19 Trademark-related Issues Raised by the Internet– with a Focus on Injunctions against Domain Name Use(*)
Research Fellow: Azusa Ichimasa
We have the issue of infringement of a trademark by a third party’s use of the trademark ina domain name (e.g., example.co.jp), which serves as an address on the Internet. No consensus
has been arrived at as to what extent a trademark should be protected if a conflict occurs
between the trademark owner and a third party. For example, a trademark owner may file anaction against a third party who parodies the trademark and uses “freedom of expression” as adefense.
This research uses the fair use doctrine adopted under U.S. law to analyze the trademark
protection provided by the court in domain-name disputes. First, this research briefly describes
U.S. trademark law with a focus on the fair use doctrine adopted under U.S. law. Second, thisresearch discusses two Japanese laws applicable to trademark-related issues, i.e., theTrademark Act and the Unfair Competition Prevention Act. With reference to the fair use
doctrine, this research suggests how to judge whether a certain act has been committed for
self-profiting or other-harming purposes, which is one of the criteria adopted under Japanese law.
This research also suggests what remedies (e.g., an injunction against the use of a domain name)should be made available under Japanese law. The analysis of these domain-name disputes helps
us determine what alterations to make to Japanese intellectual property law and policy.

I

Introduction

This
paper
considersabout
theself-profiting or other-harming purposes andthe intellectual property law and policy in
the Japanese law by learning the fair use
which says in America law as a parody and atrust damage type domain name dispute.
Incidentally, to make it easy in case of thesummary to read, it omits a note. In thequotation, therefore, refer to this passage.

1

Domain names

Domain names are equivalent toaddresses on the Internet. Originally, IP
addresses were used inside computers toaccess a computer connected to the Internet.
Since IP addresses, which consist of digit
sequences, are difficult for us to remember,
we have created web addresses (e.g., http://www.example.co.jp) and mail addresses by(*)

designating letter sequences (e.g., English
letters and numbers) instead of digit
sequences. A part of such address, such as“example.co.jp,” which consists of letter
sequences with each sequence punctuated bya period, is called a domain name. A domainname is a management unit and centrally
managed by the Domain Name System(DNS).
A domain name has a multilevel
configuration. In the case of “example.co.jp”
for instance, “jp” is known as the top-leveldomain (hereinafter “TLD”), “co” as thesecond-level domain, and “example” as thethird-level domain. Similarly, in the case of“example.com,” “com” is known as the TLD
and “example” as the second-level domain.
Each registrant is permitted to select a set ofletters of his or her choice for the part“example.”

This is an English translation of the Japanese summary of the report published under the Industrial Property
Research Promotion Project FY2007 entrusted by the Japan Patent Office. IIP is entirely responsible for any errors
in expressions or descriptions of the translation.
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168 ●

2

Issues(1) Cybersquatting
The advent of domain names has become
both a blessing and a curse. A domain name,which consists of a letter sequence thatsignifies a word or sentence carrying acertain meaning, helps us memorize website
addresses. However, the signification of ameaning has caused issues including conflictof trademarks owned by others. These issues
stem from a system that permits, under the
first-come, first-served basis, any person to
freely register a domain name of his or her
choice without undergoing examination. The
Japan Registry Services (JPRS) has taken astandpoint that “a domain name merely
signifies a meaning in the domain namespace and has no other meaning” and has notestablished a system to check whether adomain name conflicts a trademark or any
other. The lack of such a system has greatly
increased the risk of “Cybersquatting.” Anyperson could one day find that his or her
trademark, trade name, or personal namehas been registered by a third party as adomain name and that the only way to gain
the possession of the domain name would beto accept the third party’s offer to sell theowner of trademark, etc., at an extremely
high price.
(2) Fair use
The term “fair use” means a partial usethat does not constitute an infringement.
This is a doctrine that was originallydeveloped in connection with copyrightprotection under U.S. common law and wasthen incorporated into trademark protection.
The
Anticybersquatting
ConsumerProtection Act of the U.S. (15 U.S.C.
§1125(d)(1)(A)(i)), which is applicable todomain-name disputes, specifies that the actof using a work would not be considered as
cybersquatting unless a “bad faith intent”
exists. A bad faith intent would not be found
if there were reasonable grounds forbelieving that the use of a domain name is afair use or otherwise lawful. Regarding theterm “the purpose of acquiring an illicit gain●or causing injury to another person,” whichis specified in Article 2, para.1, item ⅻ of
the Unfair Competition Prevention Act,
which is applied to disputes over domainnames, the Ministry of Economy, Trade andIndustry presented its understanding that
“The criteria listed in the U.S. law, the
UDRP and the JPDRP for judging whether abad faith intent exists and the precedents
and judgments made in consideration of
those criteria provide us with usefulreferences for interpreting the revised Act.”
In order to use the “fair use” doctrine to
examine the appropriate “balance of rights”
sought in domain-name disputes, we will
first briefly examine U.S. trademark law and
the Japanese Trademark Act and Unfair
Competition Prevention Act, which handle
trademark-related issues. As a next step, I’dlike to propose to add a “disclaimer” as a
remedy for domain name users. We will also
analyze the “fair use” doctrine, which isreflected in a general provision concerning
an act of unfair competition as well as in a
restrictive regulation.

II

U.S. Laws

In the United States (hereinafter “theU.S.”), trademark-related issues had become
increasingly complex due to the existence ofstate-level trademark laws. In order to solve
this problem, laws were established in 1881
and 1905 which were applicable to theinterstate use of trademarks. In 1946, theLanham Act was substantially revised as afederal trademark law. The Lanham Act was
designed to protect trademark owners from
infringement, unfair competition, false
designation of origin and to protect
consumers from confusion. For this reason,trademark law, which aims to protect
consumers from confusion, is widely regarded
as one of the laws against unfair competition.
Since “At least, as far as the common law isconcerned, trademarks are meaninglesswithout the existence of competition,” “thetrademark law has a legitimate place to exist
as a type of unfair competition prevention
law.” The following sections will examine the169 ●IIP Bulletin 2008

Lanham Act (1946 Trademark Act) andanalyze how domain names are treated.

41

15 U.S.C. §1114, any person who uses
another person’s registered mark as if itwere his or her own in order to promote hisor her business and causes confusion among
consumers as a result should be considered
to have committed a trademark infringement.
An infringement action may be filed even for
an unregistered mark as long as it satisfies
the criteria specified in common law.
Currently, an action may be filed under
U.S.C. §1125(a)(1) against the infringementof an unregistered mark.
15 U.S.C. §1114 and 15 U.S.C.
§1125(a)(1) specify the same criteria while
the two differ in that the first provision
providesprotection
forregisteredtrademarks whereas the latter protects
unregisteredtrademarks
fromunfaircompetition. According to the criteria, any
person who uses another person’s protectable
mark (1) in commerce (2) as a “designationthat is likely to cause confusion” shall beconsidered to have committed a trademark
infringement. In other words, said provisions
are applicable to a case where a third party
obtains a domain name that is likely to cause
confusion with any other party’s mark anduses the domain name in commerce.
However, this Act would not be applied
as long as a domain name is used in such a
way that does not cause confusion. For
example, any company that finds a third
party using the company’s trademark in thedomain name for an adult website would
have difficulty in satisfying the criteria forthe likelihood of confusion. To solve thisproblem and protect the value of a famous
mark, the Federal Trademark Dilution Act of1995 was established.

Statutory definition of a domain name

15 U.S.C. §1127 defines that “The term
‘domain name’ means any alphanumericdesignation which is registered with or
assigned by any domain name registrar,
domain name registry, or other domain nameregistration authority as part of anelectronic address on the Internet.” Thismeans that, unlike a trademark owner, theregistrant of a domain name is not protectedby an exclusive right such as a domain nameright.

2

In rem jurisdiction over a domain
nameRegarding in rem jurisdiction over adomain name, 15 U.S.C. §1125 (d)(Anticybersquatting Consumer Protection
Act, hereinafter “ACPA”) sets forth that “Theowner of a mark may file an in rem civil
action against a domain name” (15 U.S.C.
§1125(d)(2)), recognizing the existence of inrem jurisdiction over a domain name.

3

Trademarks protected by the LanhamAct

A trademark is not recognized uponmere adoption but upon use. And adesignation is protected as long as it has an“inherent distinctiveness” or a “secondary
meaning.” An “inherently distinctive” markcould cause confusion if used by a third party
because such mark is perceived byprospective purchasers as a designation. A
mark that has a “secondary meaning” hasbecome inherently distinctive as a result of
its use although it does not originally haveinherent distinctiveness. It should be noted
that, unlike Japanese law, U.S. law does nothave a provision on defensive markregistration.

●

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5

15 U.S.C.
§1125(a)(1)

§1114

and

15

U.S.C.

Federal Trademark Dilution Act

The U.S. established the Federal
Trademark Dilution Act of 1995 (hereinafter“FTDA”). Nevertheless, in the Moseley v. V
Secret Catalogue case, the Supreme Court
judged in 2003 under the FTDA that the
170 ●plaintiff must prove actual dilution. In
response to strong requests from trademark
owners to protect trademarks from the riskof likely to cause dilution, the Trademark
Dilution Revision Act of 2006 (hereinafter“TDRA”) was established in October 2006.
The Trademark Dilution Revision Act (1)does away with the requirement of proving
actual dilution; (2) makes clear it isapplicable not only to inherently distinctive
marks but also marks that have acquired
distinctiveness; (3) specifically sets forth anddefines both “dilution by blurring” and“dilution by tarnishment”; (4) eliminates theconcept of niche fame; and (5) arguably
broadens the fair use defense.
The criteria for receiving relief under
the TDRA are (1) Similarity, (2) Inherent or
acquired distinctiveness, (3) Fame, (4)Dilution, and (5) Actual or likelihood ofdilution.
Dilution Act is not applicable to anymarks that are not famous. The FTDA,
which was applicable to any dilution causedby the use of a famous mark by a third party
for the purpose of selling domain names orcreating domain names for adult websites, isdifficult to apply to a case where thetrademark in question is not famous.
In order to solve this difficulty andprotect all marks against cybersquatting, theso-called
Anticybersquatting
ConsumerProtection Act was established.

6

Anticybersquatting Consumer Protection
ActThe
so-called
Anticybersquatting
ConsumerProtection
Act(hereinafter“ACPA”) was established in November 1999.
The ACPA was designed to protect
consumers against various problems causedby cybersquatting, to protect the online useof
brand
names,
andtorestrict
cybersquatting including an act of using
personal names protected as marks.
The ACPA (15 U.S.C. §1125(d)) specifies
that a person shall be liable if that person(1) has a “bad faith intent,” and (2) registers,
traffics in, or uses a domain name containing●

a mark, word, or name that— (3) in the caseof a mark that is distinctive, is identical or
confusingly similar to that mark, (4) in thecase of a famous mark that is famous, isidentical or confusingly similar to or delusiveof that mark.

7

Fair use

The term “fair use” means a partial usethat does not constitute an infringement.
This is a doctrine that was originallydeveloped in connection with copyrightprotection under U.S. common law and wasthen incorporated into trademark protection.
First, we will review the interpretation of
the fair use doctrine in copyright law andexamine the doctrine adopted under the
Lanham Act.
(1) Copyright law“The traditional concept of fair use
excusedreasonable
unauthorized
appropriations from a first work, when theuse to which the second author put theappropriated material in some way advanced
the public benefit, without substantially
impairing the present or potential economic
value of the first work.”
The rule of fair use, which had been
formed through the accumulation of equity
precedents, “over 150 years of case law,”“without the basis of underlying laws” wascodified in Section 107 of 1976 copyright law(17 U.S.C. §107).
The purpose of the fair use doctrine is to
strike an appropriate balance by permitting
the use of a work without the author’s
consent in some cases. Although the reward
to creators is a secondary goal of copyrightlaw, an absence of monetary protections
would result in diminished creativity. The
fair use doctrine is one way in which
copyright law attempts to strike a balance
between the competing interests of theindividual creator and that of society.
(2) Lanham Act
Having seen the TDRA revised in a waythat was preferable to trademark owners,
171 ●IIP Bulletin 2008

many groups advocating freedom of speech
opposed the application of this Act based
solely on the likelihood of dilution by sayingthat it would deter the public from making
criticisms and parodies.
In response, Congress found that the‘non-commercial use of a mark’ does notconstitute dilution. Consequently, a morepractical exemption clause for the fair use
doctrine,
15
U.S.C.
§1125(c)(3),wasestablished in this Act.
15 U.S.C. §1125(c)(3) specifies that “(3)The following shall not be actionable as
dilution by blurring or dilution bytarnishment under this subsection: (A) Any
fair use, including a nominative or
descriptive fair use, or the facilitation ofsuch fair use, of a famous mark by anotherperson other than as a designation of source
for the person's own goods or services,
including use in connection with (i)advertising or promotion that permits
consumers to compare goods or services; or(ii) identifying and parodying, criticizing, orcommenting upon the famous mark owner or
the goods or services of the famous markowner, (B) All forms of news reporting andnews
commentary,
and
(C)
Any
noncommercial use of a mark.”
Fair use can be roughly classified into
two types: descriptive fair use andnominative fair use. Descriptive fair use is
known as traditional fair use. Descriptive
fair use can be used as a defense to assertthat a descriptive use does not constitute an
infringement. On the other hand, nominative
fair use can be used as a defense to assertthat a nonconfusing use does not constitutean infringement.

8

Conclusion(1) Freedom of expression
One of the purposes of imposing fair use
restrictions is to prevent the expanded rightof trademark owners from damaging the
public interest in free expression and to
strike an appropriate balance between thepotential restrictions on free expression andthe public interest in avoiding consumer●

IIP Bulletin 2008

confusion. Freedom of expression should not
be taken as permission to disperse false
information. Second, trademark owners, likepublic figures, must accept the concomitantrisk of public ridicule in the form of parody.
Freedom of expression, which is a basic
right in a democratic society, must
sometimes be actively protected in a disputeeven one between private persons. Any
restrictions on criticism or news under
trademark law or any other law would limit
freedom of expression. The balance among
copyright, trademark, and First Amendment
interests is maintained by fair use. Unlike
the case where one person uses another’s
trademark to distinguish his or her products
and services from those of another in order
to increase his or her own profits, theexpression of an idea by means of the use ofanother's trademark in a parody, for example,
will “often lie within the substantial
constitutional protection.” If the use isinterpreted merely as a reference to or acomment on the goods, services, business, ormark of the trademark owner, theantidilution statutes should not be applied.
However, said statutes should be applied toany act that is likely to mislead or confuse
consumers.
Therefore, any act of establishing a
critical website under the domain name
“XXsucks” and any act of using such word as“sucks” on the Internet to criticize a
trademark owner should be regarded as the
freedom of expression as long as there is no
likelihood of misleading or confusions
consumers.
(2) Fair use
The strength of protection necessary fora famous mark should be determined basedon whether the mark is “strong” or “weak.”Since 15 U.S.C. §1114 and 15 U.S.C.
§1125(a)(1) of the U.S. law specify thecriteria
fordetermining
whether“alikelihood of confusion” exists, it is fair tosay that broad protection is provided tomarks under said law. Furthermore, theFTDA authorizes the judge to grant an
injunction against the dilution of a
172 ●

protectable mark under the “the principles of
equity.” In addition to these protection
measures, the scope of protection was
further expanded to include the likelihood ofdilution. The necessity of such expansion
remains disputable.
Since the FTDA of 1995 was revised in
2006, the likelihood of dilution has become arequirement for a legitimate dilution claim.
The revision provides owners of famous
marks with stronger protection for theirmarks. At the same time, the provision on
the exemption of an application based on thefair use doctrine has become more specific.
In the field of copyrights, fair use brings
about economic benefits. The current
development of the so-called anti-patent
movement, which stands in contrast to
intellectual property protection, has “givenrise to the idea called commons that
promotes the creation of an industry-specificcommunity for information sharing and formutual free use of works based on contracts(e.g., OSS (Open Source Software) and CC(Creative Commons) advocated by Stanford
Professor
Lawrence
Lessig).”Thedevelopment of anti-protection activities
such as this has created a new use of
intellectual property.
The same may be said about the field oftrademarks. For instance, a trademark
owner may be concerned that criticism may
decrease its brand value. However, criticism
and parody could be regarded as theevidence of public attention. Criticism could
increase the publicity for its trademark. In
addition, the trademark owner could learn
lessons from the criticism and parody tofurther enhance the brand value.
While Japanese law has no provision on
fair use, the fair use doctrine is useful forinterpreting Japanese law.

III Japanese Law
1

The Trademark Act and the Unfair
Competition Prevention Act

Japan handles trademark-related issues
based on the Trademark Act and the Unfair●

Competition Prevention Act. In addition to
the Trademark Act, under which Japan
grants a trademark right, the Unfair
Competition Prevention Act is necessary forhandling the case where an illegal
competitor makes illegitimate use of a
trademark that is likely to cause confusion.
The
maintenanceofacertaintransaction order contributes to industrial
development
andprotects
consumerinterests. Trademark Act are a part ofcompetition law.

2

Statutory definition of “domain name”

Article 2, para.9 of the Unfair
Competition Prevention Act defines “domainname(s)” as “letters, numbers, signs or othersymbols or any combination thereof that
correspond to the numbers, signs, letters or
any combination thereof assigned to identify
each computer on the Internet.”
Therefore, the relationship between theregistry and each domain name registrant is
the same as that between a debtor andcreditor. Consequently, unlike a trademark
owner, a domain name registrant has nosuch exclusive right as a “domain nameright.”

3

Trademark Act

Under the Trademark Act, an exclusive
right is granted based on registration even toan unused trademark. Under the registeredtrademark system to protect trust in thebusiness of registered trademarks andprevent confusion, a trademark right isestablished on registration with the Japan
Patent Office (Article 18 of this Act).
Article 37, para.1, item ⅰ of using a
trademark identical or similar to aregistered trademark for goods or services
that are identical or similar to thedesignated goods or services constitutes a
trademark infringement. The likelihood ofconfusion need not be asserted and proved.
Article 67, para.1, item i of this Act
specifies that the “use of the registereddefensive mark in connection with the173 ●IIP Bulletin 2008

designated goods or designated services”
shall
also
constitutea
trademarkinfringement.
One of the cases filed by the plaintiff
claiming a trademark infringement by adomain name is the “CarrerJapan” case. In
this case, the issue of dispute was whether
the domain name was in use as a trademark,whether the domain name was similar to thetrademark, and whether the services weresimilar to the designated services. Althoughfinding that these three criteria weresatisfied, the court accepted the defense ofprior use.
The Trademark Act is not applicable tothe case of dilution of a trademark.
Consequently, the Act is not applied to thecase where a domain name that is identicalor similar to a registered trademark is used
to establish an adult website because thedomain name is not used to provide goods orservices that are identical or similar to thedesignated goods or services. In contrast, theUnfair Competition Prevention Act isapplicable to the act of causing confusion byusing a product indication containing
another’s trademark regardless of whether
the indication is used for goods or services
that are identical or similar to thedesignated goods or services of the
trademark and also to the act of abusing a
famous indication. In the following sections,
we will discuss the Unfair Competition
Prevention Act.

4

Article 2, para.1, item i and item ii of
the Unfair Competition Prevention Act

The judgment as to whether the act indispute falls under “unfair competition” asspecified in Article 2, para.1, item i and item
ii of the Unfair Competition Prevention Act(hereinafter “UCP Act”) must be made basedon the following criteria: (1) whether theindication in dispute falls under “anindication of goods or business,” (2) whether
the indication is “well-known” (item i) or“famous” (item ii), (3) whether the use indispute falls under “the use of an indicationof goods or business (item i) or “the use of an●

IIP Bulletin 2008

indication of goods or business as one’s own
indication” (item ii), and (4) whether theindication in dispute is similar to another’s“indication of goods or business.”
Based on how a domain name is used,the court determines whether the domainname can be regarded as an indication of
goods or business and whether the use of thedomain name can be regarded as the use of
an indication of goods or business. However,
it is difficult to apply item i, which requires
the existence of the likelihood of confusion,to the case where an indication is used toestablish an adult website. Item ii, which
requires an indication to be famous, is notapplicable to an indication that is notfamous. Both items i and ii are notapplicable to the case of cybersquatting,where the registrant of a domain name does
not use the domain name but offers it for
sale.
These problems led to the establishmentof Article 2, para.1, item ⅻ of the UCP Act,
which defines acts involving a domain thatshall be regarded as acts of unfair
competition.

5

Article 2, para.1, item ⅻ of the Unfair
Competition Prevention Act

An act cannot be regarded as an act of“unfair competition” specified in Article 2,para.1, item ⅻ of the UCP Act unless thefollowing three criteria are satisfied: (1) theact in question must have been committed
for “the purpose of acquiring an illicit gain”(a so-called “self-profiting” purpose) or“causing injury to another person” (aso-called “other-harming” purpose), (2) adomain name must be identical or similar toanother person’s specific indication of goods
or services, and (3) the act in question mustbe either of the following acts: the act ofacquiring or holding a right to use a domainname or the act of using such domain name.
Under Article 2, para.1, item ⅻ of the
UCP Act, so-called cybersquatting such as (1)the act of using a domain name similar toanother’s trademark for the establishment ofan adult website and (2) the act of174 ●registering another’s trademark as a domainname to request the trademark owner topurchase the domain name, is considered asa self-profiting or other-harming act.
Therefore, this item is applicable tocybersquatting. The remedies available for a
victim of cybersquatting are the right toclaim an injunction under Article 3 of thisAct and the right to demand damages under
Article 4 and Article 5 of this Act.
The remaining issue is whether Article 2,para.1, item ⅻ of the UCP Act is applicable
to a dispute over the use of a domain namethat cannot be regarded as so-calledcybersquatting. The issue of how to interpret
this item must be solved to settle a dispute
over such domain name as “XX sucks” It isnecessary to further accumulate court
judgments as to whether the indications inquestion are similar and whether the act inquestion was committed for self-profiting orother-harming purposes.

6

Conclusion(1) Judgment of whether self-profiting orother-harming purposes exist
The advent of the Internet has enabled
all of us to express ourselves. One of theresulting conflicts of rights is a conflict
between a trademark right and freedom of
expression. So far, Japan has not seen
disputes over domain names such as“XXsucks” and “fuckXX” as seen in the
United States. If such a dispute were to arise
in Japan, we would have to decide whether
the act of using such domain name should be
regarded as a self-profiting or other-harmingact.
For example, the domain name,“Xsucks,” could be used for any of thefollowing websites: a website to criticize X
Company, (2) a website to criticize companies
including X Company, or (3) a website tocriticize companies other than X Company.
In case (1), the court will find the use of thedomain name acceptable because it can beconsidered as freedom of expression under
the fair use doctrine. In cases (2) and (3),however, it is uncertain whether the domain●name was used for the purpose of acquiring
an illicit gain or causing injury to X
Company or to other companies. Such use
could be interpreted as having been made forthe purpose of acquiring an illicit gain or
causing injury to X Company because
Internet users might believe that X
Company is criticizing other companies. To
solve these problems, we should take into
consideration the fair use doctrine in U.S.
law when determining whether the use of adomain name in question has been made forself-profiting or other-harming purposes.
No one should register another person’s
trademark as his or her domain namewithout considering whether the use of the
trademark is really necessary and what heor she wants to express by using thetrademark. If the registrant of the domainname is trying to express something, he or
she should be careful not to confuse or
mislead recipients of the expression becausesuch confusing or misleading expression may
not be regarded as freedom of expression.
Article 1, para.2 of the Civil Code specifies
that “The exercise of rights and performanceof duties must be done in good faith.”
Furthermore, para.3 sets forth that “Noabuse of rights is permitted.” Under these
doctrines, any person who has a trademark
right or the right to freedom of expression ispermitted to exercise the right only in such a
way that neither violates the principle offaith nor abuses the right.
It would be safe to understand thatJapan permits the use of a domain namesuch as “XXsucks” to establish a criticalwebsite and allows the non-commercial,nominative, or descriptive use of suchdomain name, unless the use is made forself-profiting or other-harming purposessuch as the resale of the domain name to thetrademark owner. A trademark owner isprohibited from claiming an injunction
against the use of his or her trademark justbecause he or she does not like the way thetrademark is used.

175 ●IIP Bulletin 2008

(2) Proposal for the revision of Japaneselaws
An injunction may be issued as a remedy
to settle a dispute over a domain name.
While an injunction against the use of a
trademark can provide the trademark ownerwith strong protection, an injunction is
unnecessary in some cases. For example, inthe case of a domain name such as“XXsucks,” the court will find it difficult toconclude that the domain name has beenused for self-profiting or other-harming
purposes. In order to strike an appropriatebalance between a trademark owner and theregistrant of a domain name similar to thetrademark,adisclaimer
shouldberecognized as an available remedy inaddition to an injunction. The same would
apply to the problem of parallel import (theact of importing genuine products soldcheaply outside Japan and selling them inJapan at lower prices than regular prices).
In order to prevent cheap imports fromdamaging the brand image associated withhighly priced goods, trademarks are used insome cases. The trademark function theory
considers that such parallel import does notconstitute a trademark infringement as longas a false origin is not indicated. Under thistheory, it is not necessary to pay
compensation to the trademark owner if
those goods are genuine. Unless the use of a
trademark damages the source-identification
function, which is one of the functions of a
trademark, and causes confusion, it should
be interpreted that the effect of a trademark(Article 25 of the Trademark Act) has notbeen damaged and that an act of unfair
competition (Article 2, para.1, item i of the
UCP Act) has not been committed. Ifparallel-import
goods
carry
such
an
indication as “This product is not distributedby the Japanese trademark holder,” it would
benefit consumers by presenting informationthat consumers require in order to makeappropriate purchasing decisions. This is thegoal of a disclaimer.
As the trademark function theory
advocates, we need to strike an appropriatebalance that will lead to the prevention of●

IIP Bulletin 2008

confusion among consumers, in other words,
to the sufficient protection of consumers.
To achieve this goal, it is necessary topermit consumers to file actions under the
UCP Act. Currently, the UCP Act does not
permit consumers to institute lawsuits
against an act of unfair competition.
However, it is consumers who actually suffer
damage from such act of unfair competition.
Therefore, consumers should be granted theright to file a lawsuit (consumer action) tostop an “unfair” act. The grant of such right
will promote the “use of trademarks that will
create a business order beneficial to the
public.”The
legalsystems
concerning
disclaimers and collective actions arenecessary not only to settle disputes overdomain names but also to effectively enforce
the UCP Act.
The basic principle of U.S. trademark
law is different from that of the JapaneseTrademark Act. U.S. trademark law uses thefirst-to-use system, whereas the JapaneseTrademark Act uses the first-to-registersystem, which is designed to protect the
reputationofregisteredtrademarks,
whether in use or not in use, and to prevent
confusion. In my opinion, the current systemgives too much trademark protection even toa non-use mark, just because it is registered,even if the registrant has made no trust to
put it to use. This issue needs further
discussion.

IV Conclusion
Jeremy Bentham (British philosopher)developed the principle of “the greatest
happiness for the greatest number” (theso-called the greatest happiness principle).
Under this principle, the ideal society is one
that “tries to maximize the total amount ofhappiness.”
Bentham defined the purpose of law as“to provide the basic framework of social
interaction by delimiting spheres of personal
inviolability within which individuals canform and pursue their own conceptions ofwell-being. The “greatest happiness” should
176 ●not be achieved by making undesirable
sacrifices but should be maximized within
the restrictions imposed by laws and systems.
In a competitive society, companies produce
various products in an effort to satisfy thediverse needs of consumers and, as a result,“increase options for consumers” The
increased options will make consumers
happier. In such a society, the greatest
happiness may be achieved by maximizing
the total amount of happiness of consumers,
who constitute a large majority of theeconomy. All market participants need toplay in a fair manner especially because it is
not easy for companies to generate profits ina free market.
One way of ensuring fair play is the
UCP Act. Currently, many people advocate
the creation of general provisions in the UCP
Act. On the other hand, many are concernedthat these provisions would hinder stableeconomic activities because the criteria for
judging an illicit act will change on acase-by-casebasis.
Somepeopleareconcerned that these provisions would
increase the burden on judges and theamount of time before a judgment is handed
down. Since efforts to ensure that all market
participants play fair will lead to “thegreatest happiness for the greatest number,”the creation of these general provisions is
indispensable in this rapidly changing world.
The “greatest number” means “participants”
in various systems and “people” who should
be “taken into consideration.” “People” in thefield of economy means “consumers” whochoose goods and services. The successful
enforcement of general provisions would
require “the general public’s awareness of
the importance of laws and their direct andindirect support and cooperation.” No one
judge is solely responsible for theenforcement. In light of global trends, Japanis expected to promote fair play by creating ageneral provision stating that “Any act ofcompetition contrary to honest practices inindustrial or commercial matters constitutes
an act of unfair competition” as specified in
Article 10bis(2) of the Paris Convention. If
any person has conducted an act of●competition without good faith that is likely
to impair consumers’ ability to makeappropriate decisions when purchasing goods
and services, or in other words, if any person
has committed an act that is likely to deceive
consumers or an act of freeriding anotherperson’s marketing results (efforts), that
person may be considered to have committed
an act of unfair competition. Companies
should not define the greatest happiness as
the “greatest profits” but conduct theirbusiness for the “happiness of consumers” inorder to achieve the greatest happiness forthe greatest number.
Consumers must also participate andplay fair. The act of purchasing fake branded
goods is damaging to the fair-play market.
Such an irresponsible act would eventuallydestroy a society where consumers can“purchase high-quality goods at low prices.”
Consumers are important market players.
The law is merely one system for promoting
fair play. In order to create a fair-play society,consumer awareness is extremely important.
It is important to know which right toprotect and when to promote competition. To
ensure fair play, we need to discuss not only
intellectual property laws but also the Act on
Prohibition of Private Monopolization and
Maintenance of Fair Trade and theConsumer Basic Act. Such comprehensive
discussion would further enhance theJapanese intellectual property system.
There are many noticeable developments
outside Japan as well. For instance, Swedentransformedits
unfaircompetition
prevention
law
into
the
“Marknadsföringslagen”, which can betranslated as a marketing act in Japanese.
This law “greatly generalizes the systemestablished under the unfair competition
prevention act in such a way that the law
may be called a market behavior standard
act.” Section 1 of this Act specifies that “Theobject of this Act is to promote the interestsof consumers and of trade and industry inconnection with the marketing of products
and to counteract marketing that is unfair toconsumers and businessmen.” In addition to
Sweden, other North European countries

177 ●IIP Bulletin 2008

consider an unfair competition prevention
law as a basic economic law. They aremaking efforts to establish a “market
behavior standard law suitable for themodern market economy system.” In order tocreate a fair and global legal systemdesigned to maximize the common good of“consumers,” who constitute the “greatest
number” of the economy, it would bedesirable for Japan to emulate the North
European model.
The Japanese Unfair Competition
Prevention Act has been revised almost
every year since 1990. The advent of theInternet has significantly changed the world.
Since provisions in the form of positive
listing are insufficient for use in maintaining
order in such a global cyberspace as theInternet, we need to have general provisions
against unfair competition. There is a theory
suggesting that, in creating generalprovisions in the Unfair Competition
Prevention Act, we need to “explicitly
exclude any use made based on the freedomof expression principle or on the fair use”
and establish a provision concerning the
exemptionofapplicationaccordingly.
Similarly, regarding the Copyright Act, there
have been active discussions as to how to
adopt the fair use doctrine under generalprovisions restricting rights. This paper has
mainlyanalyzed
domainnames
byexamining how to judge whether a certain
act has been committed for self-profiting orother-harming purposes and whether acertain use can be regarded as fair use. I
hope this paper will contribute to theestablishment of general provisions.
In this global age, the principle of “thegreatest happiness for the greatest number”
requires us to achieve the “greatest
happiness” across national and racial
boundaries. Further study needs to be madefrom this perspective.

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IIP Bulletin 2008178 ●