Intellectual Property Law

Protecting Business Interests in Japan: IP and Antitrust Hot Topics

Japanese Attorney at Law - Bengoshi L.L.

• 8 min read
Slide contrasting Japan’s IP & antitrust hot spots: single-colour mark hurdles, narrow applied-art copyright, and ASBP risks in supplier negotiations. 情報源

TL;DR

  • Single-colour trademarks remain almost impossible to register in Japan—proof of secondary meaning must isolate the colour from all other brand elements.
  • Copyright rarely covers “applied art”; courts demand aesthetic creativity separable from function, so design rights or patents are safer for product shapes.
  • The Antimonopoly Act’s unique “Abuse of Superior Bargaining Position” (ASBP) can bite where market dominance is absent; evidence must show unilateral imposition.
  • Integrating IP filing strategy with antitrust awareness is essential for foreign firms negotiating with powerful Japanese partners.

Table of Contents

  • The Challenge of Protecting Single Color Trademarks
  • Copyright Protection for Applied Art: A Narrow Scope
  • Antitrust Law: The Unique Concept of "Abuse of Superior Bargaining Position"
  • Strategic Integration of IP and Antitrust Awareness
  • Conclusion

Successfully navigating the Japanese market requires not only business acumen but also a keen understanding of its unique legal landscape, particularly concerning intellectual property (IP) and competition law. While Japan shares fundamental IP and antitrust principles with other major economies, specific doctrines, enforcement priorities, and recent court interpretations present distinct challenges and opportunities for foreign companies. This article explores some key hot topics, drawing on recent case law concerning non-traditional trademarks, copyright for applied art, and the particularities of Japanese antitrust enforcement regarding relationships between dominant and non-dominant players.

The Challenge of Protecting Single Color Trademarks

Since Japan began accepting applications for non-traditional trademarks (including color marks) following the 2014 Trademark Act (商標法, Shōhyōhō) amendments effective from April 2015, securing registration for single colors without accompanying words or designs has proven exceptionally difficult. The core issue lies in demonstrating "acquired distinctiveness" (secondary meaning) under Article 3(2) of the Trademark Act. This provision allows registration of marks that initially lack inherent distinctiveness (like a single color, covered by Article 3(1)(iii)) if, through use, consumers have come to recognize the mark as indicating the source of the goods or services.

The Intellectual Property (IP) High Court decision on June 23, 2020, exemplifies this high threshold. A prominent manufacturer of construction machinery sought to register a specific shade of orange (Munsell value 0.5YR 5.6/11.2) as a standalone color mark for "hydraulic excavators." The application was rejected by the Japan Patent Office (JPO), and the IP High Court upheld this rejection.

The court acknowledged the applicant's long-term (around 44 years) and extensive use of this orange color on its machinery, leading to a certain degree of consumer recognition (supported by survey evidence showing high awareness). However, it ruled that this was insufficient to grant exclusive rights to the color itself under Article 3(2). The court's reasoning hinged on several factors:

  1. Commonality of Color: The specific orange shade, while perhaps associated with the applicant, was considered a relatively common color, particularly within the construction and agricultural machinery sectors where similar hues are often used for safety or visibility purposes (akin to JIS safety colors).
  2. Use with Other Marks: Crucially, the applicant consistently used the orange color in conjunction with its highly recognizable word and logo marks (e.g., "HITACHI") prominently displayed on the machinery and in advertising materials. There was insufficient evidence to show that consumers recognized the orange color alone, divorced from these other brand identifiers, as a source indicator.
  3. Consumer Purchasing Behavior: The court reasoned that for high-value industrial goods like hydraulic excavators, consumers primarily base purchasing decisions on factors like functionality, reliability, and manufacturer reputation, with color playing a minor role in source identification.
  4. Public Interest (Color Depletion): The court explicitly considered the public interest in preventing the undue restriction of color use. Granting a monopoly over a single, relatively common color in a major industry could unfairly disadvantage competitors who might use similar colors for functional or aesthetic reasons unrelated to source identification. This reflects the "color depletion" concern – the idea that the finite spectrum of colors should not be easily monopolized.

This decision underscores the difficulty of registering single-color marks in Japan. While registrations for combinations of colors have been granted (e.g., for the iconic blue, white, and black stripes of the Tombow "MONO" eraser or the orange, green, and red stripes associated with 7-Eleven stores ), single colors face a much higher burden. Applicants must provide compelling evidence that the color itself, independent of other branding elements, functions as a unique source identifier in the minds of relevant consumers. This often requires extensive use, significant advertising expenditure focusing on the color, and strong survey evidence specifically isolating the color's source-indicating function.

Another area where Japanese IP law presents specific challenges is the protection of "applied art" (応用美術, ōyō bijutsu) – artistic creations applied to functional articles – under the Copyright Act (著作権法, Chosakukenhō). Unlike design patents or design rights (意匠権, ishōken), which specifically protect the appearance of industrial products, copyright protection offers a longer term but is generally harder to secure for functional items in Japan.

The prevailing standard requires that for the design elements of a utilitarian article to be protected as an "artistic work," they must possess aesthetic creativity that can be considered separable from the article's function or possess such a high degree of aesthetic merit that they can be appreciated purely as fine art, independent of the object's utility. This threshold is often considered higher than in some other jurisdictions.

The Osaka High Court decision on April 27, 2023, addressed the copyrightability of patterns applied to mass-produced bedding fabric (布団生地の絵柄, futon kiji no egara). The plaintiff, a bedding manufacturer, claimed copyright infringement based on patterns derived from digital data they had acquired from a textile designer. The defendant had allegedly used similar patterns on competing products.

The High Court, affirming the lower court, denied copyright protection for the patterns. It reasoned that the designs were created specifically for application to mass-produced functional items (bedding) and were subject to practical constraints inherent in that use. While acknowledging the patterns had creative elements, the court found they did not reach the level of aesthetic expression required to be appreciated independently as "fine art." It specifically mentioned constraints related to the purpose of bedding fabrics, such as the need for patterns that might obscure dirt or be suitable for repeated washing, implying these functional considerations limited the purely artistic expression. The court essentially applied a form of separability test, concluding that the aesthetic elements were intertwined with the functional purpose and constraints of bedding fabric, thus failing to qualify for copyright protection as "works of artistic craftsmanship" or general "artistic works."

This ruling reinforces the difficulty of relying on copyright to protect designs applied to industrial products in Japan. While not impossible (particularly for decorative elements clearly separable from function or designs exhibiting exceptionally high artistic merit), businesses should primarily consider design rights (which protect the novel aesthetic appearance of an article) or potentially utility models or patents for functional aspects when seeking protection for product designs. Relying solely on copyright for designs integrated into functional items carries significant risk in Japan.

Antitrust Law: The Unique Concept of "Abuse of Superior Bargaining Position"

Japan's Antimonopoly Act (独占禁止法, Dokusen Kinshi Hō, often abbreviated as Dokkinhō) contains a provision with no direct equivalent in US antitrust law: the prohibition against "Abuse of Superior Bargaining Position" (優越的地位の濫用, Yūetsuteki Chii no Ranyō), found in Article 2(9)(v). This provision targets situations where a party with a relatively superior bargaining position (not necessarily market dominance or monopoly power) leverages that position to impose unjust terms or disadvantages on a weaker trading partner.

The Japan Fair Trade Commission (JFTC) actively enforces this provision, particularly in sectors like retail, franchising, and subcontracting. It addresses conduct such as unilaterally lowering purchase prices, demanding undue economic contributions (e.g., excessive rebates, mandatory promotional fees), coercing purchases of unwanted goods, or imposing unfair burdens like dispatching employees at the supplier's cost.

A Fukuoka District Court decision on May 17, 2023, provides an interesting example related to a specific industry guideline derived from this principle. The case involved a newspaper sales distributor suing a major newspaper publisher. The distributor alleged that the publisher forced it to accept and pay for more newspaper copies than it had ordered or could sell – a practice known in the industry as oshigami (押し紙). This practice is specifically designated as an unfair trade practice (a form of abuse of superior bargaining position) for the newspaper industry by a JFTC notification.

The distributor claimed damages and restitution, arguing the publisher's actions violated the Antimonopoly Act. However, the court dismissed the claim. It found insufficient evidence that the publisher had unilaterally forced the excess copies onto the distributor. The court noted that:

  1. Formal Orders: The distributor had consistently submitted formal order forms (定数・業務報告書, teisū gyōmu hōkokusho) specifying the number of copies. Although the distributor claimed it sometimes submitted reduced numbers initially, it subsequently submitted revised forms with higher numbers after discussions with the publisher's representatives. The court viewed these revised submissions as reflecting the distributor's final, agreed-upon order quantity.
  2. Economic Rationale: The court considered that distributors derive revenue not only from newspaper sales but significantly from inserting advertising flyers (折込広告, orikomi kōkoku), the rates for which are often tied to declared circulation numbers. Furthermore, publishers often provide various subsidies and incentives linked to maintaining or increasing circulation. The court concluded that the distributor likely determined its order numbers based on a comprehensive business strategy considering these factors (advertising income, subsidies, potential for waste copies as a cost of business) rather than being purely coerced by the publisher. Offers of additional subsidies coinciding with the distributor agreeing to maintain higher order numbers were seen as negotiation, not necessarily coercion in this context.

While oshigami itself is prohibited if proven to be coercive, this case demonstrates that simply receiving more newspapers than sold is not, by itself, proof of an antitrust violation. The court required evidence of unilateral imposition by the party in the superior position, considering the overall economic context and the weaker party's own potential business motivations for agreeing to certain terms, even if disadvantageous in some respects.

For foreign companies operating in Japan, particularly those in supply or distribution chains involving large Japanese counterparts, understanding the concept of Abuse of Superior Bargaining Position is crucial. It requires attention not just to explicit contractual terms but also to potentially unfair practices related to requests for discounts, contributions, personnel dispatch, or shifting of costs that might be imposed due to a disparity in bargaining power. The JFTC provides guidelines and actively investigates complaints in this area.

Strategic Integration of IP and Antitrust Awareness

Protecting business interests effectively in Japan necessitates integrating IP and antitrust considerations into overall business strategy (知財経営, chizai keiei). This means not only securing appropriate IP rights but also understanding the competitive landscape and regulatory constraints. For instance:

  • When developing branding, be realistic about the protectability of elements like single colors.
  • For product designs, consider the interplay between design rights, copyright, and utility models/patents.
  • In negotiations with powerful local partners, be aware of the potential applicability of Abuse of Superior Bargaining Position rules and document agreements clearly.

Conclusion

Japan offers a large and sophisticated market, but success requires navigating its specific legal environment. Recent developments highlight key areas demanding attention:

  • Non-Traditional Trademarks: Securing rights for single colors remains very challenging, requiring strong proof that the color alone functions as a source identifier.
  • Applied Art Copyright: Copyright protection for designs on functional products is narrow; design rights or patents are often more appropriate avenues.
  • Abuse of Superior Bargaining Position: This unique antitrust concept requires vigilance in dealings with dominant trading partners to avoid imposing or accepting unfair terms stemming from bargaining power imbalances.

By understanding these nuances and proactively managing IP assets and contractual relationships within the framework of Japanese law, foreign businesses can better protect their innovations, brands, and overall commercial interests in this important global market.