## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it

N os. 07

- 3288 , 07

- 3289 , 08

- 3835 , 08

- 3836 , 08

- 3931 , 08

- 3936 S UNS T AR, I NC ., P laint if f-A ppell ant, D efend a nt-A pp ella nt/C ross-A pp ellee, v. A LBE RT O -C ULV ER C OMPAN Y, D efend a nt-A pp ellee, Plai nt i f f

-Appe l l e e/ Cros s -Appe l l ant,

an d
B ANK O NE C ORPO RA T I ON, D efend a nt-A pp ellee.
K ANE DA, K OS AN, K ABU SHIKI K AI S HA, D efend a nt-A pp ella nt/C ross-A pp ellee.

A pp ealsfr o m the United S t ates Di strictC our t fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No s. 01 C 736, 01 CV 5825

—Ronal d A . G uzmán, Judge
.
A RG UE D S EP TE MBE R 17, 2009

— D ECI DE D O CT OB ER 28, 20092 N os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l. Befo re P OSNER, M A NI ON, a nd E VANS, C ircu it Judges . P OSNER, Cir cu i tJudg e . Thi s i s a n i m m ense, unw ield y, com ple x, m ult i partyco m m er ci al case , now i n i ts ni nth ye ar and on it s second d i str i ct j ud ge. The cas e has bee n prot ra cted u n d u ly a n d sh ou ld p ro b ab ly h av e b een r eso l ved on s um m ar y j ud gm ent y ear s a go. T he princ ipal i ss u e s c onc ern th e interp retation of a tr adem ar k l i c en si ng ag re em ent a nd J apanese tr adem ar k l aw . In 198 0, A lber to- Cu l ver, a m aj orU

. S. prod ucer ofhai r- car e a n d s kin-car e pr oducts ( i ts hom e page , un de rh a i r - c ar e b r a nd s , s t a t e s tha t“ Alb e r t o V O5

— th e com pany’s fl ags hi p bra nd after53 ye ar s re m ai ns a f av o r i te o fmil l i o ns o fwomen an d m enthr o ug ho ut th e w or l d, offer i ng so l uti ons fro m dai l y hai r car e t o inn ovative styling p rod uc ts”), sold Jap an ese trad em ark re gi str ati ons, co ver i ng 13 tr adem ar ks. The buye r w as a J apanese m anufa cture r ofsuch pro du cts nam ed Sunsta r ( plu s a n affi l i ate , Kaned a, Kosan, Kabushik iKais ha, that need not be di scusse d separa tel y; we pass o vero ther im m aterial facts as w ell ). M ost of the trad em arks are f o r m s o rv ari an ts o f“ VO5” ; tho se tha t ar e no t ha ve no bear i ng o n the l i ti gat i on. T h e for m s o r var i ants, as prese nted in a pp endice s t o the l i cense agr eem ent, ar e a s follo w s:N os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l. 34 N os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l.N os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l. 5 The a g r ee m en t o fsa l e pr o vi ded tha t upo n r ec ei vingthe tr ade m ar ks S uns ta rwoul d t r an sferthe m t o Ba nkOne C or p or at ion to h old in t ru st for 9 9 y ea rs , to lice n se th eir us e dur i ngthi s per i o d t o S unstar, a nd a t th e en d o fthe p e r i o d t o ret u rn th em to Su n st ar . I f atan y t im e w h ile the t rustwas i n f or ce the trustee had a “ reas on ab le gr ound” f orthi nki ng S uns ta r had com m i tte d an act that cre ate d “a dangerto the value orval i dity o f L IC E N SO R ’s [i.e., B an k O n e’s ] ow n er sh ip an d tit le in L i c e n s e d T r a d e ma r k s , ” S u n s t a rwo u l d h a v e t o s t o p u s i ng th e endangere d tra dem ar ks unti lthe tr ustee “r eas onably deter m i ned” that th e d an gerhad passed. In the eve nt o f an actual br each o fthe l i cense by Sun st ar, the tr ustee w as to re sci nd the l i cense and return t h e t ra dem ar ks to A lberto-Cu lver. T he l icens e agreem en t (the t e r m s of w hich w ere ne got ia ted by Sun star an d A lberto-Cu lver, Ba nk On e’s du ti es bei ng l i m i ted to enf or cem ent) cal l s the l i cense gr anted S unstara seny o shiy o k en , whi ch in E ng l i shmean s “excl usi ve- use r i ght.” The hol der o fa seny o shiy o k en not onl y has an excl usi ve ri ght t o use the l i censed t ra dem ar ks wi th i n the g eo g r aph i ca ls co pe o fthe li ce ns e ( se e ne xt parag ra ph) but can sue i nfr i nger s o fthe tr ad em ar ks i n i ts own nam e. The gr antorof the l i cense

— i n thi s ca se the tr ustee

— c an n ot u se th e t ra d em ar ks w h ile th e lic en se is in f or ce. J apanese Tradem ar k A c t, ar ts. 25 , 30 ( 2) , 36 ( 1) , 38 , 71(1)(i ii ). Sunsta r, f ori ts part, was f orbi dd en by t he ag re em ent t o exportany prod ucts b ear i ng the l i censed t ra dem ar ks to countr i es i n w hi ch A lber to- Cu l verwa s s el l i ng pro du cts6 N os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l. und erany ofthe tr adem arks, had gr anted an e xcl usi ve l i cense to a thi rd party to sel l such products, or h ad re gi ste re d or appli ed to r egi ste r any o fthe tr adem ar ks l i c ensed t o S un s t a r . Al tho ugh the a g r e e men tf o rb i ds S uns ta r to r eg i st er ( ex ce pt f o r th e pur po se o fde fendi ng th e l i ce ns ed tr ade m ar k s) “a ny ne w t r ade m ar ks con

taini ng the nam es A lber to, A lber to V O5 orVO5 orany of th e na m es or m arks s etf o r thi n [ th e appe ndi ce s to the agr eem ent] , ” S unstar is not f orbi dd en to use new tr ade m ar k s i n J apa n. A l lthe products s ol d und erthe l i cense are m ade by Su n st ar ; as fa r as th e re c or d s h o w s, A lbe rt o-C u lve r se lls no hai r- car e pr oducts

— m aybe no products, per i od

— in J apan. The ag re em ent doe s no t r equ ire S unstarto pay royalties for u sing th e li cen sed trad em arks; the ent ire com p ensat i on t o A lber to- Cu l verf orthe l i cense consi ste d o fl um p- su m pa y m en ts ( to ta l i ngmor e th an$ 10 mil l i o n) byS uns ta rmade i n 1 980 whenthe l i ce ns e ag r ee m en t w as m ade. The differ ence between ob taini ng a 99- yea r excl usi ve tr ade m ar kl i cens e wi thno r o y al tyo bl i g at i o n a nd b uy i ng tr ade m ar k s o ut r i g hti s smal l

. S unstarha d want ed to b uy the tr adem ar ks outr i ght but A lber to- Cu l ver had bal ked be ca us e i t want ed to r es tr i ctS uns ta r ’ s ab i l i ty to us e th e tr adem ar ks i n countr i es i n w hi ch A lbe rto- Cu l verused o r m i g ht wantt o us e th em ( th es e r es tr i ct i o ns t ak e up m or e s pace in the l i cense agr eem en t than anyo ther su bj ec t), an d d ou b tle ss als o b ec au s e it w an te d to be ab le to re capture and then r el i cense the use o fthe tr ad em ar ks i n J a p a n s h o u l d S u n s t a rf o rs o me r e a s o n s t o p u s i n gth e m.N os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l. 7 I n 198 9 S unstaras ked Albe rt o-C ulv erf orper m i ssi on t o l i cense thi s new var i ant o fthe VO 5 t ra dem ar k:

A lber to- Cu l verrefused. S unstarused the var i ant a nyw ay, co nt en di ngtha t it d id no t vi o l at e th e l i ce ns e. Butthe tr ustee sa i d i t di d. N ego ti ati ons bet w een A lber toCu l verand S unstarensued, and ul ti m ate l y S unstar ag r ee d t o p a y $ 1 0 mi l l i o n f o rth e r i g h tt o a d d th e v a r i an t to the l i st ofl i censed t ra dem ar ks and reg i st er it , and f or som e t ra de sec re ts. T en y ear s l ate r, S unstarst ar ted usi ng a furthervar i ant, c o n s i s t i n g ma i n l y o f a d i ffe r e n t t y p e f a c e f o r “ V O 5 , ” but al so add i ng a bl ack back gr ound an d a v er ti calbar( ra ther than a space) betw een the “O” a nd the “5”:8 N os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l. S uns ta rde sc r ibe s th i s as a “m oderni ze d” ve r si o n o fthe lice n se d V O 5 t ra d em ar ks , w h ich w e a ss u m e m ea n s a ll uri ng to m oder n J apanese con sum er s. A lber to- Cu l ver re fused to am end the a gr eem ent t o perm i t S unstarto use the m oder ni zed ve rs i on, and, as b efo re , the tr ustee com m and ed S u nstarto desi st

— w hi ch i t r efused to do, i nstea d fi l i ng thi s sui t i n 2001 aga i nst b oth A lber to- Cu l ver and Bank One. The sui t, w hi ch i nvoke s federa lj uri sdic ti on unde r2 8 U. S

. C. § 1 33 2( a) ( 2) b ec au se i t i s be twe ena f or ei gn c iti zen ( Sunsta r) and two U

. S. ci ti zens ( A lber toC ulver an d Ba nk On e), seeks a d eclaration th at Su ns tar’s us e o fthe mar ki s per m i tt ed bythe l i ce ns e. S uns ta rs o ug ht o th err el i efa s wel l, i nc l udi ngda m ag es f r o m Ba nkOne , b ut h as aba nd oned the add i ti onalcl ai m s. A lber to- Cu l ver, as a thi r d- pa r t y b e ne fi c i a r y o fthe l i c e ns e ag re em en t, fi l e d a m i r r o r - i m ag e su ita g ains t S uns ta r, s ee k i ngda m ag es a nd i nj un c t i v e r e l i e f, i nc l ud i ng a n o r de r tha t the l i c e ns e be rescind ed and th e t rad em arks retu rned to A lberto-Cu lver. The sui ts w er e co nsol i dated, and tr i ed to a j ury. The agr eem ent i s in Engli sh a n d state s that di sputes ar i singunde ri t ar e to b e r es o l ve d i n a cc o r dan ce wi ththe l aw o fI l l i no i s. Butwe ca nno t l o o k to I l l i no i s l aw to de fi ne s e n y o s h iyo k en , a t e r m t he me a ningo fwh i c h i s g i v e n by J apa ne se l aw. I l l i no i s law w il lno t te l lus whethe rthe hol der o fa s e n y o s h iyo k en can use v ar i ants ofi ts l i censed tr adem ar ks. A lber to- Cu l verhas tak en the posi ti on that the par ti es used the ter m m er ely to i nd i cate thatS unstar cou l d r eg i st erthe l i ce ns e wi ththe J apa ne se t r ade m ark offi ce, and not to confero n Sunsta r the r i ghts that a seny o shiy o k en c o n fe r s o n th e h o l d e ru n d e rJ a p a n e s e l a w. T he district j ud ge agreed , and refused t o i n stru ct th e j uryN os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l. 9

on th e le ga l m ea n in g of th e Jap an es e te rm . U n d er R u le 4 4.1 o fthe c i vi lr ul es , the j udg e dec i des the m ea ni ngo fr el ev an t f or ei gn l aw and inst ructs the j ury on that m eani ng, j ust a s i t woul d do i n the c as e o fi ss ue s of d om est i c l aw. The parti es had subm i tte d affi davi ts fro m exper ts on J apanese l aw c o ncern ing th atmean i ng, b utthe j udg e, thi nk i ngthe J apa ne se l eg almean i ngi r r el ev an t, di d no t try t o de te r m i ne i t. Albe r to
- Cul ve ra r g ue s th atS uns ta rf o rfei te d a ny cha llenge to the j ud ge’ s r uling byf ai l i ng to as k hi m to instru ct the j ury on th e legalm ean ing of seny o shiy o k en . But he had m ade hi s posi ti on cl ear and S unstar ’s la w yer s’ w er e no t r equi re d to askhi m to r eco nsi der i t. I n the cour se of i ts del iber ati ons, the j ury sent a no te to th e j udg e as k i ng : “ W ha t ex cl us i ve r i g ht s do es the S e ny o s hi y o k e n l i cense gi ve Sunstar P LE AS E B E E X PL I C I T !” Th e j ud ge d eclined to answ er, and the j ury th en ret u rn ed a ve rd ict f o r A lbe rt o-C u lve r, ex c ep t t h at it aw ar ded no dam age s

— for th e exc ell en t reason that there wer e no ne . Th e jud g e th ene nj o i ne d S uns ta rfr o m us i ng th e variant m ark

— and al so or de red the l i cense agr eem en t te r m i na te d b ec ause o fS uns ta r ’ s br ea cha nd a l lthe li cen sed tra d em arks th erefore retu rned to A lberto-Cu lver. A lber to- Cu l ver ’ s cr oss - app ea li s fro m the j ud ge’ s r efusal to g r an t a br o ade ri nj unc ti o n; w e s ha l lno t ha ve t o c o nsid er th e m er its of th e c ro ss -ap p ea l. W e ca nnot find any basi s forthe propos i ti on e m bra ced b y th e d i s t r i c tj u d g e th a tth e t e r m seny o shiy o k en bears a p r i v a t e mea ning i n the c o nt r a c t
. On l y i f S un s tar was the ho l der o fa seny o shiy o k en w ith in the m eani ng tha t J a p a n e s e l a w a s s i g n s t o th a tt e r m, r a t he r th a n i n s o me10 N os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l. id ios yn c ra tic se n se t h a t t h e p ar tie s a ss ign ed to it (n or d id they saytheywere doi ng tha t) , was i t a uthor i zed to re gi ste r the l i cense agr eem ent, as A lber to- Cu l verco ncedes S u n s t a rw a s a u th o r i z e d t o d o , a n d t o s u e i n i t s o wnn a me f or i nfr i ngem ent of the l i censed tr adem ar ks, as A lber toCu l veral so con cedes that Sunsta r w as author i zed to do. J a pa ne s e T r a de mar kAc t, a r t s . 3 6 ( 1 ) , 3 8 ( 2 ) ; K enn e th L. P or t, Tradem ark and U nfairCo m peti ti on Law a n d P o licy in Japan 94 ( 2007 )

. A lber to- Cu l verdoes nota rg u e that Sunsta r’ s l i c en se i s no t a “r eal ” s eny o shiy o k en , bu t o n ly that such a l i cense d oe sn ’ t a uthor i ze Sunsta r to use var ian ts of the l i censed t ra dem ar ks, and that i s a quest i o n o fJ a p a n e s e l a w. W hen part i es to a co ntra ct, es peci al l y sop hi sti cate d parti es, use a t echni calte rm , ther e i s a pre sum pti on that th ey are u sin g it in its te c h n ica l se n se . R ee d v . Hobbs , 3 Il l. 2 9 7 (18 40 ); M i nges Cr e e k, LL C v. Royal Ins . Co. , 44 2 F

. 3d 95 3, 95 6 (6 th C ir. 20 06 ); M ello n B a nk, N .A . v. Aetn a B usin ess Credit, Inc ., 61 9 F .2d 10 01 , 101 3 (3 d C ir. 19 80 ); Sup e r i or B usin ess Assista nc e C o rp. v. U nited Sta tes , 46 1 F

. 2d 1036 , 10 39 (10 th C ir. 19 72 ); R es tate m ent( Second) of Co ntr a cts § 2 02( 3) ( b) ( 1981 )

. ( That i s Am er i can l aw

—but r em em b er th e ch o i ce o fl aw pr o vi si o n i n th e l i ce ns e ag r ee m en t. ) I fthe te chni ca lt er m ha ppen s to b e a f o r ei g n t er m , the presum pti on i s that i t i s use d i n i ts f or ei gn te chnic alse nse. B u t if th e t ec h n ica l te rm is a for eig n te c h n ica l l egal t e r m, one m i ght wonder what sense i t be ar s i fas in t h i s ca se th e c o n t r a c t p ro vid es th at d om es tic law (Ill in ois law in th i s ca se ) g o ve r ns . The won der m en t is su per fi ci al : the p arties can ’t have m ean t tha t the m ean ing of seny o shiy o k en w ou ld be d ecid ed un d er I ll inois l aw , becau s e th e w ordN os. 07

- 3288, 07

- 3289 , 08

- 3835 , 08

- 3836, etal

. 11 has no m eani ng i n that l aw . A nd as w e s ai d bef or e, unl ess seny o shiy o k en was used i n i ts techni call ega lse nse, S unstar coul d not hav e r egi ste re d the l i cense ag re em ent o r enf or ced the l i censed t ra dem ar ks aga i nst infr i nger s. So w e m ust deci de w hetherthe hol der o fa seny o shiy o k en i s per m i tte d b y J apa ne se l aw t o us e va r i an ts o fthe l i censed t ra dem ar ks. Rule 44

. 1 m ak es that a questi on o f l aw . The r ule per m i ts f or ei gn l aw to be prove d by tes ti m ony oraffi davi ts ofexper ts, and that is the r oute f ol l owed i n m ostcases. But i t a l so perm i ts j ud ges to con s ul to the rs o ur c e s o ff o r e i g n l a w, s uc h a s a r t i c l es, tr eat i ses , and j ud i ci alo pini ons. T hos e are s u p erior sou rces. W he n a cou rt i n on e U

. S. st at e a pp l i es the l aw o fano therst ate , o r w hen a federa l cou rt ap p li es s t a t e l a w , the cou rt doe s not p erm it exp ert te st im on y on th e m ea n in g of t h e “ f o r e i gn ” la w , eve n if it i s th e l aw o fLo ui siana, w hi chi s ba se d t o a s i g ni fi ca nt degre e o n the Fr ench Ci vi lCode. Yet i fth e law to be appli ed i s the l aw o f a fo re i gn co untry, ev en i fi t i s a n En gl i sh- speakin g c ou n tr y t h e le ga l sys te m of w h ich d er ives from the sa m e sourc e as ours

— Eng l an d

— our cour ts ro uti nel y a dm i t t est i m ony by law yers on the m eani ng o f th e fore ign law , see , e.g., Schexnide r v. M cD er m ott Int’ l, Inc. , 86 8 F.2 d 7 17, 7 19 n . 2 (5 th C ir. 19 89 ) (p er cu ria m ), an d rely heavi l y o n that tes ti m ony. Bu t the l aw ye rs w ho t est i fy t o the m eani ng o ff or ei gn law , w h et h er th ey are p ra c tit ion er s o r p ro fes so rs , are p aid f o rthe i rt es ti m o ny a nd s el ec te d o n the b as i s o fthe conve rg ence ofthei r vi ew s with the l i ti gat i ng posi ti on o f th e c l i en t o rth e i rwi l l i n g n e s s t o f a l li n wi th th e v i e ws urge d up on th em by the cli en t . Th ose are ban es of exp ert12 N os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l.
tes ti m ony. W hen the tes tim ony concerns a sci enti fi c o r ot h er te c h n ica l issu e, h ow ev er , i t m ay be u n re a so n ab le to expect a ju d ge to r eso l ve i t without the ai d ofsuch testim ony . Bu t j ud ges are ex p er t s o n law , and there are pu bl i shed m ate ri al s on f or ei gn l aw , i n the f or m oftr eat i ses , l aw r evi ew ar ti cl es, and c as es . Of cour se the m ost au th or ita tiv e l ite ra tu re on th e la w of a for eig n co u n tr y is apt to be i n a l anguage othe r than Engl i sh. But the parti es ca n h av e th e r el eva ntpo r ti o ns t r an sl at ed i nt o Eng l i sh ; j u d ge s c an h an d le t r a n sla tio n s, w h ich figu re p ro m in en tly i n a v ar i etyo fcas es tr i ed i n A m er i can courts , such as drugtraffi cki ng and i m m i gr ati on ca ses . Rel yi ng o n pa id wi tn es se s to s po o n f ee d j udg es i s j us ti fi ab l e o nl y whenthe forei gn l aw i s the l aw of a cou n t r y w it h su ch an obs cu re o rpo o r l yde ve l o ped l eg als y st em that th er e ar e no se co nda r y mate r i al s to whi chthe j udg e co ul d tur n. The parti es prese nted evi dence by expertwit n es ses con cern ing the m ean ing of s e n y o shiy o k en i n J apanese trad em ar k l aw . But f or tunatel y the exper ts ci ted to s c ho l a r l y l i t e r a t ur e a s we l l, wh i c h c a n he l p us de c i de w hethera seny o shiy o k en al l ows i ts hol der t o var y a l i censed tr adem ar k. I ssues o fthe sco pe ofa tr adem ar k usual l y a ri se i n sui ts f ori nfr i ngem ent. T he tr adem ar k’ s o w ner tr i es to prove th at th e d efe n d an t’s m ar k is c on fu sin gl y s im ilar to h is ow n, and i f he suc ceed s, th is i m p li es th at th e d efend an t’s v a r i a nti s wi thin the trad e mar k ’ s s c o pe

— it’s so like h is tr ad em ar k t h at n o on e e lse is en tit led to u se th e v ar ian t in th e s a me ma r k e t
. T h e i s s u e i n th i s c a s e i s n o tc o n fu s i o n; ra ther, i t i s whether th e vari ant i s s o si m i l arto the or i g-N os. 07

- 3288, 07

- 3289 , 08

- 3835 , 08

- 3836, etal

. 13 in al t h at it sh ou ld be d ee m ed to h av e b ee n inc lu d ed in th e lic en se to u se th e o rig in al. I n U

. S. law , a change i n a t ra dem ar k’ s typef ace i s no t consi dered a m ate ri alal ter ati on o fthe or i gi naltr adem ar k. D r exe l Ente rpr i s e s , Inc . v. Ri ch ar ds on , 312 F. 2d 525, 52 7 ( 10th C ir. 19 62 ); M iya no M a ch inery U SA , I nc . v. M iya no H itec M achinery, Inc. , 5 76 F . Su p p . 2 d 8 68 , 882 (N .D . I ll. 20 08 ). A re l ate d rul e, cal l ed “ta cki n g on, ” m ake s the use by a tra d e m a r k’s ow ne r ofa variant of his or igi na l trad em ark a defen se t o ac l ai m tha t r epl ac i ngthe o r i g i na lwi ththe variant cons titute d the a b a n d onm en t (a better w ord woul d b e f o r fei tu r e) of the t r ade m ar k

. S o i n San ds, Tayl or & Wood Co. v. Q uake rO at s Co. , 978 F.2 d 947, 955 (7th Cir. 1992 ) , the own ero fthe tr adem ar k TH I RST-AID “F i rs t Aid f o rYo urThi rst” ha d dr o pped “F i r stAi d f o rYo ur Thirst” and thi s was hel d not t o be a n abandonm ent o f the t ra dem ar k. S ee al so Brook f i e ld C o m m uni ca t i ons, Inc . v. Wes tCoas tEnt e r t ai nm e ntCorp. , 1 74 F

. 3 d 1 0 3 6 , 1 0 4 8 ( 9th C ir. 19 99 ); D r eyf

us Fu nd, Inc . v. Royal Bank o f Canada , 525 F. S up p. 11 08, 11 15 ( S. D.N.Y. 19 81) ; 3 J. Thom as M c C ar th y, M cCar t hy on Trad e m arks an d Unfai rCom pe t i t i on §§ 17:27, 17:28 (4th ed

. 2009). I n a l i censi ng c as e, “ta cking o n” bec om es a guide to i nter preta ti on ofthe l i cense. A l i censee would be r eluct an t to a g r ee t o b e pro hibi te d fr o m making m o des t ch an g es i n the a p p earanc e o rwor di ngo fthe tr a de mar kb e c a us e i two ul d p r e v e nth i m f r o m a dj usting h i s m ar ket i ng o fthe tr adem ar ked pro du ct t o unp re dict abl e f l uctuati ons i n co n su m er res p onse . Su p p os e t h e d ro p p ed p h ra se in t h e T H IR ST -A ID t r a de mar kh a d b e e n “ F i r s tA i d f o rH i s T h i r s t ” a ta t i me14 N os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l.

w he n th e m ale pron ou n w as t h e d e fault pron ou n for a per so n o funs pec i fi ed g en der

. As l an g ua g e co nven ti o ns evo l ved, the l i c en se e m i ght thi nk i t e sse nti al, to change “F irs t A id fo r H is T h irs t” t o “F irs t A id fo r Y ou r T h irs t.” It woul d b e se ns el es s to c o ns i derthi s a vi o l at i o n o fthe p ar tie s’ u n d er st an d in g u n les s t h e lic en se h ad ex p licit ly f orbi dd en anychange s. T h at is A m er ica n law an d th e is s u e in th is c as e is J apa ne se l aw. Butthe J apa ne se r ul e i s th e sa m e as the A m er i can. S ee To k uta ro M o rik a w a v. Fo un d a t i o n R ito ru Waar udo , 13 50 H anrei Jih o 137 ( Tokyo H i gh Ct. Feb. 20 , 19 90 ) (L IT T L W O R L D an d L IT T L E W O R L D ), cite d in K en n et h L . Po rt, Ja pa nese Trad em a r kJurisp rud ence 98 n. 16 (19 98 ); L i mone i r a v. Pol a Kas e iKogy o K. K. , 2 3 Chi te k iS ai sh u 163 ( To k y o Hi g h Ct

. F e b

. 2 8 , 1 9 9 1 ) ( “ the T r a de mar kh as a l ar ge fi gu re w ith tw o l i nes o fl ett er s in sm al l ersi ze bel ow the fi gure : o ne l i ne r epres enti ng ‘ POL A ’ i n Rom an l et te r s an d the o th eri n kat akana [ a Japa ne se script ], w here as the M ar k has sm al l erfigu re w i th a l ar ge Rom an l e t t e rr e p r e s e n t a t i o n o f‘ P O L A’ o n i t s r i g h ta n d t wo kat akana rep resen tations

. . . p laced slantly at th e u p p erl eft corner and l ower- ri ght c or ner ofthe paper st r i p m o r e th an2 0 cm a w ayfr o m the s ai d fi g ur e an d R om an let te r ele m en ts ”); He i wado Boe kiK ab us hi kiK ai s ha v

. Ka bush ik i Ka isa ha Ta ihei, 1 0 M utaiS ai shu 193 ( Tokyo Dis t. C t. M ay 12, 1988) ( d ifferent typ eface). The l onge r the t er m o fthe l i cense, m oreo ver, the l ess pla usibl e i t i s t o ass um e, i n the a b se nce o fexpre ss l anguage , thatthe l i censee was f orbi dd en t o m ake ev enmin ut e ch an g es . The l i ce ns e i n thi s ca se , theN os. 07

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. 15 seny o shiy o k en , w as to continue f or 99 yea rs . Overso l ong a per i o d, c ha ng es i n langua g e, ty pef ac es , mar k et i ng m eth od s, an d trad em ark style w ou ld be li kely ( w e are te m pte d t o s aywoul d b e ce r ta i n) to requi r e va r y i ngthe w or ding orappeara nce o fthe l i cen sed m ar k in or der to enabl e the tr ad em ar ked pro du ct t o be m ar ket ed e ffe c t i v e l y . T he l i c e ns e ma y e v e n ha ve r e q uired S unstar to m ake such chang es, f orr em em berthatthe l i censee m us t do no th i ng th at woul d c r ea te a “ dan g ert o the va lu e o r va lid ity ” o f th e lic en se d m ar ks , an d st u b b or n ly c l i ng i ngt o a do wdy, o l d- f a s hi o ne d, “ un mod e r ni z e d” origina l m ark m ight creat e an ac ut e d an ger. This i s e speci al l y l i kel y b ecause the ri ght c onfer re d by a seny o shiy o k en i s e xcl usi ve ofthe l i censo r as w ell as of p ot en tia l ot h er lice n se es . T h e li c en se e w ill b e t h e on ly us ero fthe t r ade m ar ki n the r el ev an t m arket an d the onl y e nti ty ther ef or e with either a s tak e in ora feelf or the ne eds o fthatm ar ketand th u s th e o nl y e nti ty m otivated and able to preserv e the value of th e trad em ark by adj usti ng i ts appearance . The hol der o fa seny o shiy o k en , sta nd i ng i n the sh oes o fthe tr adem ar k o w ner, m ust ha ve th e sam e ri gh t tha t the ow ne r w ou ld h ave (w ere ther e no seny o shiy o k en ) t o make smal l ch an g es . I nde ed, the ri ght o fa 99- yea r excl usi ve l i censee to m ake such chan g es i s m o r e ne edful th an th at o f th e o nc e an d f arfutu re ow ne r. A rticle 50( 1) o fthe J apanese Tradem ar k Act pro vi des f o r c a n c e l l a t i o n o f a t r a d e ma r k r e g i s t r a t i o n i ft he r eg i st r an t

— orthe hol der o fa seny o shiy o k en

— ha s, for m ore th an th re e y ea rs , n otbe en u sin g t h e t ra d em ar k. A16 N os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l.

re gi ste re d tra dem ar k “ i ncl ud es a t ra dem ar k c onsi sting o f the s am e l ett er s hav i ng m odi fi ed typef aces . . . [ or ] o f fi g ur es ha vingthe a ppea r an ce s th at ca n be r eg ar ded as the s a me , o ra t r a d e ma r kth a tc a n b e r e g a r d e d a s th e s a me as the r egi ste re d tra dem ar k in questi on in the com m on se ns e o fthe s o ci ety : the s ame a ppl i es i n s ub seq ue nt provi si ons of this A rt icl e . ” A lternatively, an d m ore hel pfulto A lber to- Cu l ver, a re gi ste re d tra dem ar k “ f orthe purposes of this A rt icl e. . . i nc lud es trad em arks w hich are ba se d o n the r eg i st er ed m ar kb utwri tt enin a di ffer en t sty l e th anthe r eg i st er ed tr ade m ar k, t r ade m ar k s wi ththe sa m e s ou n d or m ea n in g a s t h e reg ist er ed m ar k . . ., tr adem ar ks consi d ered to have the sam e a pp ear ance a s the r egi ste re d tradem ar k, and any othe r tr adem ar ks gener al l y a ccepted byso ci etyas identi calto the r egi ste re d m ar k.” (W e h av e c i te d bo th tra n sla tio n s b ec au se th er e is n o offic ial E n glis h tra n sla tio n of Jap an es e la w s.) A lber to- Cu l verr el i es on the passa ges thatwe have italicized, esp eciall y the secon d one, w hich i s the m ore a utho r i t a t i v e s i nc e i ta pp e a r s i n a s c ho l a r l y b oo k

— an d b y on e o fS u n st ar ’s e x p er t w itn es se s! P or t, Ja pa nese Trad em a rk Ju rispru den ce, supra , a t 14 3. Butwheth erthe quo te d p r o vi si o n i s m ea ntt o e xc l ude v ar i an ts fr o m the sco pe ofa re gi ste re d tra dem ark foral lpurposes o ther th an ca n c ella tio n is u n c lea r. Su c h an ex c lu sio n w ou ld m ake no sense , atl east as a pp l i ed to thi s ca se. A lber toCu l veri s no t s eek i ng the cance l l ati on of the t ra dem ar ks. I t is se ek i ngt o r ec aptur e th em; a nd fr o m S uns ta r’s s t a n d p o i n ti t i s a l lth e s a me

— ifthe u se of a variant of a tr ade m ar kdo es no t war r an t ca nc el l at i o n b ec au se theN os. 07

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. 17

var i ant “ can be r ega rded as the sam e a s the r egi ste re d tr adem ar k i n questi on, ” why shoul d i t warr ant the l oss o f tr adem ar k r i ghts? M or eov er, o ne exp ects tr adem ar k c ancel l ati on t o be eas i eri n J apan than in the U ni ted S tat es beca u se J apan per m i ts r eg i st r at i o n o f tr ade m ar k s wi th o ut us e, unl i k e th e U ni ted S tat es. J apa n ese Tra dem ar k Law, ar t. 18 ( 1) ; Por t, Trad e m ark an d Unfai rCom pe t i tio n La w and Poli cyi n Japan , s u p ra , at 77-78; M asaya Suzu ki, “Th e Trad em ark Re g i st r at i o n S y st em i n J apa n: A Fi r stha nd Rev i ew a nd Ex posi ti on, ” 5 M a rquette Int ellectu a l P rop erty L . Rev

. 13 3, 13 9-4 3 (2 00 1); T er u o D o i , Int e l l e ct ual Pr ope r ty Pr ot e ct i on and M anag e m e nt : La w a nd P r ac t i cei n Japan 182-83 (1992). A pure re gi str ati on s yst em en abl es the “ banki ng” o f tr ad em ar ks, wh i ch cl ogs the tr adem ar k r egi str y with t r a de mar k s tha tma y ne v e rb e u s e d. P a ulJ

. He a l d, “T r ade m ar k s an d Ge o g r aph i ca l I ndi ca ti o ns : Expl o r i ngthe Contours of the TRIPS A gr eem ent, ” 2 9 Va nderb il t J. Transnati ona l L . 6 35, 65 9 ( 1996 )

. A r equi re m ent o f continuous use i s there f or e m or e i m port ant t o u n b l ock the t ra dem ar k a rt er i es i n J ap an than i n the U ni ted S tat es. Even so, J apan does not perm i t a sm al lvar i at ion to destr oy tr adem ar k r i ghts. A lber to- Cu l verfurtherar gues, howev er, thatS unstar vi ol ate d a pro vi si on o fthe l i cense thatrequi re s itto “k eep ea cho fthe [ li cens ed] Tr ade m ar k s i n c o nt i nuo us us e an d in a m an ne r and qu an tity suffi cien t to m eet th e statu tory r equi r ement s as t o us e. ” The b r i ef s do no t sa y whi cho fthe 13 t r ade m ar k s S uns ta rf ai l ed to us e co nt inu ous l y, b ut Sunsta r concedes that ther e w er e som e. Yet at th e o ral18 N os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l. argu m en t, A lberto-Cu lver’s law yer con ced ed i n tu rn th atthe o nl y c o ns eque nc e o fs ucha f ai l ur e woul d b e th e retu rn to his cli en t of tho setra d em ar ks . To su gg es t t h at if Sunsta r f ai l ed to use any o ne o fthe 13 tr adem ar ks ( or ra th er 14 , bec au se of th e 1 98 9 a m en d m en t) c on tin u ou sly for 99 ye ar s t h e en tir e lic en se w ou ld be ca n c ele d w ou ld be r i dicul ous. I t would be es peci al l y r i diculous since A lber to- Cu l ver had no fi nanci alst ake i n Sunsta r’ s use o ftho se t r ade m ar k s, b ec au se i t ha d no rightt o a ny ro ya ltie s o r ot h er co m p en sa tio n ba se d on th at su c c es s; it ther ef or e coul d no t be hurt by the abandonm ent of som e o r f orthatm att eral lo fthe m ar ks. The pa r ti es pr es en te d a g o o d de alo fe vi den ce c o nc erni ng di sc us si o ns o fthe l i ce ns e ag r ee m en t o ve rthe co ur se o fthe ma n y y e a r s s i n c e i twa s fi r s tma d e . T h e d i s c u s si o ns i nd i cate thatS u n star m ay not have att ached m uch sig n ifi cance to the desi gnati on of the l i cense as a seny o shiy o k en ( though that i s har d to bel i eve , since w ith ou t tha t d esigna tion it w ou ld n ot ha ve th e statu tory ri ghts that the s tatus co nveys and that A lber to-Cul ver co nc edes th at S uns ta rha s, a ppar en tly wi th o utr ec o g ni zing the si gni fi cance of the con c es sio n ), an d th at it ac kno wl edg ed th ati ts 1 98 9 va r i an t o fVO5 v i o l at ed th e l i cense agr eem ent unti l am ended t o al l ow it

. The ev i dence sh ou ld notha ve b ee n a dm i tt ed. The l i ce ns e ag r ee m en t gr ants Sunsta r a seny o shiy o k en . T his is a Japa ne se legal term w hich , as w e said, i s to be given th e m ean ing th at it bears i n J a pa ne s e l a w. T ha tme a ning, we h a v e de c i de d as a m at te ro fl aw ( be ca us e i t i s ani ss ue o fl aw) , i s th atthe hol der o fsuch a l i cense i s e nti tl ed to m ake m i norN os. 07

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. 19 changes i n the tr adem ar k without be i ng deem ed to have exceeded the ri ghts confer re d on i t bythe l i cense. A lberto-Cu lver h a s on e m ore arrow i n its qu iver. Re m embe rtha t S un sta rc o nt i nue d t o us e th e va r i an t tr ade mar k a ft e r b e i ng t o l d b y the t r us t e e tha t the use en d an gered the li cen sed t r a d em arks. I f th at d eterm i nati on was bas ed on a “reasonabl e g ro und , ” then Sunsta r’ s conti nued u se ofthe tr adem ar k, unti lthe danger di sa ppea r ed, was i n v i o l at i o n o fthe ag r ee m en t. The tr u st ee ’s d et er m in at ion w as u n re as on ab le. (W h et h er it w as in good f aith, a qu estion relevan t only to Sun star’s att em pt to o btain d am age s fro m the tr ustee , i s m oo t now that Sunstarh as abandoned the a tte m pt. ) W e ca nnot fi n d a n ything i n the re cor d to sugge st that Sunsta r’ s use ofthe var i ant co uld r ed u c e th e val ue o fthe l i censed tr ade m ar k s. Re m embe rth at the da ng ermustb e to the va l ue o rv al i di tyo fthe l i ce ns o r ‘ s, whi chi s to s aythe tru stee’s

— B an k On e’s

— i nter esti n the tr adem ar ks. That i nter est i s confi ned to thei r use in J apan, o r othe r countr i es inw h ich A lbe rt o-C u lve r h as n o p re se n c e, b e c a u se it is o nl y the J apa ne se regi st r at i o ns tha t wer e pl ac ed i n the tr u st , a n d they can be used o nl y in J apan orsuch countr i es, tho ugh peopl e do so m eti m es m ove fro m J apan to ano therco u n tr y a nd thei r deci si on wh etherto buy VO5 i n that countr y m i ght c oncei vabl y b e influenced bythe v ar i an t th eyha d s ee n in J apa n. E ve n so , w e s u p p os e ( a v a r i a n t o f th e la st p oin t) t h at if Sunsta r affi xed “VO 5” to an i l l ega lp ro du ct the trustee coul d cancelthe l i cense, o n the theo rythatthe outr age w ou ld b e b ou n d to be co m m u n ica te d to co u n tr ies in20 N os . 07-3 28 8, 07 -32 89 , 08-3 83 5, 08 -38 36 , et a l. wh i c h A l be r t o - C u l v e ru s e s th e t r a d e ma r k

. An d we su ppo se i tc o u l d b e ar g ue d tha t sinc e Alb er to
- Cul ve rmight som e day ( bef or e 2 079, wh en the tr adem ar ks w i l lbe tr ansfer re d to Sunsta r) o btain the re turn o fthe tr adem ar ks be c au se of so m e fu tu re br ea c h of th e lic en se , i t has a n expectan c y th at w oul d be dest ro yed i fbec ause of S un s t a r ’ s a l t e r a t i ons o fthe t r a de mar k, i tl o s tthe g o o dwi l ltha t J apa ne se c o ns um er s ha d b es to wed on i t. But th e c h alle n ge d va ria n t is to o c l os e t o th e o rig in al (t h at is to say, the 1989 var i ant l i censed to Sunsta r) to m ake any of these danger s m or e than chi m er as. I t i s true tha t th e trus te e was s uppo se d t o wat cho ut for A lbe r t o-C u lve r’s int er es ts in o th er co u n tr ies ; i t is r equi r ed t o re sc i nd the ag r ee m en t i fthe r e i s a br ea ch, a nd sal es by Sunsta r ofpro du cts bear i ng the l i censed tr ade m ar k s i n fo rbi ddenc o unt r i es woul d b e a br ea ch

. Butthe r e i s no s ug g es ti o n o fs ucha v i o l at i o n. A pp ar entl y S unstarhas done bet te r in J apan than A lber to- Cu l verexpecte d, and, as i n 198 9, A lber to-C ulv er has t ri ed to use a hyper techni cal, but m or e i m port ant a n unsound , i nter preta ti on o fthe l i censi ng ag re em ent t o ex to r t addi ti o na lc o m pen sa ti o n. W e a re te m p te d sim p ly to ord er all th e c lai m s i n th is li tigation d ism issed w ith p rej ud ice; that w ou ld restore the s tatus quo that e xi ste d bef or e the tru st ee com pla i ned ab o utSunst ar ’ s us e o fthe v ar i an t VO5 tr ade m ar k

. But w e’ l lr esi st the t em ptati on. S unstarhas not re quested such r el i ef(j ust a new tri aland a di sm iss al o fthe cro ssappe a l ) , a nd a s a r e s ul t the de fe nd a nt s ha v e no t ha d an opportunity t o conte st such a re quest. W e doubt thatN os. 07

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. 21 furthertr i alpro ceedi ngs a re w ar ra nted, but l eave that d ec isio n to be m ade i n the fi rs t instance bythe dist ri ct cour t. The j ud gm ents ( i ncl ud i ng the di sm i ssa lo fthe cro ssappeal, as i t i s prem atur e to deter m i ne w hat inj uncti ve re l i e fi fa nythe de fe nd a nt s a r e e nt i t l e d t o ) a r e v a c ate d and the ca se i s r em anded

. 7th C ir. R

. 36 shal lapplyo n r e man d. V ACA T ED AN D R EMAND ED
.

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