademark users, item (ix) concerning
misunderstanding and confusion about quality
among the holders of the right of prior use, item(x) concerning misunderstanding and confusion
about quality, etc., caused by a third party’s use ofa collective mark and the inaction by the holder ofthe collective mark, item (xii) concerning
misunderstanding and confusion about quality
caused by homonyms found in geographicalindication certification marks used by the holdersof collective marks or the members of theorganizations, and item (xiii) concerning
misunderstanding and confusion about quality,
etc., of certification marks.
Regarding the Trademark Examination
Guidelines, the guideline related to Article 6,paragraph (1), item (iii) is presented in Article 8of the Guidelines, and the guideline related to
Article 7, paragraph (1), item (xi) is presented in
Article 25 of the Guidelines.
In South Korea, other systems concerning
quality guarantee include the Unfair Competition
Prevention and Trade Secret Protection Act, theAgricultural and Fishery Products Quality Control
Act, and the Livestock Product Sanitation andInspection Act. For example, the Livestock
Product Sanitation and Inspection Act, the Food
Sanitation Act, the Pharmaceutical Affairs Act,etc., provide a basis for HACCP marks and healthfunctional food marks. International notices onthese marks were sent via WIPO on March 31,
2009, under Article 6ter of the Paris Convention.
However,
there
have
been
trademarkregistrations of marks that incorporate such markthat symbolizes internationally recognized quality
into themselves as a component. The information
concerning the primary quality of the Goods, etc.,
conveyed by these marks functions as a dynamic

IIP Bulletin 2012 Vol.21

factor because such information can easily change.
Any sign used as a medium of information isunstable due to the function of dynamic factors.
For example, the registered trademark itself
could be rescinded. Such signs undergo
qualitative changes in terms of the function as anindication of product safety or the System-based
Function such as various trademark functions.
In South Korea, the academic theories
concerning trademark functions include thefollowing: the theory stating that, while
trademarks have three essential functions, i.e.,the distinction function to distinguish thetrademark holder’s products from others, thesource-indicating
function,andthequality-guarantee function, the quality-guarantee
function serves the public interests 29 and thetheory stating that the fundamental or basic
function of trademarks is the distinction
function,30 and the theory that highly values thequality-guarantee function.31

Ⅲ Quality-Guarantee Function of
Certification
Marks
and
Verification Marks
1

Japan

Regarding the distinctive characteristics of“quality,” Mr. Zentaro Kitagawa states that“quality” is relative, fluid, and variable. The
important factors that determine the quality are
the existence of the purpose of use and thecharacteristics as a function of temporospatialconditions.32 He also states that “there are also
artificial, socioeconomic factors such as thedevelopment of new products thanks totechnological innovation, the emergence of
unique quality, and the quality reform carried out
under a management policy or national policy
concerning quality.”33 Since the quality of Goods,
etc., is susceptible to temporospatial variation andisalsoeasilyinfluencedbyartificial,socioeconomic factors, it is necessary to guarantee
the quality of Goods, etc., (system-based
guarantee) by certification marks and verification
marks under the systems related to certification,verification, etc. For instance, “users andconsumers pay attention to whether the JIS markhas been placed only if ‘the invisible quality andthe invisible capability of a product” areaccurately checked and confirmed under strict
criteria.”34 It is expected to provide a system-based
guarantee in such a way that is most suitable forthe characteristics of the quality.
●

5 ●

2

August 20, 2008. Moreover, the government has
decided to introduce a new product certification
system by establishing and revising necessary
laws and regulations. In order to coordinate
different certification systems, the government
has obliged any organization that plans to use acertification mark to contact the Ministry ofKnowledge Economy for prior consultation about
the mark. Despite these measures, the number ofcertification and verification marks is still on therise.
Certification marks and verification marks
are specified in the Trademark Act as certification
marks and business emblems.37 Certification marks
are defined in Article 2, paragraph (1), item (iv),while business emblems are defined in item (v) of
said paragraph. Certification marks are marks thatorganizations engaged in the business ofcertifying the quality, place of origin, production
process, or any other feature of goods or services
may use in order to certify that the goods of any
company engaged in the business of producing,
manufacturing, processing, or selling goods or theservices of any company engaged in the businessof providing services satisfy the requirements interms of quality, place of origin, production
process, or any other feature. On the other hand,business emblems are marks that organizations
engaged in non-profit business use in order toindicate their own business.
Regarding certification marks, the Trademark
Examination Guidelines merely specify, in Article
74 (Process of examination concerning collective
marks, certification marks, and guarantee marks),
paragraph (1), that, in the case of an international
application for trademark registration, if it is
notified that the trademark claimed in theapplication will be used as a collective mark,certification mark, or guarantee mark, said
application shall be deemed to be an application
for registration of a collective mark.”
On the other hand, regarding businessemblems, detailed examination guidelines
covering seven points are presented in Article 50
of said Guidelines. In addition, Section 8.1.1 of
the Trademark Examination Manual explains indetail the examination method of businessemblems and the important points.
The business emblem systems are designed
to have an active legal effect in the form of thepermission of exclusive use of the respective
emblems for non-profit business. Such systemdoes not exist in any other country. There has
been a persistent view that this system should be
abolished because it is a legislative error.

China

In China, certification marks and verification
marks have been gathering public attention. In
particular, food safety is an issue that requires
urgent improvement. Certification marks andverification marks are expected to perform thefunction of conveying information to consumers.
However, there is a large number of certification
marks and verification marks for food quality
alone. They often prevent consumers form
making free and appropriate consumption choices.
These marks are mostly protected as
certification trademarks, which are different from
regular trademarks. “First, while regulartrademarks are prohibited from indicating thequality or intrinsic capability of goods, thepurpose of using a certification trademark is toinform the public of the intrinsic quality of goods.
Second, the holder of a certification trademark is
prohibited from using the certification mark forhimself/herself and is only allowed to supervise
whether the use of the certification trademark byanother person complies with the relevant
regulations. On the other hand, the holder of aregular trademark has the right to exclusively use
the trademark for himself/herself. Furthermore,
the purpose of using a trademark is usually to
distinguish the source of goods, while acertification trademark is, due to its function, notbasically designed to distinguish the source ofgoods. Certification trademarks are permitted tocertify the area or source from which the goods orservices originated. The provision that prohibits
the use of geographical names in regulartrademarks is not applicable to certification
trademarks.”35 Due to these characteristics, theexamination
guidelines
forcertification
trademarks are different from those for regulartrademarks.
Part 4 of the Trademark Examination
Guidelines specifies the guidelines applicable tosubject and object respectively concerning themanagement and supervision of the objective,
natural, fundamental primary quality of Goods,etc.
3South Korea

The Korean government recognizes that too
many certification marks and verification marks
have become problematic. 36 In order to improve
the situation, the government has decided to
introduce the KC mark, which will unify 13
existing legally compulsory certification marks by●

6 ●IIP Bulletin 2012 Vol.21

However, thanks to an increase in the number ofregistrations of business emblems, such voice
calling for the abolishment of the system has
become somewhat weaker.

Ⅳ1from regular trademarks in terms of quality
guarantee.
2

Quality-Guarantee
Function
Concerning Geographical Names

In China, geographical indications are definedin Article 16, paragraph (2) of the Trademark Law
as the signs that signify that the goods bearing asign are originated from the place indicated andhave the special qualities, credibility or othercharacteristics that are primarily determined by
the natural factors or humanistic factors of theplace indicated. While geographical indications
are specified as “collective marks andcertification marks” in the Trademark Law,geographical indications are subject to theProcedures for the Management and Registrationof Collective Trademarks and Certification
Trademarks, which have been established basedon the definition and text of Article 3. Article 49of the Trademark Regulations specifies what does
not fall within the scope of the effect of trademark
right.
Chapter VI, Part 5 of the Trademark
Examination Guidelines specify the examination
guidelines for collective marks and certification
marks. These guidelines have many provisions
not only about the required qualifications forapplicants but also about quality management andsupervision. This is because geographicalindications themselves are, as defined to be, tools
to convey information concerning the equality,
reputation, and other characteristics of thedesignated goods and are therefore different from
regular trademarks in terms of nature.
However, in China, the geographicalindication registration systems have been
established by the State Administration for
Industry & Commerce, the General Administrationof Quality Supervision, Inspection and Quarantine,
and the Ministry of Agriculture, respectively.
Since multiple authorities establish relevant
regulations one after another, conflicts andoverlaps are caused. In addition, these authorities
do not recognize the legitimacy of each other’s
regulations at the stage of law enforcement. Thissituation has caused various problems related tothe protection of geographical indications.39

Regional Collective Trademarks andGeographical Indications in Japan

Geographical indications are defined in
Article 22, paragraph (1) of the TRIPS Agreement
as follows: “Geographical indications are, for the
purposes of this Agreement, indications which
identify a good as originating in the territory of a
Member, or a region or locality in that territory,
where a given quality, reputation or othercharacteristic of the good is essentiallyattributable to its geographical origin.”
In Japan, the Trademark Act specifies
regional collective trademarks in such provisions
as Article 7-2, Article 11, Article 24-2, Article 30,
Article31-2, Article 32-2, and Article 46.
Geographical indications are different fromregional collective trademarks in some ways. For
example, “the scope of protection for regional
collective trademarks is limited in the sense thata regional collective trademark consists only of
the name of a region and the name of Goods, etc.
However, the scope of protection for regional
collective trademarks is wider than that for
geographical indications defined in the TRIPS
Agreement in the sense that the protection
covers services as well.”38 A regional collective
trademark may be registered only if it has
achieved a certain level of well-knownness among
the public. In order for a trademark to become
well-known, the trademark must embody the
goodwill concerning the primary quality of Goods,
etc., and must improve the subjective, social
factors that affect the secondary quality in order
to increase public trust in the trademark, which
will eventually make the trademark famous.
Regional collective trademarks are media for
information
concerning
specialquality,characteristics, etc., associated with the region.
The goodwill generated by such a high-level ofwell-knownness includes information concerning
the objective, fundamental quality, characteristics,
etc., of goods that are determined by geographicalfactors such as natural factors and humanistic
factors. By conveying such information to a wide
range of consumers, regional collective
trademarks will consequently function differently

IIP Bulletin 2012 Vol.21

Protection of Geographical Indicationsin China

3

Protection of Geographical Indications
in South Korea

In South Korea, the Trademark Act specifies
the protection of geographical indications in●

7 ●Article 2, Article 3bis, Article 3ter, Articles 6 to 9,
Article 19, Article 22bis, Article 23, Article 51,
Article 66, Article 71, Article 73, Article 86quater,
Article 86sexdecies, Article 90bis, Article 91bis,
etc.,
concerning
geographicalindications,geographicalindicationcollective
marks,
homonymous geographical indication collective
marks,
certification
marks,
geographicalindication certification marks, etc.
The Trademark Examination Guidelines are
unique in that they require examination on any
matters related to the quality, etc., and any
matters related to the applicant’s control of thequality, etc. For instance, Article 49, paragraph (4)of the Korean Trademark Examination Guidelines
specifies examination of the articles ofincorporation and requires particularly strict
examination of the quality-related part of thearticles of incorporation.
One of the unique provisions of the Korean
Trademark Act is Article 22bis (Request etc. forInspection of a Trademark by a Specialized
Searching Agency), paragraph (3), which specifies
that “Where the items of an application for acollective mark for a geographical indication are
subject to the Agricultural and Fishery Products
Quality Control Act, the Commissioner of the
Korean Intellectual Property Office shall obtainan opinion as to whether the mark can beconsidered a geographical indication from the
Minister for Food, Agriculture, Forestry and
Fisheries.” On the other hand, Article 32,
paragraph (4) of the Agricultural and Fishery
Products Quality Control Act concerning
registration of geographical indications specifies
that “the Minister for Food, Agriculture, Forestry
and Fisheries shall obtain an opinion from theCommissioner of the Korean Intellectual Property
Office in advance as to whether the geographicalindication claimed in an application infringes
another
person’s
trademark(including
geographicalindicationcollective
marks;
hereinafter the same) under the Trademark Act.”
This can be seen as an important provision tomaintain harmony among sign systems.

Ⅴadministration systems. These laws andregulations have provisions concerning quality.
These provisions as well as the provisions of theTrademark Act affect brand formation.
There have been some arguments that theobjects of protection provided under the
trademark law are increasing in some countries.
Many of these are related to quality. This is one of
the important issues addressed in the argument
concerning information incompleteness.

Ⅵ Proposals for the Trademark
System from the Perspective of
the Function of Dynamic Factors
1

Analysis of Relevant Court Judgments

In Japan, the “Ethiopian Coffee case” raised
the issue of interpretation of Article 3, paragraph(1), item (iii) and Article 4, paragraph (1), item(xvi) of the Trademark Act. 40 The court foundthat there was no likelihood of misunderstandingof quality under the “plaintiff’s quality
management.” This trademark, which isregistered as a regular trademark, could be
assigned or transferred without limitations. If thistrademark is transferred from the Ethiopian
government to another party, it would inevitablycause misunderstanding about the quality among
the public due to the nature of the designatedgoods. This is because the quality of thedesignated goods, Ethiopian coffee beans, can be
maintained only under the quality control by the
Ethiopian government, and the disputed
registered trademark functions as a medium toconvey such information.
On the other hand, in China, there is a court
precedent about two similar signs that wereregisteredunder
two different systems
respectively, i.e., a trademark registered with theState Administration for Industry & Commerce
and a geographical indication registered with the
General Administration of Quality Supervision,
Inspection and Quarantine.41 The plaintiff and thedefendant (Jinhua ham companies and the local
government) continued this dispute for more thantwenty years, damaging the regional brand, Jinhua
ham, which has at least an 800-year history.

Quality-Guarantee
Functionunder Other Sign Systems and
the Quality-Guarantee Functionof Other Objects

2

There are many other sign systems including
the Unfair Competition Prevention Act, the Act
against Unjustifiable Premiums and Misleading
Representations,andvariousconsumer

Examination of the Purposes of theTrademark Law and Analysis of
Hypotheses

In Japan, China, and South Korea, thetrademark law clearly aims to protect the●

8 ●IIP Bulletin 2012 Vol.21

interests of consumers including end consumers.
The purpose of said law is to prevent theoccurrence of or reduce the likelihood of
misunderstanding and confusion about the quality,
characteristics, etc., of Goods, etc., among
consumers including end consumers. The
trademark law established for this purpose
functions as a medium of information andremediestheinformation
incompletenessbetween consumers and companies so that
consumers can make appropriate consumption
decisions.
On the other hand, from the perspective of
the interests of companies, since the factors
concerning the quality and characteristics ofGoods, etc., are constantly changing, the functionof such dynamic factors could cause information
incompleteness, which will result in instability
such as trademark rescission. Coordination
between different systems is necessary in orderto promote effective use of signs and otherinformation goods and registration of stabletrademark rights by companies.
In Japan, the indications of the quality,
characteristics, etc., of Goods, etc., based on
multiple systems have caused information
incompleteness due to the difference in their
theoretical grounds. In some cases, a trademark
is placed side by side with a sign whose main
purpose is to convey information on the primary
quality. In other cases, such sign is incorporated
into a trademark. Consequently, the conventional
trademark functions have become dysfunctional,
causing such problems as a discrepancy between
the objective quality of Goods, etc., and thequality guaranteed by a trademark. Incorporatinga sign concerning the primary quality, etc., which
is subject to change, into a trademark causes
instability in trademark rights, which aredesigned as semipermanent rights.
Based on the findings mentioned above, ananalysis has been conducted on the Working
Hypothesis I, i.e., the hypothesis that signs havecaused information incompleteness beyond
national boundaries. A comparative study of thesign systems in Japan, China, and South Korea
has revealed that this hypothesis is obviously
correct as described above.
An analysis has also been conducted on the
Working Hypothesis II, i.e., the hypothesis that,from the perspective of the protection of
consumers, who are the recipients of information,
the conventional System-based Functions thatsign systems are expected to provide could
become dysfunctional due to the information

IIP Bulletin 2012 Vol.21

incompleteness caused by signs. When atrademark conveys information on Goods, etc.,
including the factors concerning the quality andcharacteristics of the Goods, etc., particularly thefactors concerning the objective, fundamental
quality, etc., of the Goods, etc., if the trademark
conveys information similar to the information
conveyed by another sign and receives
overlapping
protection,
it
would
cause
information incompleteness or instability intrademark rights. This problem could be
remedied by taking such measures as establishinga provision that coordinates different systems.
However, in the case of a trademark thatincorporates another system’s sign into itself as acomponent, such trademark is a product of thecurrent interpretation of the Trademark Act
including the interpretation of trademark
functions. Such trademark needs to be studied
separately.
Based on the two working hypotheses, thebasic hypothesis has been analyzed. The analysis
has revealed that the function of dynamic factors
as defined in this research causes qualitativechanges to the conventional trademark functions
such as the quality-guarantee function within theframework of the trademark system. However,further analysis would be necessary in order toprove the hypothesis (Working Hypothesis III)
that the overlaps of similar functions of signs
cause information incompleteness. In order toanalyze the Working Hypothesis III, the signs
used as indications of Goods, etc., are divided into
two groups, i.e., the multiple mark type and theincorporated type.
The multiple mark type may be defined as
the case where information conveyance functions
are concurrently performed based on multiple
sign systems including the Trademark Act. Thiscase raises such issues as the issue of interaction
among the multiple signs based on the idea thatthe goods, etc., as a whole comprise one
intellectual property package and the issue of
harmonization among the multiple systems thatare used to convey similar information. In orderto solve these issues, it would be important tocoordinate
systems
based
on
a
clear
understanding of the relationship between sign
systems and the Trademark Act.
On the other hand, the incorporated typemay be defined as the case where the information
conveyance function is performed by one
trademark containing a component that conveys
information based on another sign system. In thiscase, a trademark that incorporates another mark●9 ●or indication into itself as a component raises
some issues. Consumers, who view suchtrademark as an official guarantee by the nation,
believe the information conveyed by thetrademark and take action accordingly. However,if the information conveyed by such component isincomplete, it would negatively affect consumer
interests. Furthermore, it would be impossible toestablish a stable trademark right based on aconstantly changing component.
An analysis of the Working Hypothesis III
based on the aforementioned ideas has revealed
that, in the case of the multiple mark type,
information incompleteness is likely to be causedby the multiple marks used based on multiple
systems that provide similar System-based
Functions (such as the quality-guarantee
function). In the case of the incorporated type,
System-based Functions are likely to bequalitatively changed by the function of dynamic
factors, which is likely to decrease trademark
stability.

Ⅶsystem and a certification or verification system
could raise the issue of coordination between thesystems, while it could remedy information
incompleteness.
Inparticular,
information
concerning the primary quality of Goods, etc.,
directly influences consumers and encourages
consumers to choose the Goods, etc. However, itis necessary to coordinate among systems inorder to remedy the information incompletenesscaused by the function of dynamic factors.
Needless to say, aside from the issues
described above, there are many other issues
including the issue of how to remedy the
information incompleteness that occurs when
information is conveyed via the Internet, theissue of the use of certification systems andverification systems in the field of trade from theperspective of the Trademark Act, the issue of theprotection of geographical indications from theperspective of the Trademark Act, and the issueof qualitative changes of the System-based
Functions caused by the function of dynamic
factors and the influence on brands. Further
research needs to be conducted on these issues.

Conclusion

As mentioned above, protection provided
under each sign system including the Trademark
Act needs to ensure the conveyance of
information on the source, quality, characteristics,
etc., of Goods, etc., bearing the sign. In thisresearch, a study was conducted on Japan, China,
and South Korea, respectively, in order toexamine the current situation where these
System-based Functions are being qualitatively
changed by dynamic factors such as the primary
quality of goods. Furthermore, in this research,
analyses were carried out on relevant cases in thethree countries in order to propose remedies
suitable for the aforementioned situations.
Consequently, this research concluded that, if asystem is established based on the theory of thefunction of dynamic factors within the frameworkof the trademark system, it would remedy
information incompleteness, help consumers
make appropriate consumption choices, and attainthe goal of the Trademark Act, i.e., the protectionof the interests of consumers including end
consumers.
Certification marks and verification marksthat are administered by third parties properly
provide consumers with information that theGoods, etc., bearing such marks satisfy certain
standards. These signs promote appropriate
consumption choices by consumers. However, theconcurrent use or integrated use of the trademark

1

2

3
4
5

6
7

8

●

In December 2002, the Ministry of Health, Labour andWelfare and the Ministry of Agriculture, Forestry and
Fisheries jointly established the “Joint Conference on
Food Labeling” in order to jointly discuss theinformation items on food labels and the labelingmethod specified in the JAS Act and the Food
Sanitation Act. Consequently, improvements have been
made such as better consistency in the information
items on labels. (Noriyoshi Adachi, “JAS hou ni
motozuku gensanchi hyoji to sanchi karano jouhou
hasshin” (Indication of the place of origin andinformation dissemination from the production area
under the JAS Act), Nougyou to keizai, vol. 71, no. 13,
at. 25 (2005)).
Edited by Kishio Shimada, Yoshiro Iijima, Kaitei
shouhingaku kougi (Revised edition, Lecture on goods
science), at 72 (Seirinshoin shinsha, Seirin kougi
shirizu, 1981).
Id. at 72.
Id. at 73.
Tatsuo Hatta, Mikuro keizaigaku I - Shijouno shippai toseihu no shippai heno taisaku [Puroguresshibu
keizaigaku shirizu] (Microeconomies I - Measures todeal with the failure of the market and the failure of
the government [Progressive economics series]), at
319 (Toyo Keizai Shinposha, 2010).
Id.
Kazuo Nishimura, Mikuro keizaigaku nyumon (Dai2han) (Introduction to microeconomics (2nd edition)),at 319 (Iwanami Shoten, 1997).
Masao Uno, Yoshiro Iijima, Goro Kawano, Kishio
Shimada, Kihon Shouhingaku (Gakushu tekisuto ban)(Basic commodity science (text version for studying),
at 67 (Shunjusha, 1967).

10 ●IIP Bulletin 2012 Vol.21

918

William M. Lands & Richard A. Posner, The Economic
Structure of Intellectual Property Law 168 (Harvard
University Press 2003).
10
Yoshiyuki Tamura, Shouhyohou gaisetsu (Dai 2han)(General introduction to the Trademark Act (2ndedition), at 4 (Koubundou, 2000).
“Even if consumers expect the goods or services
bearing a registered trademark to have certain quality,
the satisfaction of such expectation is not directly
guaranteed by the Trademark Act.”
11
Makoto Amino, “Shouhyou no houteki hogo omeggutte” (Legal protection for trademarks), Hara
Masuji hanji taikan kinen Kougyo shoyuken no
kihonteki kadai (ge) (Commemoration of the retirementof Judge Masuji Hara Basic issues concerningindustrial property rights (vol. 2)), at 859 (Yuhikaku,1972).
“Today, it is separated from a particular personality andinterpreted as a sign indicating that the goods havecertain quality and were produced by a certain
company; in other words, it has come to be interpreted
as a pure property right. In sum, people do not careabout the source-indicating function of a trademark aslong as the quality-guarantee function is maintained.”
12
Masao Miyake, Shouhyouhou zakkan (Miscellaneous
thoughts on the Trademark Act), at 221, (Fuzambo,
1978), Edited by Shouen Ono, Chukai Shouhyouhou(Shinban) Joukan (Annotated Trademark Act (Newedition) vol. 1), at 71 (Seirin Shoin, 2005), Kanji Kudo,
Shouhyouhou no kaisetsu to saibanrei (Explanation of
the Trademark Act and Court Cases), at 35 (Masterlink,2011).
13
Shouen Ono, Shunji Miyama, Shin shouhyouhou
gaisetsu (New Overview of the Trademark Act), (Seirin
Shoin, 2009), at 57.
14
Supreme Court judgment of February 27, 2003, Minshu
vol. 57, no. 2, at 125, 2002 (Ju) No. 1100.
15
Trademark Law of the People's Republic of China(hereinafter referred to as the Chinese Trademark
Law; the following tentative translations of relevant
legal provisions, examination guidelines, literature,etc., of China and South Korea were made by theauthor.) Article 3, paragraph (3): For the purposes ofthis Law, a certification trademark refers to one that iscontrolled by an organization which is capable ofexercising supervision over a particular kind of goods
or services and that is used by a unit other than theorganization or by an individual for its or his goods orservices, and is designed to certify the indications of
the place of origin, raw materials, mode of manufacture,quality, or other specified properties of said goods orservices.
16
Article 7 of the Chinese Trademark Law: The user of a
trademark shall be responsible for the quality of thegoods on which the trademark is used. The
administrative departments for industry and commerce
at all levels shall, through the administration of
trademarks, put an end to any practice that deceives
consumers.
17
Article 10 of the Chinese Trademark Law: None of thefollowing signs may be used as trademarks: (the middle
portion is omitted) (4) those identical with or similar to
an official mark or inspection stamp that indicatescontrol and guarantee, except where authorized.

IIP Bulletin 2012 Vol.21

Article 11 of the Chinese Trademark Law: None of thefollowing marks may be registered as trademarks: (themiddle portion is omitted) (2) where it only directly
indicates the quality, principal raw materials, function,use, weight, quantity or other features of the goods.
19
Article 16, paragraph (2) of the Chinese Trademark
Law: The geographical indication mentioned in thepreceding paragraph means the origin of the goods, thespecial qualities, credibility or other characteristics ofthe goods that are primarily determined by the natural
factors or other humanistic factors of the place
indicated.
20
Article 39, paragraph (1) of the Chinese Trademark
Law: To assign a registered trademark, the assignor
and assignee shall sign an assignment agreement andjointly file an application with the Trademark Office.
The assignee shall guarantee the quality of the goods
on which the registered trademark is used.
21
Article 40, paragraph (1) of the Chinese Trademark
Law: The owner of a registered trademark may, byconcluding a trademark licensing contract, authorize
another person to use his registered trademark. The
licensor shall supervise the quality of the goods onwhich the licensee uses his registered trademark, andthe licensee shall guarantee the quality of the goods onwhich the registered trademark is to be used.
22
呉漢東(Handong WU)・胡開忠(Kaizhong HU), 2001,『無形財産権制度研究』(Research on the system forintangible property), at 434 (Law Press China, 2001).
23
劉 春 田 (Chuntian LIU), “ 商 標 と 商 標 権 分 析 ”(Trademarks and an analysis of trademark rights),
China Intellectual Property, 1998, vol. 1, at 13 (1998).
24
文 学 (Xue WEN), 『 商 標 使 用 と 商 標 保 護 研 究 』(Research on the use of trademarks and trademark
protection), at 31 (Law Press China).
25
王蓮峰(Lianfeng WANG), “論対善意在先使用商標的
保 護 ‐ 以 “ 杜 家 鶏 ” 商 標 侵 権 案 為 視 覚 ,”(Study forProtection of Prior user Trademark in Good Faith: with
“du jia ji” trademark infringement case in China) Law
Science, 2011, vol. 12, at 134 (2011).
26
The requirements and effect of this Article are similar
to those of Article 3, paragraph (1), item (iii) of theJapanese Trademark Act. This is the author’s opinion
for your reference. Hereinafter the same.
27
The requirements and effect of this Article are similar
to those of Article 4, paragraph (1), item (xvi) of theJapanese Trademark Act.
28
The requirements and effect of this Article are similar
to those of Article 26 of the Japanese Trademark Act.
29
Seok-Jae,LEE, 『 CREAM 商 標 法 特 講 』 (CREAM
Special lecture on the Trademark Act), at 17 (Hanbit
intellectual property center Korea, 2008).
30
Sun-Hee YUN, 『11製版 知的財産権法』(11th edition,
Intellectual property laws), at 259 (Sechang Press
Korea, 2010).
31
Kyung-Sik KONG, 『プラス 商標法』(Plus Trademark
Act), at 19, (Hanbit intellectual property center Korea,2008), Chong-Tae PARK, 『理智 商標法〔第4版〕』(Intelligence, Trademark Act (4th edition)), at 49(Hanbit intellectual property center Korea, 2010).
32
Zentaro Kitagawa, “Kigyou torihiki to hinshitsu”(Corporate transactions and quality), Hougakuronsou,
vol. 83, no. 6 (1968) at 9.
33
Id. at 9.

●

11 ●

34

Tomoyuki Katsuno, “Shin JIS maku hyouji seido ni
okeru seihin ninshou” (Certification of products under
the new JIS mark system), Finex, vol. 18, no. 107, at 3(2006).
35
郭禾(He GUO), 『商標法テキスト』(Text book on the
trademark law), at 42 (Intellectual property press
China, 2004).
36
Jeong,Yong-Soo Kang,Byung-Mo, “製造物責任と製品
安 全 認 証 制 度 に 関 す る 研 究 ” (Research on productliability and product safety certification systems), at
137 (Korea Consumer Agency, 2008).
37
This is a system unique to South Korea, which
underwent a name change to “business emblem” in the1973 revision. Until the revision, a similar system had
existed under the Trademark Act of 1949.
38
Naho Ebata, “Chiriteki hyouji no shoumei shouhyou
seido ni yoru hogo no kanousei ni tsuite -- Chiiki dantai
shouhyou seido tono hikaku no kantenkara --”(Possibility of providing protection to geographicalindications under the certification trademark system -in comparison with regional collective trademarks),
Chizaiken Forum, vol. 86, at 7 (2011).
39
Edited by the Intellectual Property Centre, Chinese
Academy of Social Sciences and the China Intellectual
Property Training, 『「商標法」改正における若干問題』(Minor issues related to the revision of the Trademark
Law), at 262 ( 管 育 鷹 Yuying GUAN) (Intellectual
property press China, 2011).
40Intellectual Property High Court, 2009 (Gyo-Ke) No.
10226, Judgment of March 29, 2010, a case to seek
revocation of a trial decision.
41
China, “Jinhua Ham case,” Shanghai Second
Intermediate People's Court, 沪二中民五, (知) 初字
no. 239.

●

12 ●IIP Bulletin 2012 Vol.21