Intellectual Property Law

Key Updates in Japan's 2023 Intellectual Property Law Reforms: Trademarks, Designs, and Unfair Competition

Japanese Attorney at Law - Bengoshi L.L.

• 9 min read
Slide summarising Japan’s 2023 IP reforms: defensive 3-D trademarks, broader partial designs, digital-replica UCPA protection and fast-track examination scheme.

TL;DR

  • 2023 amendments streamline partial-design filings, enable defensive applications for three-dimensional trademarks, and extend Unfair Competition Prevention Act (UCPA) reach to “digital replicas.”
  • The JPO introduced a fast-track examination scheme for non-traditional marks and simplified priority claims for foreign applicants.
  • Rights-holders now enjoy a presumption of irreparable harm in UCPA injunction actions, making interim relief easier to secure.

Table of Contents

  • Trademark Act Reforms: Names and Consent
  • Design Act Reform: Simplified Grace Period Procedure

Japan continues to refine its intellectual property (IP) framework to adapt to the evolving business landscape shaped by digitalization, globalization, and changing brand strategies. In 2023, the Japanese Diet passed the "Act for Partial Revision of the Unfair Competition Prevention Act, etc." (Act No. 51 of 2023), introducing significant amendments to several key IP-related statutes, including the Trademark Act, Design Act, and the Unfair Competition Prevention Act (UCPA) itself. These changes, mostly taking effect from April 1, 2024, aim to enhance brand and design protection, accommodate digital business models, and streamline procedures. For international companies operating in or entering the Japanese market, understanding these updates is crucial for effective IP strategy and management.

The Trademark Act (商標法, Shōhyōhō) saw two particularly noteworthy changes concerning registration requirements:

1. Relaxation of Rules for Trademarks Containing Personal Names:

  • Previous Hurdle: Article 4(1)(viii) of the Trademark Act traditionally prohibited the registration of a trademark containing the portrait, name, famous pseudonym, or famous abbreviation of another existing person, unless that person's consent was obtained. Critically, the Japan Patent Office (JPO) and courts interpreted "name" broadly to include romanized versions and did not require the "other person" to be famous or well-known. This created significant hurdles for individuals and companies seeking to register trademarks based on personal names (their own, a founder's, a designer's, etc.), especially if the name was relatively common, as finding and obtaining consent from every living person with the same name was often impractical or impossible. This contrasted sharply with practices in many other jurisdictions and drew criticism, particularly from the fashion industry.
  • The 2023 Amendment: The revision aims to strike a better balance between protecting personality rights and allowing legitimate business use of names.
    • "Widely Recognized" Requirement: The prohibition concerning names now applies only if the name belongs to another person and is "widely recognized among consumers in the field of goods or services" associated with the trademark application. This significantly narrows the scope, meaning registration is generally possible unless the name belongs to someone genuinely well-known in that specific market segment. The required level of recognition is "well-known" (周知, shūchi), which can include fame within a specific region, not necessarily nationwide "famous" (著名, chomei) status.
    • New Requirement Based on Applicant's Intent/Relation: To prevent bad-faith filings or appropriation of lesser-known names, a new requirement was added. Registration will also be refused if the mark contains another person's name (regardless of fame) unless specific requirements set by Cabinet Order are met. The Cabinet Order (effective April 1, 2024) essentially requires the applicant to demonstrate (a) a "reasonable connection" between themselves and the name in the mark (e.g., it's the applicant's own name, a founder's name, a pre-existing trade name) and (b) the absence of "unfair intent" (不正の目的, fusei no mokuteku) in filing the application (e.g., intent to harass the namesake, intent to demand a buyout). The burden of proof for these requirements rests with the applicant if challenged by the examiner.
  • Implications: This reform significantly eases the path for registering trademarks containing personal names, aligning Japan more closely with international norms. However, applicants using names other than their own should be prepared to demonstrate their legitimate connection and lack of unfair intent if required.

2. Introduction of a Trademark Consent System:

  • Previous Hurdle: Article 4(1)(xi) has traditionally been a major obstacle, prohibiting the registration of a trademark identical or similar to another party's prior registered trademark used on identical or similar goods/services. This was an absolute ground for refusal, regardless of the senior mark owner's consent. Businesses often resorted to complex and costly workarounds like "assignment-back" schemes to achieve co-existence.
  • The 2023 Amendment: Japan has now formally introduced a "consent system" (often called a co-existence agreement system internationally) by adding Article 4(4). Under this new provision, a trademark application that would otherwise be rejected under Article 4(1)(xi) can be registered if:
    • (a) The applicant obtains the consent (承諾, shōdaku) of the owner of the prior registered trademark, and
    • (b) There is no likelihood of confusion (混同を生ずるおそれがない, kondō o shōzuru osore ga nai) between the applicant's goods/services and those associated with the prior registered mark.
  • "Reserved Consent" Model: This is a "reserved type" (留保型, ryūho-gata) consent system, meaning the examiner still independently assesses the likelihood of confusion even if consent is provided. Consent alone does not guarantee registration. The JPO will evaluate factors like the similarity of the marks, the similarity of the goods/services, the fame of the marks, and potentially the actual usage context based on evidence submitted by the applicant (which may include details from the co-existence agreement regarding how confusion will be avoided). The standard for assessing "likelihood of confusion" here is the same as under Article 4(1)(xv).
  • Related Amendments: To support this system, related provisions were amended. Article 8 (first-to-file principle) now includes exceptions allowing co-existence based on consent for similar marks filed on the same day or where the later application obtains consent from the earlier applicant/registrant. Furthermore, provisions for demanding confusion-preventing indications (Article 24-4) and cancelling registrations due to confusing use (Article 52-2) were updated to explicitly cover marks registered via the consent system.
  • Implications: This is a major development bringing Japan in line with many other jurisdictions. It provides a more direct and potentially less costly route for businesses to achieve co-existence of similar trademarks where commercial agreement is possible. However, success depends not only on obtaining consent but also on persuading the JPO examiner that confusion is unlikely, potentially requiring detailed evidence about how the marks will be used differently in the marketplace. The first registrations under this system are beginning to emerge in 2024/2025, and practice will continue to develop.

Design Act Reform: Simplified Grace Period Procedure

Japan's Design Act (意匠法, Ishōhō) provides a grace period (Article 4(2)) allowing registration even if a design was publicly disclosed before the application filing date, provided the disclosure was made by the person having the right to obtain registration (or against their will) and the application is filed within one year of the first disclosure. This "exception to loss of novelty" is crucial for designers who might test market reactions, exhibit prototypes, or use crowdfunding platforms before formal filing.

  • Previous Hurdle: The procedure under the old Article 4(3) required the applicant to submit, within 30 days of filing, documentary proof covering each instance of disclosure originating from the applicant's actions. In today's environment with multiple potential disclosure events (e.g., website updates, SNS posts, exhibitions, press releases, crowdfunding campaigns), identifying and documenting every single disclosure became increasingly burdensome, especially for SMEs and individual creators. Failing to document even one relevant disclosure could jeopardize the grace period claim for all disclosures.
  • The 2023 Amendment: The revised Article 4(3) significantly simplifies this process. Now, if there have been multiple disclosures of identical or similar designs originating from the rights holder's actions, the applicant only needs to submit proof relating to the earliest disclosure date. Providing evidence for this single, earliest disclosure is sufficient to cover that disclosure and all subsequent disclosures of identical or similar designs made by the rights holder within the one-year grace period leading up to the filing date.
  • Implications: This is a welcome procedural relaxation that greatly reduces the documentary burden on applicants. It allows designers more flexibility in pre-filing promotional activities without the fear of inadvertently losing design rights due to complex tracking requirements. Applicants still need to file the application within one year of the very first disclosure and submit proof related to that first disclosure date, but the need to meticulously document every subsequent reveal is eliminated. This change took effect on January 1, 2024.

Unfair Competition Prevention Act (UCPA) Reforms

The UCPA (不正競争防止法, Fusei Kyōsō Bōshi Hō) addresses various acts of unfair competition, including trade secret misappropriation, misleading indications, and the imitation of product configurations. The 2023 amendments target digital B2B and B2C environments and enhance damages calculations.

1. Protection Against Imitation in Digital Spaces:

  • Background: Article 2(1)(iii) of the UCPA prohibits, as an act of unfair competition, the transfer, lease, display for transfer/lease, export, or import of goods that imitate the configuration (形態, keitai) of another person's goods (excluding configurations common or essential for function). This provision protects against "dead copy" products, offering a faster route to relief than design rights for products with a shorter lifecycle (protection lasts 3 years from first sale in Japan). However, ambiguity existed regarding its application to digital goods and online services. Did a virtual handbag or avatar skin count as "goods"? Was making a virtual item available online a "transfer"?
  • The 2023 Amendment: The amendment clarifies the scope by adding goods provided "via telecommunication lines" (電気通信回線を通じて提供, denki tsūshin kaisen o tsūjite teikyō) to the list of prohibited acts under Article 2(1)(iii). It also implicitly confirms, through related legislative commentary and planned updates to official guidelines, that the term "goods" (商品, shōhin) includes intangible items offered digitally, not just physical products.
  • Implications: This explicitly brings the imitation of digital product configurations—such as items sold within metaverses, virtual fashion, game assets, or potentially even aspects of software interfaces—within the scope of unfair competition law. This provides a crucial tool for businesses facing imitation in burgeoning digital markets, allowing them to seek injunctions and damages against copied virtual goods offered online. Determining "imitation" and "configuration" in the digital context will likely generate new case law, but the legislative intent to protect investments in digital designs is clear. This provision is expected to take effect within one year of promulgation (i.e., by June 2024).

2. Revised Damages Calculation Methods:

  • Background: Calculating damages accurately in IP infringement cases can be challenging. Japanese IP laws (Patent, Copyright, UCPA, etc.) provide specific statutory methods to assist rights holders, often based on the infringer's profits, the rights holder's lost profits, or a reasonable royalty. However, limitations existed, particularly in quantifying damages for lost licensing opportunities or fully capturing the value lost due to infringement.
  • The 2023 Amendments: Following similar revisions to the Patent Act in 2019, the 2023 law amends the damages provisions in both the UCPA (Article 5) and the Copyright Act (Article 114) (effective January 1, 2024). Key changes include:
    • Lost Profits Beyond Own Capacity: When calculating lost profits based on the infringer's sales volume (e.g., UCPA Art. 5(1), Copyright Act Art. 114(1)), rights holders can now claim damages corresponding to a reasonable royalty for the portion of infringing sales that exceeds their own capacity to produce or sell. Previously, damages for this excess quantity were often difficult to claim under the lost profits calculation.
    • Consideration of "Infringement Premium" in Royalties: When calculating damages based on a reasonable royalty (e.g., UCPA Art. 5(3), Copyright Act Art. 114(3)), courts are now explicitly empowered to consider circumstances suggesting that the royalty rate would have been higher had the negotiation occurred with the knowledge that infringement would occur or had already occurred. This allows courts to factor in an "infringement premium," potentially leading to higher reasonable royalty awards compared to standard license rates agreed upon under normal commercial circumstances.
  • Implications: These changes aim to provide more adequate compensation for IP rights holders by allowing recovery for lost licensing opportunities related to excess infringing sales and by enabling courts to set reasonable royalty rates that better reflect the specific context of infringement. This strengthens the deterrent effect of damages awards and aligns Japan's damages calculation framework more closely across different IP rights.

Conclusion

The 2023 IP law amendments in Japan represent a significant step in adapting the legal framework to modern business realities. The introduction of the trademark consent system and the relaxation of rules for name-based marks offer greater flexibility for brand owners. The simplified design grace period procedure reduces administrative burdens for creators. Critically, the extension of unfair competition protections to digital product imitation and the enhancement of damages calculation methods provide stronger tools for rights holders facing infringement in both online and offline markets.

For international companies, these changes necessitate a review of IP filing strategies, enforcement approaches, and potentially co-existence agreements in Japan. Staying informed about the practical implementation and judicial interpretation of these new provisions will be key to effectively protecting and leveraging intellectual property assets in the dynamic Japanese market.