18

Desirable Intellectual Property Rights System
for Promoting Sound Development of
E-Commerce, etc. via the Internet

Researcher：Takashi Kimura(*)

The rapidly developing Internet has been showing its significant progress also in the field of e-commerce inrecent years. One of archetypal examples is a system where on-line purchasers submit their credit card
information via the Internet at the point of ordering books or concert tickets, and have them (tangible goods)
delivered to their home at a later date, or enable to directly and immediately download digital contents such as
e-books, music in digitized form or application software for personal computers, onto their personal computers
via the Internet.
This report reviews the problems on trademarks, copyrights, and acts of unfair competition that occur inthe field of e-commerce under such circumstances, and discusses whether they can be dealt with under thecurrent legal system and which kind of legal system should be adopted/established if they could not beappropriately resolved under the current legal system.

1

Introduction

In recent years e-commerce via the Internet
has been developing rapidly and showing its
diversification of use. This paper will review
various problems relating to intellectual property
actually occurring in the field of e-commerce anddiscuss whether they can be dealt with under thecurrent legal system, and which kind of legal
system shall be adopted/established if they cannot
be appropriately resolved under the current legal
system.
2

Prevention of Collision between Rights,
Prevention of Abuse

In this section, (1) trademarks and trade
names, (2) domain names, and (3) digital contents
and other copyrighted works will be discussed as
subject matters of IPR that may often cause
problems on the Internet.
(1) Trademarks and trade names(i) Locus of the problem
When business entities place advertisements
or conduct e-commerce business on the Internet,
their trade names and/or trademarks are usually
carried on (their) websites and are displayed on PC
displays (trade name(s) shall be hereinafter
included in “trademark(s)”). Suppose that a
trademark, the registration of which a certain
Japanese company “J” has been awarded in Japan, is
identical or similar to another trademark, theregistration of which a certain British company “B”
has been awarded in the U.K., and moreover, thatthe businesses conducted by the two companies
with the use of their respective trademarks are also
identical or similar. In the case where bothcompanies conduct their business in the countries
where they have their said trademarks registeredrespectively, if Company B places its advertisementon the Internet, Company B’s trademark, which isincluded in that advertisement, would be displayedon the PC screens of those living in Japan. Thatwould fall into “an act of displaying or distributing
advertisements relating to the goods orservices...on which a mark has been applied” under
Section 2(3)(vii) of the Japanese Trademark Law.
(ii) Applicable legal system
In order to coordinate such a dispute as
mentioned in (i), it is beneficial to review and makereference to the Joint Recommendation Concerning
the Protection of Marks, and other Industrial
Property Rights in Signs, on the Internet(hereinafter called the “Joint Recommendation”)
drawn up by the Standing Committee on the Law ofTrademarks, Industrial Design and Geographical
Indications (hereinafter called the “SCT”) which
has been established in the World Intellectual
Property Organization (hereinafter called “WIPO”).
Although the Joint Recommendation is notinternationally binding, it should be actively utilized
and referenced in applying and interpreting thetrademark law (and its implementing regulations) of
the respective countries with regard to disputes on
infringement of trademark rights caused via theInternet. The author will outline briefly the Joint
Recommendation by referring to several concrete
examples as follows.
(a) Collision between trademark rights owned byindividual business entities – General
Under the aforementioned hypothetical situation,
since Company B advertises its products on theInternet, people living in Japan are also able tobrowse its advertisement (the English version) as(*) Manager, Planning Division, Intellectual Asset Operations Unit, NEC Corporation

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well as Company B’s trademark. According to the
Joint Recommendation, the act of advertisement by
Company B does not fall into “use (of a sign)”
unless it produces any “commercial effect” in the
countries where Company J’s trademark right iseffective (interpretation of Article 2 thereof), andtherefore Company B does not infringe Company
J’s trademark right effective in Japan.
(b) Collision between trademark rights owned byindividual business entities –Particulars: use
after notification of infringement–
Next, the Joint Recommendation provides for“Use After Notification of Infringement” in Article
10, i.e., that “if the user (of a sign) referred to in
Article 9 has received a notification that his use
infringes another right, he shall not be held liable ifhe:(i) indicates to the person sending the notificationthat he owns a “right” in the sign in another Member
State, or uses the sign with the consent of the ownerof such a “right,” or that he is permitted to use thesign, in the manner in which it is being used on theInternet, under the law of another Member State towhich he has a close connection;(ii) gives relevant details of that “right” or permitted
use; and(iii) expeditiously takes reasonable measures which
are effective to avoid a commercial effect in theMember State referred to in the notification, or to
avoid infringement of the “right” referred to in the
notification.” (The words in brackets have been
inserted by the author for convenience.)
The “reasonable measures which are effective
to avoid a commercial effect” in (iii) above areconcretely enumerated in Article 12 (titled“Disclaimer as a Measure Under Article 10”).
If Company B’s trademark (Company B owns atrademark right in the U.K.) used on the Internet
may have a “commercial effect” in Japan, where
Company J has a registered trademark which is
identical with or similar to the said Company B’s
trademark, it would be sufficient for the former totake measures for avoiding the “commercial effect”
set force in Article 12 thereof such as expressing a
disclaimer on their homepage to the effect that they
do not intend to sell their products to potential
customers living in Japan, and to refuse to sell theirproducts in fact despite orders from them.
However, in the case that the subject of thedealing is intangible which shall be offered
electronically (e.g., digital music or application
software program which can be downloaded onto
the customer’s PC via the Internet) there are nomeans to identify and/or check the country/ies

where orderers live. Also, to impose obligation on
business entities to identify the country/ies where
the customers live would only result in a downturnin e-commerce. The measures set force in Article
12 thereof seem reasonable under the present
circumstances, but future discussions are expected.
(c) Disputes caused by abuses and/or misuse byunauthorized third parties
Article 4 of the Joint Recommendation
stipulates “the use in bad faith”. Since the term
“bad faith” (*1) and “(a sign is) used in bad faith” donot exist in Japanese laws, the exact content andmeaning remain controversial. As the criteria for
determining whether there is “bad faith” or “(a signis) used in bad faith,” as long as we deduct from theeffect of Article 4(2) and its Explanatory Notes, themeaning shall be considered to be a broad concept
including such circumstances as “malicious intent
to conduct an act of unfair competition,” “dolus
eventualis (willful negligence) of ambivalence
towards triggering an act of unfair competition oreven taking advantage of it,” and “having caused an
act of unfair competition by (gross) negligence.” A
person who uses a sign “in bad faith” or acquired aright “in bad faith” can not claim for the applicationof the provisions from Article 9 to 12 of the Joint
Recommendation, and shall be held liable for the
infringement of others’ rights stipulated thereunder.
Naturally, as the Joint Recommendation is only a“recommendation” which has no legal binding force,
it is very hard to predict to what extent the purportof the concept “(in) bad faith” in the Joint
Recommendation would be taken into consideration
and reflected in the Trademark Law or the Unfair
Competition Prevention Law (or any corresponding
statute) of the respective countries/territories.
(iii) Applicable Japanese law and points at issue
Under the circumstances, in order that theindication or display of a mark via/through theInternet should fall into the definition of “use of amark” under the Japanese Trademark Law, thefollowing revisions were made (effective as of
September 1, 2002); Section 2(3)(ii) was changed to“importing, or providing through telecommunicationlines, goods…”; the new clause “acts of providing
services by indicating a mark on a screen whenproviding services through a screen byelectromagnetic means (that is, electronic,
magnetic and other means which cannot beperceived by human perception)” was added andestablished as a new definition of “use of a mark”
under Section 2(3)(vii); and the clause “acts ofdisplaying or distributing advertisements relating to
the goods or services, price lists or business papers(*1) There is no legal term in Japan corresponding to the term “(in) bad faith”. Hence, the term “(in) bad faith” is sometimes
translated or explained as “akui (de)” ( Japanese: “with the intent to harm others”) as a generic expression. But the term
“akui (de)” as a legal term in Japan is that, for instance, a party “knows” that the other party’s act is not entitled regarding
the act of law which that should bind the parties. The term “(in) bad faith” is also sometimes translated or explained as“gaii,” but is also inappropriate.
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with respect to the goods or articles on which amark has been applied” (corresponding to Section
2(3)(vii) of the Law that was effective until the endof August 2002), was rectified as to add thesentence “, or providing information on them byapplying a mark thereon through electromagnetic
means” in Section 2(3)(viii). Naturally the scope of“act of trademark infringement” also enlarged withthe above revision, but two problems exist between
the right to demand an injunction (Section 36 of theTrademark Law) as a remedy against infringement
and that of the Joint Recommendation.
The first is the consistency with the measure
stipulated in the Joint Recommendation. For
instance, suppose that an owner of a trademark
right require the third party who is using a markidentical with or similar to the trademark on theInternet to cease/discontinue the use of the mark,claiming that the use infringes his trademark right.
The problem is whether the disclaimer stipulated in
the Joint Recommendation, which has no legalbinding force, could be approved as a measure thatshould fall under or substitute a suspension of
infringement or an injunction in Japanese courts.
The author thinks that, as long as the user of thesign sufficiently provides a disclaimer that denies
use of the sign (mark) in Japan such as placing astatement on the user’s website to the effect that
“We do not intend to do business with this productin Japan”, the act would no longer fall under “use”
in Section 2 of the Japanese Trademark Law taking
into consideration of the definition “use (of amark)” therein, and that courts in Japan may
approve the disclaimer as a measure in substitution
of “a suspension of infringement or an injunction”.
The second problem is that an effect of the
injunction against a person having used the mark(s)owned by another person as a right(s) on theInternet “in bad faith” under the Joint
Recommendation may lead to infringement of thejurisdictions of other countries, since the mark is tobe deleted from the computer server in compliancewith the injunction, the prohibition of use (deletion)
becomes effective not only in Japan, but also allaround the world. This issue on the said effect ofworldwide injunction has also been contested at the
SCT. The author considers that such worldwide
injunction may be approved, or rather, should behanded down, at least, against the person who
constitutes an act falling under Article 10bis(2) or(3) of the Paris Convention. A strict attitude should
be taken against acts of unfair competition by wayof the use of signs/marks on the Internet.
(2) Domain names(i) Outline of applicable law
Although a domain name simply has thefunction of “uniquely distinguishing/identifying acomputer” (i.e., just an address on a computer
network) and does not have any specific meaning(i.e., a right) by itself, business entities’ motive for

IIP Bulletin 2003

adopting their own trademarks or trade names as
their domain names is quite understandable. Hence,disputes frequently occur over the attribution of
domain names between those who used others’
own trademarks, trade names, or personal nameswith reputations as their domain names so as totake advantage of the others’ fame, and those who
legitimately own the said trademarks, trade names
or personal names with reputations, all of which are
identical with or similar to the said domain names.
Under the circumstances, the Japanese Unfair
Competition Prevention Law, revised andpromulgated on June 29, 2001, established theprovision “the act of acquiring or possessing a rightto use a domain name identical with or similar toothers’ indications of goods, etc. (i.e., the indicationof a name, trade name, trademark, mark or othergoods or services regarding their business), or
using the said domain name, in order to make anillicit profit or to cause damage to others”, as one ofacts of “unfair competition” in Article 2(xii). In
addition, the definition of “a domain name” wasadded in Article 2(7) thereof. Therefore, legal
disputes over domain names on the Internet havebeen resolved “at any rate” in terms of thelegislative framework.
(ii) Interpretation of law and points at issue
The requirements for constituting “unfair
competition” as set forth in Article 2(xii) are:(1) the act is conducted “in order to make an illicit
profit” or “(in order) to cause damage to others”;(2) the domain name is “identical with or similar toanother person’s indication of goods, etc.”; and(3) the act is “acquiring or possessing a right to use(the) domain name or using such a domain name”.
Taking a look at (2) first, as far as the “JACCS
Case” (decided at Toyama District Court, Japan in
December, 2000) and several WIPO Panel decisions
on domain name disputes are studied thedeterminations of the similarity seem to be made inaccordance with the decisions made by Trademark
Authorities (i.e., Japan Patent Office in Japan) as towhether marks filed applications for trademark
registrations are identical with or similar to priorregistered trademarks. Considering the status quo
where domain names are mostly selected in close
connection with trademarks, trade names, or
personal names of their owners’ own, the practicefor decisions mentioned above seems appropriate.
As for (1) above, when an act is conducted forthe purpose of one’s own legitimate interests orwhen he does not intend to cause any damage toothers from the very beginning even though his
acts resulted in damages to the others, the act does
not constitute unfair competition(*2).
Lastly, as for (3), literally, the mode of acts is
not limited to “using” a domain name, but also toacquiring or to possessing the right to use thedomain name and even to possess the right (i.e.
domain name) after acquiring it without any actual● 146 ●

use of it.
Incidentally, differing from WIPO Paneldecisions, a complainant (claimant) cannot demand
the owner of the domain name in dispute(respondent) to transfer the domain name to thecomplainant under the Japanese Unfair Competition
Prevention Law(*3).
(iii) Conflicts between legitimate domain nameownersThere are cases where multiple domain names
simply differ in their top-level domains (TLDs) but
are identical in the distinctive portions. For
example, suppose that both a Japanese Company“J” and a British Company “B” (not affiliated orhave capital relationship with each other) own theregistration for the same mark “ABC” in Japan andin the U.K., and that Company J was granted theregistration “abc.co.jp” with Japanese domain nameregistration agency and Company B was granted
the registration “abc.co.uk” with the British domainname registration agency. As long as the twocompanies do their business bona fide using theirtrademarks “ABC” respectively, they would have torespect and accept the existence of each other’sregistered domain names. If the situation “caused
trouble in business,” there would be no other way
but to solve it as a practical matter relating tobusiness strategies between the two companies, forexample, by way of buying the other company’s
domain name through negotiation. This is because
it is not the legal problem to be settled under the
Unfair Competition Prevention Law or the
Trademark Law.
(3) Digital contents(i) Point at issue
One of the merits and enchantment of utilizing
the Internet is that a user can easily obtain various
contents such as digitized music, photographs,
books, and PC application software (hereinaftercollectively
called“digitalcontents”)
bydownloading them onto a use’s PC via the Internet.

The distinctive features of digital contents include:(1) exact copies of the original information can be
reproduced unlimitedly at a low cost; (2) the qualityof data does not deteriorate; and (3) there does notexist any concept of “stock”. Together with theconvenience of being able to distribute digitalcontents via the Internet, the digital contents
market is expected to expand continuously.
Therefore, for those who are doing or planningto do business utilizing the Internet (hereinaftercollectively called “content provider(s)”), the key tosuccess their business depends upon how muchdegree of digital contents can be lined up which(potential) customers are seeking for. However, tothe contrary, some content providers are, on theirown website, dealing digital contents copyrighted
by others without any authority, which often causes
problems.
(ii) Applicable law
Almost all digital contents are, essentially,
protected as works under the Copyright Law andrelated treaties/conventions on copyright (see theevents enumerated in Article 10(1) and Article 5 of
the Japanese Copyright Law). Therefore, a content
provider’s act of copying and distributing on theInternet digital contents whose copyrights are
owned by other parties without any authorization of
the copyright owners or their exclusive licensee(*4),
is to infringe the copyright owners’ rights ofreproduction (Article 21 of the Copyright Law) andthe rights of public transmission, etc. (Article 23
thereof), as well as the rights of distribution(Article 26 thereof) in the case where the digitalcontent is a reproduction of a cinematographic work,and the right of transfer of ownership (Article 26bis
thereof) and the right of lending (Article 26ter
thereof) when the digital content is a reproductionof other type of work (music, photographic, etc.,
other than cinematographic work).
Furthermore, the neighboring rights (Articles
89 to 100quinquies of the Law) will also be(*2) Most of the mass media reports on the WIPO Panel decision on the “jal.com” case (D2000-0573) explained that “there
were legitimate interests” by only referring to the fact that the domain name was a combination of the initials of anindividual’s name. However, as is revealed, the Panel has decided that “the Respondents have rights to and/or a legitimate
interest in the domain” referring to the fact that the registrant (the Respondent) had registered the domain name in 1993,
when the Internet was not yet diffused, and that he had been using it as a domain name of the company he ran. It further
discloses that the registrant had been always and continuously taking “measures to avoid confusion” by drawing attention
to the senders of e-mails addressed to Japan Airlines Company Limited (JAL; Complainant) had been mistakenly sent to his
company, and forwarding those e-mails to JAL, so the use of the domain name was neither “in bad faith” nor “with theintention to cause confusion”.
(*3) The WIPO Panel in the “三共.com” (sankyo.com) case (D2000-1791) held that the domain name in dispute should betransferred to Sankyo Co., Ltd., the Complainant. However, considering if this case were filed in Japanese court and anorder of transfer were established as a statutory remedy, a question would arise whether the transfer to the Complainant
were really appropriate. This is because there are in fact many companies in Japan whose names are crowned with theword/term “Sankyo”. Naturally, if all companies whose names are crowed with “Sankyo” belonged to and were affiliated tosame business group, solely Sankyo Group, it would be sufficient that the attribution and the management of the domainname could simply be decided within the Group after the domain name has been transferred to the Complainant. But in fact,
since there are several Sankyo-crowned companies which have nothing to do with Sankyo Group, those companies mightwell object to such a transfer order.
(*4) Article 63 of the Copyright Law uses the term “exploit (a work)” but the term is not defined thereunder, different from theterms “work (an invention)” and “use (a trademark)” defined respectively under the Patent Law and the Trademark Law.
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infringed according to the type of digital contents aswork(s). For example, one of the frequently
observed modes of infringement is that a content
provider obtains a music CD-ROM, reproduces its
copies electromagnetically or electronically with acomputer and distributes the copies in electronic
form via the Internet (needless to say, the act
infringes the copyright owned by the lyric writer(s)and the composer(s) of the music). This act also
infringes various rights granted to the “producer ofthe phonogram” (Article 89(2) thereof; refer toArticle 2(1)(v) and (vi) thereof for the definitions of“phonograms” and “producers of phonograms”)
who produced the said music CD-ROM and enjoys
the neighboring rights, particularly the right ofreproduction (Article 96 thereof), the right ofmaking transmittable (Article 96bis thereof), andthe right of transfer of ownership (Article 97bis
thereof).
Apart from the issue of a neighboring right,
however, book publishers sometimes electronicallyprocess books or photograph collections which they
have already published into electronic books orelectronic photograph collections and distributethem via the Internet. A publisher is defined as “anowner of the right of publication” in Article 80
thereof, and the contents of the right of publication
are basically decided by an agreement between a
copyright owner (re-defined as “the owner ofreproduction right” in Article 79 thereof) and the
publisher (the “contract of establishment” asmentioned in Article 80 thereof). If the owner ofthe right of publication is granted a license to
distribute electronic books or electronic photographcollections via the Internet by an agreement withthe owner of reproduction right, a content provider’s
act of electromagnetically or electronically reproducing
a book or image which was published or issued bypublishers and of distributing that reproduction on
the Internet would infringe the rights of the ownerof the right of publication under the Copyright Law.
(iii) Practical points at issue, “modes of use by end
users”
The act conducted by Napster Inc., which
provided on-line users with program software thatenabled them to freely exchange music files among
them, did not distribute any digital contents, andtherefore it did not constitute any infringement of
the rights stipulated in the Japanese Copyright Law.
This is because Japanese statute law system does
not allow courts to find, on their discretion, “aid of
copyright infringement” without any legal basis, as
is allowed for in U.S. courts. Moreover, since theJapanese Unfair Competition Prevention Law limits
the acts of “unfair competition” to thoseenumerated in the each events of Article 2(1)thereof and it dose not have a general clauseregarding “prohibition of acts of unfair competition”,
as is stipulated in the German and Swisscorresponding laws, the above act conducted by

IIP Bulletin 2003

Napster Inc., does not constitute an act of “unfair
competition”.
Accordingly, acts such as conducted by Napster
Inc., could only be regulated based on an unlawful
act under the Japanese Civil Code (Article 709
thereof). However, the plaintiff would have to bearimmense burdens, including the burdens to prove
intention or negligence, the presence of an act of
infringement, and the causal relation between theact of infringement and damage, and therefore, it
could not be expected that it could be decided as“an unlawful act”. If such acts were to increase in
the future and they could cause troubles to rightowners, the Copyright Law and the Unfair
Competition Prevention Law should be amended sothat such acts could be the subject matter of
injunction/regulation.
Incidentally, it is often overlooked in thepresence of such software as Napster and Gnutella,
but the true copyright infringers are the end users
who exchange the music files using the software.
Under the circumstances, the business entities(mainly producers of phonograms) have been
making their own efforts to defend rights in theirworks, such as taking technical measures to makedigital contents only exploitable (viewable) on the
PC on which the contents have been downloaded
from the Internet. However, it depends ultimately
on the end users’ attitude towards respecting
copyright and their improvement of their morals.
3

Legal measures for the development of
e-commerce, etc. (toward promoting
further convenience)In this section, (1) electronic signatures/electronic certifications, (2) prohibition ofunauthorized computer accesses, (3) protection of
databases, will be reviewed as indispensable
elements for such systemic and institutional
improvement by referring to the status quo and thelegal system of Japan as well as relevant EU
Directives.
(1) Electronic: signatures/electronic certification(i) Outline
Different from a contract under the Civil Code,a contract under the Commercial Code or otherspecial laws shall not be made effective
fundamentally unless it is entered into in writing,so in order to make e-commerce effective, a systemshould be established where the electronic
signature contained in/attached to an electronic
document etc. regarding e-commerce, whichcorresponds to or is presumed to be a written
contract (hereinafter referred to as a “Digital
document(s)” for convenience), shall have the samelegal effect as that of a person’s signature or seal.
Furthermore, it is needed to establish the system
which enables to confirm (1) whether or not the
Digital document is the one that has been

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transmitted by the authentic person (so-called“posing” issue), and (2) whether or not the
document has been falsified by a third party, bothfrom the viewpoint of the security of commercial
transactions. In response to the above requests, theLaw concerning Electronic Signatures andCertification Services (Law No. 102 of May 31,
2000; hereinafter called as “Electronic Signatures
Law”) was enacted.
(ii) Comparison with the EU Directive related toElectronic Signatures (1999/93/EC)
Since the EU has adopted the “Directive
1999/93/EC of the European Parliament and of theCouncil of 13 December 1999 on a Community
framework for electronic signatures” (hereinafter
called the “EU Directive 99/93/EC”), the Directive
will be overviewed and compared with theElectronic Signatures Law of Japan (outlined above).
The purport of the Directive is plainly stated in the
Whereas clauses; Based on the recognition that“electronic
communication
andcommerce
necessitate ‘electronic signatures’ and related
services allowing data authentication, divergent
rules with respect to legal recognition of electronic
signatures and the accreditation of certificationservice providers in the Member States may createa significant barrier to the use of electronic
communication
andelectroniccommerce”(Whereas clause (4) thereof).
Article 5 thereof provides that “Member
States shall ensure that advanced electronic
signatures which are based on a qualified certificate
and
which
are
createdbyasecure-signature-creation device: (a) satisfy thelegal requirements of a signature in relation to data
in electronic form in the same manner as ahandwritten signature satisfies those requirements
in relation to paper-based data; and (b) areadmissible as evidence in legal proceedings”. The
Article allows electronic signatures to make thesame legal effects as is stipulated in Article 3 of theElectronic Signatures Law of Japan.
The Directive also stipulates in Article 6(1)that “as a minimum, Member States shall ensurethat by issuing a certificate as a qualified certificate
to the public or by guaranteeing such a certificate to
the public a certification-service-provider is liablefor damage caused to any entity or legal or natural
person who reasonably relies on that certificate”
and in Article 6(2) that “as a minimum Member
States shall ensure that a certification-service-provider who has issued a certificate as a qualified
certificate to the public is liable for damage caused
to any entity or legal or natural person who
reasonably relies on the certificate for failure to
register revocation of the certificate” (unless thecertification-service-provider proves that he has
not acted negligently). This is the part thatconsiderably differs from the Electronic Signatures
Law. The Electronic Signatures Law has noprovision on civil liabilities of an accredited
certification service provider, such as compensation
for damages. Of course, there is room for filing aclaim based on the Civil Code, but together withthe difficulty of proving the damages, it would be
difficult to secure a remedy for the injured party.
Now that the Electronic Signatures Law aims at
sound development of electronic signatures and thenational economy, the Law should introduce
provisions on civil liabilities and transfer of theburden of proof.
(2) Prohibition of unauthorized computer
access(i) Preamble
When placing an order for goods or services
with a business entity doing business over theInternet, requesting a service from such a business
entity, or accessing a members-only website hosted
by a business entity, an Internet user usually enters
his “membership number (or ID number)” and“password” on the business entity’s website. Thisis a minimum measure required for confirming
whether the user is an authentic users/member.
Without this measure, a third party posing as anauthentic member may place a false order for goods,
and then the business entity delivers theunnecessary goods to the person who has deemed
to be an orderer on account of the false order but
who did not actually place the order. There exist
serious factors of confusing or hindering
e-commerce.
In order to prohibit such unauthorized
computer access by third parties, the UnauthorizedComputer Access Law (Law No. 128 of 1999;
promulgated on August 13, 1999) entered into force
on February 13 of 2000. The Explanatory
Document released by the National Police Agency
explains that unauthorized computer access is “anact of making available a restricted specific use of a
specific computer by evading the restrictions placedby an access control function on the specific use,”
and its concrete contents are: (1) an act of making
available a specific use by removing the restrictions
on the specific use by entering the identification
code, such as a password, of the authorized user;and (2) an act of attacking a security hole. The
types of “identification code(s)” are unlimited (e.g.,
ID number, password, fingerprint, iris, voice, orsignature), the “specific use(s)” are also unlimited(e.g., falsifying a website carried by others, placing
an Internet shopping order, inspecting data,transferring data files, or establishing dial-up
access), and the “specific computer(s)” can be theone owned either by an individual or a company. In
addition, as we can find out from the text “an act ofmaking available a specific use” in Article 2(2)(i)thereof, an act shall fall into “unauthorized
computer access” prohibited under the Law at the
point of making a specific use merely available eventhough such specific use has not yet been

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performed. Such an unauthorized computer accesswill be punished either with a penal servitude fornot more than one year or a fine of not more than
500,000 yen (a fine of not more than 300,000 yen
for violation of Article 4 thereof) (Articles 8 and 9
thereof).
(ii) Comparison between the UnauthorizedComputer Access Law and the EU Directive
98/84/EC
Regarding unauthorized computer access, the“Directive 98/84/EC of the European Parliamentand of the Council of 20 November 1998 on thelegal protection of services based on, or consistingof, conditional access” (hereinafter called the “EU
Directive 98/84/EC”) was adopted, whose purport
is to establish unified protection standards forservices based on, or consisting of, conditional
access under the recognition that “the viability of
those services (broadcasting services andinformation society services) will often depend on
the use of conditional access in order to obtain the
remuneration of the service provider; whereas,accordingly, the legal protection of service
providers against illicit devices which allow accessto these services free of charge seems necessary inorder to ensure the economic viability of theservices” (Whereas clause (6) thereof with theauthor’s modification as to add the part of (2)thereof).
Article 4 thereof lists the following as
infringing activities: (a) the manufacture, import,
distribution, sale, rental or possession forcommercial purposes of “illicit devices”; (b) the
installation, maintenance or replacement forcommercial purposes of an “illicit device”; and (c)the use of commercial communications to promote“illicit devices.” In addition, Article 5 thereof
provides for sanctions on the infringer andremedies for the service providers who sufferedfrom the infringement.
The EU Directive 98/84/EC does not mention
any measures against so-called “illicit acquisition ofa password of another person’s own” under the
Unauthorized Computer Access Law of Japan. As
long as an “illicit device” is not involved in orconcerned, e.g., a mere act of illicitly acquiring suchinformation as a password from a third party andaccessing a paid distribution service by enteringthat information on the “normal” PC (which is notdesigned to or adapted to give access to a protected

service in an intelligible form), such an act would
not be prohibited under the Directive. However,such an act will be subject to criminal punishment
under the national laws of Member States of the EU
since it falls into “illegal access” provided in Article
2 of the Convention on Cybercrime ETS No. 185,
which was opened for signature by the Council ofEurope on November 23, 2001.
On the other hand, while the Directive
provides for both civil and criminal liabilities which
are remedies for the injured parties and sanctions
on the infringers, the Unauthorized Computer
Access Law is a criminal law and procedure, so theinjured parties can not help seeking remedies andcompensations based on the Civil Code, whichburdens them a lot. Furthermore, the content ofcriminal punishment for an act of unauthorized
computer access seems to be rather lightconsidering the purpose of the Law. Future
discussions are expected.
(3) Protection of databases(i) Applicable law and points at issue
Not only search engine service providers like
“Yahoo!” and “Google”, but also many websites
nowadays have respective search functions within
their sites. In order to make it possible to searchanything in the website, it is requisite that the
information/content providers have in advanceestablished “database(s)” that the various
information they have collected are organized andsystematized. The term “database” is defined in
Article 2(1)(xter) of the Copyright Law of Japan, andArticle 12bis(1) stipulates that databases that are“not creative” are not protected as copyrighted
works(*5), (*6)
Since no protection of rights is extended for
uncreative databases, databases are, even thoughenormous cost, time, and labor were spent bybusiness entities in their production, frequently
reproduced and used (even processed and sold asgoods in some cases) by third parties easily and atlittle expense, which often cause problems. If thevalue of those databases as property rights isdenied this will not only cause the stagnation ofusers’ convenience but also impede thedevelopment of businesses and economy.
Accordingly, there increases an argument that suchdatabases should be protected as rights.
(ii) EU Directive on database protection
Protection of databases is stipulated in the(*5) “Town Page”, a Golden Pages (classified telephone directory) was found to be a compilation (Article 12 of the CopyrightLaw) and its electronic database version “Town Page Database” was found to be a database work both in the NTT Town
Page case (Tokyo District Court decision of March 17, 2000 (Hanrei Jihou No. 1714, p.128)).
(*6) Of course, business entities would be able to file actions based on the Civil Law or the Unfair Competition Prevention Law,but it would be extremely difficult to prove infringement of right. It is noteworthy that, in the Automobile Database case
(March 28, 2002; Tokyo District Court; 1996 (wa) 10047, etc.; unfair competition; civil action) and its interlocutory decision(May 25, 2001; Tokyo District Court; 1996 (wa) 10047), the court found an unlawful act under Article 709 of the Civil Law,stating that “it (the act to be held liable) does not necessarily have to be the exact infringement of a statutory right, butshould be sufficient to be infringement of interest that deserves legal protection”. For the finding of an unlawful act, see theinterlocutory decision mentioned above.

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“Directive 96/9/EC of the European Parliament andof the Council of 11 March 1996 on the legal
protection of databases” (hereinafter called the “EU
Directive 96/9/EC”). The purport of the Directiveis that, since “the making of databases requires theinvestment of considerable human, technical andfinancial resources while such databases can becopied or accessed at a fraction of the cost needed
to design them independently (and) the
unauthorized extraction and/or re-utilization of thecontents of a database constitute acts which canhaveseriouseconomicandtechnical
consequences” (Whereas clauses (7) and (8)thereof), it seeks to safeguard the position ofmakers of databases against misappropriation of theresults of the financial and professional investment
made in obtaining and collection the contents”(Whereas clause (39) thereof).
In this context, Chapter III (Articles 7 to 11)
thereof provides for the “SUI GENERIS RIGHT”,
and Article 7(1) stipulates that “Member Statesshall provide for a right for the maker of a databasewhich shows that there has been qualitatively
and/or quantitatively a substantial investment ineither the obtaining, verification or presentation of
the contents to prevent ‘extraction’ and/or‘re-utilization’ of the whole or of a substantial part,
evaluated qualitatively and/or quantitatively, of thecontents of that database”, which means thatdatabases with no creativity also are legally
protected to a certain level. Such right becomes
effect from the date of completion of the making of
the database and expires fifteen years from the firstof January of the year following the date ofcompletion (Article 10 thereof).
(iii) Movement in the United States
In the United States, no right is granted for
databases that are not protected as works, similar
to the Japanese and EU system. In the U.S.
Supreme Court decision on Feist Publications, Inc.
v. Rural Telephone Service Co. in 1991 (499 U.S.
340 (1991) 499 U.S. 340), the court held the same
effect.
On the other hand, the bill for the Collectionsof Information Antipiracy Act (H.R. 2652) was
submitted to the House of Representatives in
October 1997. It was drafted from the viewpoint ofpreventing unfair competition and was passed in
the House of Representatives on May 20, 1998 andwas sent to the Senate in July of the same year (S.
2291), but it was abandoned with pros and cons.
The purport of the bill (H.R. 2652) was latermodified and submitted as a different bill (H.R. 354)with almost the same content as that of the EU
Directive 96/9/EC other than the requirement of“(the extraction) causes harm to the market”.
Under these circumstances, a movement ofextending some protection for databases without
any creativity seems to be developing also in the
United States.

(iv) Whether or not legislative protection isrequired in Japan
It is quite understandable that the makers of
databases demand some legal protection for their
databases which they have exerted their technicalabilities and/or expertise and spent enormous
expenses in collecting and verifying the data to becontained in their databases. In that sense, theauthor would like to evoke an argument of whether
or not Japan should legislate the right(s) similar to“sui generis right” under the EU Directive 96/9/EC
and H.R. 354 (the revised version of H.R. 2652) of
the United States.
However, even if the “sui generis right” wereenacted in Japan, whether or not a certain portion isa “substantial part” of a database as stipulated in
the EU Directive 96/9/EC, etc. would ultimately
depend upon judicial decisions. Moreover,scrutinizing the two court decisions mentioned infootnotes 5 and 6, the author receives a strong
impression that the issue could not be resolved
conclusively
until
judicial
decisions,andsimultaneously comes up with the doubt about theneed for the enactment since (the author believesthat) judicial decisions reasonably determine thematter from the viewpoint of “legal interest worth
protecting” based on the Civil Code and/or the
Unfair Competition Prevention Law. Nevertheless,discussions on enactment of the right are highly
expected to enlighten both business entities andusers on rights with respect to databases.
4

Restriction on intellectual property forthe development of e-commerce(1) Arbitrary license and compulsory license
It is desirable that patented inventions
regarding encryption technology, technology forpreventing/repelling unauthorized computer accessand illegal decryption, and technology for
expelling/eliminating computer viruses that may
fundamentally harm and destruct e-commerce
should be workable by providers (business entities)
engaged in e-commerce in general. On the other
hand, if the patentee of the said invention refuses togrant a license to a person seeking to work theinvention, there still remains an opportunity towork the patented invention by demanding an trial
for invalidation of the patented invention (Section
123 of the Japanese Patent Law) or by requesting
an arbitration decision to grant a non-exclusive
license (hereinafter referred to as an “arbitrary
license” for convenience), or by taking bothprocedures concurrently. The author will discuss
arbitrary licenses under Section 92 and 93 which
may actually cause problems in connection withpatented inventions regarding e-commerce, and thecomparison between these two Sections and theAgreement on Trade-Related Aspects ofIntellectual Property Rights (hereinafter referred to● 151 ●IIP Bulletin 2003

as the “TRIPS Agreement”) as well as “Mutual
Understanding between the Japanese Patent Officeand the United States Patent and Trademark Office”(hereinafter referred to as the “JPO-USPTO
Agreement”) as follows.
(i) Arbitrary license in Section 92 of the Patent
Law
It is highly expected that many inventions will
come on the scene that utilize (an) other patented
inventions in the field of such technology as
mentioned above. The requirements for granting an
arbitrary license for an invention to be utilized foranother patented invention are stipulated in Section
92 of the Japanese Patent Law. Besides, theprovision similar to the Section thereof is stipulated
in Article 31(l) of the TRIPS Agreement. However,at the point of applying the Section to theseprovisions, the existence of Item 3 of “Actions to betaken by the JPO” of the JPO-USPTO Agreement
presents a problem, stating that “Other than toremedy a practice determined after judicial oradministrative process to be anti-competitive or topermit public non-commercial use, after July 1,
1995, the JPO is not to render an arbitration
decision ordering a dependent patent compulsory
license to be granted”. Opinions are divided overwhether or not the JPO-USPTO Agreement isdomestically effective since it has taken noprocedure for obtaining the approval of the Diet set
forth in Article 73(iii) of the Constitution of Japan,
but from the standpoint of supporting the domestic
effectiveness of the JPO-USPTO Agreement, it
would be impossible to grant an arbitrary license on
account of Item 3 of the JPO-USPTO Agreement
even if the requirement in Article 31(l)(i) of the
TRIPS Agreement were satisfied. Irrespective ofthe determination on whether or not we should
recognize the effectiveness of the JPO-USPTO
Agreement, it would be beneficial to approach theUnited States to add a sentence in the current
JPO-USPTO Agreement to the effect that Item 3 of
the “Actions to be taken by the JPO” in the
JPO-USPTO Agreement shall not be applied toinventions of encryption technology regarding
e-commerce (including technology of electronic
signature/certification),technology
forpreventing/repelling unauthorized computer accessand illegal decryption, and technology for
expelling/eliminating computer viruses” (then, thecorresponding provision must also be establishedwith respect to Item 3 of the “Actions to be takenby the USPTO”). Arbitrary licenses became
argument, especially regarding patents concerningessential drugs, and the dispute was taken up at the
WTO Ministerial Conference held in Doha in
November 2001, where a comprehensive resolution
policy was drawn up. As is the case with thedispute, further arguments should also be made on
arbitrary licenses for working (practicing)
inventions with respect to e-commerce.

IIP Bulletin 2003(ii) Arbitrary license in Section 93 of the Patent
Law
Section 93 of the Patent Law stipulates that“where the working of a patented invention isparticularly necessary in the public interest,” aperson who intends to work the patented invention
may request an arbitrary license if no agreement isreached in the prior consultation between theparties or no such consultation is possible. As theinterpretation of “the public interest” in thissection, the Ministry of Economy, Trade andIndustry (abbreviated as METI) and the Industrial
Property Council enumerates examples in 2.(1)(5)of “Saitei Seido no Unyō Yōryō ” (Outline ofOperating Rule of the Arbitration System,hereinafter referred to as the “Arbitration Rule”)
adopted by the parties thereto as of December 1,
1975 (amended as of April 24, 1997).
As a matter of course, if the patentee
exclusively works the invention or grants a licensewith the fee that would be judged to be
unreasonably high (or outrageously high that it canpractically be construed as license refusal) by abuseof a dominant bargaining position to maintain orstrengthen his/her price leadership, and as a result,if it may reflect higher service charges whichmakes consumers/users to refrain from or hesitate
in conducting e-commerce, it will fall into
2.(1)(5)(i)(ii) of the Arbitration Rule. In such a case,granting an arbitrary license under Section 93
thereof can be highly expected.
5Summary

With the rapid progress of technology relating
to e-commerce, arguments are expected to develop
over granting some kind of rights or finding someassociation with rights to facts and/or things thathave long been considered to have nothing to dowith intellectual property, such as domain names
and “sui generis rights” for databases that do notcontain any creation.
Indeed, wide recognition and understanding by
citizens are required for what is not stipulated andestablished as a “right” in the current laws in order
to be approved as a “right” in the future. All themore, the author looks forward to the future
movement of how such new “rights” will be
associated with the existing laws, how they shouldbe treated toward the problems on licenses andunder the Anti-Monopoly Act.

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