Battling Counterfeits in Japan: Using Unfair Competition Law and Design Rights to Protect Your Products

Japanese Attorney at Law - Bengoshi L.L.

• 7 min read

In today's global marketplace, businesses invest heavily in developing innovative and distinctive products. However, this success often attracts imitators seeking to capitalize on that investment by producing counterfeit goods or "look-alike" products. Japan offers a multi-layered legal framework to combat such unfair practices, primarily through its Unfair Competition Prevention Act (UCPA, or Fusei Kyōsō Bōshi Hō) and its Design Act (Ishōhō). Understanding how these laws operate is crucial for businesses looking to protect their product designs and brand reputation in the Japanese market.

The Unfair Competition Prevention Act (UCPA): A Versatile Shield Against Imitation

The UCPA serves as a cornerstone of fair trade practice in Japan. Its stated purpose, in Article 1, is "to provide for measures for the prevention of unfair competition and for compensation for damages caused by unfair competition, etc., in order to ensure fair competition among business operators and the proper implementation of international agreements related thereto, and thereby to contribute to the sound development of the national economy." [cite: 462]

Unlike laws that grant exclusive intellectual property rights (like patents or registered trademarks), the UCPA is primarily an "act regulation law" (kōi kisei hō). [cite: 463] It defines specific categories of conduct deemed to be "unfair competition" and provides civil remedies (injunctions, damages, measures to restore business reputation) and, for some acts, criminal penalties. [cite: 463] It acts as a special law to general tort law (Article 709 of the Civil Code). [cite: 463]

Several provisions within the UCPA are particularly relevant for tackling product imitation:

1. Imitation of Product Configuration (Dead Copying - Shōhin Keitai Mohō Kōi) - UCPA Article 2(1)(iii)

This provision specifically targets the act of "dead copying" another party's product form. Its core purpose is to protect the "development profit"—the investment of skill, labor, and capital made by the originator in developing the product's configuration—rather than protecting "creativity" in the copyright or design patent sense. [cite: 465] It prevents competitors from simply free-riding on this development effort.

  • Key Requirements:
    • "Product Configuration" (shōhin no keitai): Defined in Article 2(4) as the external and internal shape of goods, or their combination with patterns, colors, gloss, or texture, which is perceivable by consumers in the ordinary use of the goods. [cite: 465] For example, the unique "gourd-like" shape of a rucksack with distinctively placed zippers and pockets, creating an impression of a face, would qualify.
    • "Imitation" (mohā): Defined in Article 2(5) as creating a product configuration that is substantially identical to that of another person by relying on (i.e., copying) that other person's product configuration. [cite: 466] Minor, trivial differences will not escape a finding of "substantial identity" if the overall appearance is strikingly similar. [cite: 466]
    • Prohibited Acts: Selling, leasing, displaying for sale/lease, exporting, or importing products that imitate another's product configuration.
  • Crucial Limitations (Article 19(1)(v)):
    • Functionality Exclusion: This protection does not extend to product configurations that are "indispensable to securing the function" of the goods. [cite: 465] Common, purely functional shapes cannot be monopolized under this provision.
    • Three-Year Time Limit: Critically, protection under Article 2(1)(iii) is only available for three years from the date on which the original product (whose configuration was imitated) was first sold in Japan. [cite: 465] This short term reflects the provision's aim to give developers a lead time, not perpetual protection for unoriginal designs.
      • Scenario: If Company X launches its uniquely shaped rucksack "Alpha" in Japan, and one month later Competitor Y starts selling a look-alike rucksack "Beta," Company X can invoke this provision. However, if Competitor Z launches a similar rucksack "Gamma" four years after Alpha's launch, Article 2(1)(iii) will no longer be available against Gamma for this specific act of imitation.
    • Good Faith Acquirers: The provision also exempts persons who, in good faith and without gross negligence, acquire an imitating product and then transfer it. [cite: 465]

2. Misappropriation of Well-Known or Famous Indications (Protecting Trade Dress) - UCPA Article 2(1)(i) & (ii)

Beyond literal dead copying, the UCPA also protects the goodwill and source-identifying function associated with a product's overall appearance or "trade dress," if that appearance has become a recognized indicator of source.

  • Article 2(1)(i) – Confusion with Well-Known Indications (Shūchi Hyōji Kondō Jakki Kōi):
    This prohibits acts of using a product or business indication (which can include a distinctive product shape or overall appearance) that is identical or similar to another party's well-known indication, in a way that causes (or is likely to cause) confusion with that other party's goods or business. [cite: 467]
    • "Well-known" (shūchi) means widely recognized among relevant consumers or traders, even if this recognition is confined to a specific region within Japan rather than being nationwide. [cite: 467]
    • "Confusion" (kondō) includes not only mistaken beliefs about the direct source of the goods but also mistaken beliefs about an affiliation, sponsorship, or group relationship between the businesses (broad sense confusion). [cite: 469]
    • Scenario: If Company X's rucksack Alpha, due to its unique design and popularity, becomes "well-known" to the extent that its shape itself signifies "a rucksack from Company X," and Competitor Z's later rucksack Gamma has a confusingly similar shape, this could be an act of unfair competition under Article 2(1)(i).
  • Article 2(1)(ii) – Misappropriation of Famous Indications (Chomei Hyōji Bōyō Kōi):
    This provision offers broader protection. It prohibits using an indication identical or similar to another party's famous indication as one's own product or business indication. [cite: 467]
    • "Famous" (chomei) implies a very high degree of recognition, typically nationwide across various consumer segments.
    • Crucially, this provision does not require proof of likelihood of confusion. Its aim is to prevent the dilution (weakening of distinctiveness) or tarnishment (damage to reputation) of a famous indication by unauthorized use, even on dissimilar goods or services if the fame is strong enough. [cite: 467]
    • Scenario: If the unique shape of rucksack Alpha becomes truly "famous" nationwide, Competitor Z's use of a similar shape for its rucksack Gamma could be actionable under Article 2(1)(ii) simply by virtue of Z using it "as its own product indication," irrespective of actual consumer confusion.

Formal Protection for Aesthetics: The Japanese Design Act (Ishōhō)

While the UCPA offers valuable remedies, particularly for early-stage imitation, the Design Act provides a more formal and potentially longer-lasting means of protecting the aesthetic appearance of industrial products.

  • Purpose: The Design Act aims to protect and encourage the creation of novel and creative industrial designs, thereby contributing to industrial development (Article 1). [cite: 469]
  • Registrable Design: A "design" is defined as the shape, pattern, or color (or their combination) of an article (including part of an article), which creates an aesthetic impression through the eye (Article 2(1)). [cite: 469]
  • Requirements for Registration: To be registrable, a design must typically be industrially applicable, novel (not publicly known before filing), and possess creative difficulty (i.e., not easily conceived by a person skilled in the art based on prior designs) (Article 3). [cite: 469]
  • Effect of a Design Right: A registered design grants the owner the exclusive right to commercially "work" (manufacture, sell, import, etc.) articles to the registered design and to designs similar thereto (Article 23). [cite: 469] Similarity is judged based on the overall aesthetic impression created on the eye of the ordinary consumer (Article 24(2)). [cite: 469]
  • Protection Begins After Registration: Unlike patents, the Design Act does not provide for pre-grant protection through mechanisms like laying-open of applications or a right to claim compensation for use before registration. [cite: 464] The exclusive rights commence upon registration.
    • Scenario: If Company X successfully obtains a design registration for the unique appearance of its rucksack Alpha before Competitor Z launches its look-alike rucksack Gamma, Company X can assert its design right against Z. If Gamma's design is found to be identical or similar to Alpha's registered design, Z's manufacture and sale would constitute direct design right infringement. [cite: 470]

The Perils of Aggressive Enforcement: "Credit Defamation" from Warning Letters

When a business believes its product designs are being imitated, a common first step is to send warning letters to the alleged imitator and sometimes to their customers (distributors, retailers). However, this tactic carries risks.

UCPA Article 2(1)(xxi) (formerly Article 2(1)(xv) in older versions of the Act) prohibits "an act of making or circulating a false allegation that is injurious to the business reputation of another person in a competitive relationship." [cite: 470]

  • If the assertions of infringement in a warning letter (whether based on UCPA violations or design right infringement) turn out to be unfounded—for example, if the sender's IP right is invalid, not infringed, or the alleged unfair act is not established—the recipient of the warning (or the business whose customers received warnings) might counterclaim that the sender engaged in credit defamation. [cite: 470]
  • Japanese courts have found senders of unfounded warning letters liable for damages under this provision. While a good faith belief in the validity and infringement of one's rights might be considered (some courts view it as potentially negating unlawfulness, while others see it as relevant only to the question of negligence for damages), sending aggressive warnings without a solid legal basis is a risky strategy. [cite: 471]

Guarding Internal Innovations: Trade Secret Misappropriation under the UCPA

Beyond external product appearance, the UCPA also provides robust protection for trade secrets (eigyō himitsu), which is crucial for safeguarding confidential product plans, manufacturing processes, customer lists, and other valuable business information.

  • Definition of a Trade Secret (Article 2(6)): Information must be:
    1. Kept secret (i.e., "secretly managed" - himitsu toshite kanri sareteiru). This requires the company to take reasonable objective measures to maintain secrecy, making its intent clear to those with access (e.g., employees). [cite: 471]
    2. Useful for commercial activities (technical or business information).
    3. Not publicly known.
  • Prohibited Acts (Examples from Article 2(1)(iv)-(x) and beyond): The UCPA lists numerous prohibited acts concerning trade secrets, including:
    • Acquiring trade secrets by improper means (theft, fraud, coercion, inducement – fusei no shudan) (Art. 2(1)(iv)). [cite: 472]
    • Using or disclosing trade secrets acquired by such improper means (Art. 2(1)(v)). [cite: 472]
    • Disclosure or improper use by an ex-employee who had authorized access during employment, if done for unfair personal gain or to harm the original owner (Art. 2(1)(vii) and related provisions).
  • Scenario: If a senior manager of Company X, privy to confidential new product plans, resigns, secretly copies those plans, and then provides them to a new employer, Competitor A, who uses them to preempt Company X in the market:
    • The manager's act of illicit copying and disclosure would likely constitute trade secret misappropriation.
    • Competitor A's acquisition and use of these plans would also be unfair competition if they knew, or were grossly negligent in not knowing, that the plans were improperly obtained trade secrets. [cite: 472]
  • Remedies for Trade Secret Misappropriation: These include injunctions against the use or disclosure of the trade secret, damages (Article 5 of the UCPA includes provisions for presuming damages), and orders for the disposal of products made using the stolen trade secrets. [cite: 472]

Conclusion: A Multi-Layered Defense Against Imitation

Businesses in Japan have a range of legal tools to protect their products from imitation and unfair competition. The Unfair Competition Prevention Act offers relatively quick, though sometimes time-limited, avenues to address issues like dead-copying of product configurations and the misuse of well-known or famous trade dress. For novel aesthetic designs, securing a registered design right under the Design Act provides stronger, longer-term, and more definitive protection. Furthermore, diligent internal measures to identify and manage trade secrets, backed by the UCPA's trade secret provisions, are essential for safeguarding confidential innovations. While aggressively enforcing these rights is often necessary, it must be done with a sound legal basis to avoid potential counterclaims for credit defamation. A comprehensive IP protection strategy in Japan will typically leverage a combination of these legal frameworks.