カテゴリー: Unfair Competition Prevention Act

Louboutin 2nd Defeat in Litigation over Red Soles

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By order of December 26, 2022, the IP High Court ruled to dismiss an appeal taken by Louboutin against the Tokyo District Court ruling that denied a source-indicating function of Louboutin’s red soles.

[Appeal court case no. Reiwa4(ne)10051]

Appellant, Christian Louboutin SAS, brought an appeal against the Tokyo District Court ruling decided on March 11, 2022.

In May 2019, Louboutin sued Eizo Collection Co., Ltd., a Japanese company that produced ladies’ shoes with red-colored rubber soles, and sought a permanent injunction as well as damages in the amount of JPY4,208,000 under the Unfair Competition Prevention Law. The Tokyo District Court did not side with Louboutin by finding an insufficient reputation of Louboutin’s red soles perse as a source indicator and thus unlikelihood of confusion.
See details here.

The IP High Court paid attention to the following factors to assess the likelihood of confusion in the case.

  1. Relevant consumers of high-heels (women from their 20s to 50s) are most likely to try on multiple pairs of shoes at a physical store and select the ones that fit them prior to the purchase.
  2. The market for women’s high heels can be divided into three categories: (1) luxury brand products, (2) affordable brand products, and (3) inexpensive no-name products. Undoubtedly, Louboutin’s high-heels priced at JPY80,000 and over are classified into category (1). In the meantime, Eizo’s shoes priced at JPY17,000 or less belong to category (2).
  3. Every high-heel bears a brand name or logo on the insole so that consumers can easily distinguish its supplier.
  4. E-commerce websites post not only images of ladies’ shoes but also the brand and condition of respective goods in advertisements.

Based on the foregoing, the judge found, irrespective of the resemblance in color on the outsole, no likelihood of confusion between both shoes.

As for the reputation of Louboutin’s red soles, the IP High Court admitted certain consumers may recognize the red soles as a source indicator of Louboutin, however, the judge questioned if the soles have acquired a remarkable reputation among relevant consumers in general based on the research targeted women, in their 20s to 50s accustomed to wearing high-heels, residing in major cities that revealed only 51.6 % of the interviewees answered Louboutin at the sight of a high-heel with red-colored sole and a fact that Louboutin has not been an exclusive supplier of red sole shoes for women.

Louboutin Unsuccessful in Litigation over Red Soles

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On March 11, 2022, the Tokyo District Court dismissed allegations by Christian Louboutin who claimed red-soled shoes distributed by the defendant infringe their intellectual property right and are liable for damages under the Unfair Competition Prevention Law.

[Judicial case no. H31(Wa)11108]

Louboutin’s red soles

Christian Louboutin SAS alleged heels and pumps with red-lacquered leather soles (Pantone 18-1663) perse (see below) have been famous as a source indicator of Louboutin shoes as a result of substantial use for more than two decades in Japan.

To demonstrate the remarkable reputation of the position mark with a single color, Louboutin produced a lot of evidence. Japanese subsidiary generated sales of JPY3,305 million for Ladies’ shoes in 2016. More than 70% of the shoes are heels and pumps with red-colored soles. The company has yearly spent JPY15 million and more on advertisements in Japan. According to the interview conducted in October 2020, 65% of the 3,149 interviewees (females aging from 20 to 50) answered Louboutin when shown the above image.

Disputed goods

Allegedly, Eizo Collection Co., Ltd., a Japanese business entity, began to distribute ladies’ shoes with red-colored rubber soles bearing the wordmark “EIZO” for JPY17,000 from May 2018 (see below).

In the litigation, Louboutin sought a permanent injunction, disposal of the disputed shoes, and damages in the amount of JPY4,208,000.

It should note that Louboutin’s attempt to register the position mark representing ladies’ heels with red-colored soles in 2015 has been pending by the Japan Patent Office due to a lack of inherent and acquired distinctiveness as of now.

Court decision

The Tokyo District Court denied a certain degree of reputation and popularity of the red soles to indicate Louboutin shoes by stating:

  1. Red color has been commonly used on shoes to enhance the aesthetic appearance and attract consumers. Ladies’ heels with red-colored soles have been widely distributed even before the launch of Louboutin shoes in Japan.
  2. Under the practice in commerce, two decades and advertisement would be insufficient to find Louboutin’s red soles have played a role in the source indicator in Japan.

Besides, the court found the unlikelihood of confusion between Louboutin and the defendant’s shoes on the grounds that:

  • Given Louboutin’s shoes are known for high-end heels that cost JPY80,000 and more, relevant consumers would pay attention to selecting and purchasing suitable goods. Being that Louboutin’s shoes has the stylized mark “Louboutin” on soles as well, it is unlikely that relevant consumers connect the defendant’s shoes bearing the wordmark “EIZO” on soles with Louboutin.
  • Because of the difference in respective materials on soles (lacquered leather for Louboutin, and rubber for defendant shoes), there exists a distinction in texture and luster to the extent that relevant consumers can easily distinguish the quality and source of respective goods.
  • The interview targeted consumers who have purchased high-end goods and famous brands. Since the interview failed to show the defendant’s shoes to the interviewees, it would be irrelevant to prove a likelihood of confusion between the shoes.

Based on the foregoing, the court dismissed the plaintiff’s allegations under the Unfair Competition Prevention Law and did not side with Louboutin.

Famous mark Protection under Unfair Competition Prevention Law

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The Unfair Competition Prevention Law (UCPL) protects famous trademarks regardless of their registration status under Article 2(1)(i) & (ii).

Article 2(1)(i)

The act of using goods or other indications (hereinafter, “goods or other indications” means name connected with person’s business, tradename, trademark, mark, container, or package of goods, or any other indication used for goods or business) which is identical with, or similar to, another person’s goods or other indication as to be well-known among consumers，or the act of selling, distributing, displaying for the purpose of selling or distributing, exporting, importing or offering via telecommunication lines goods on which such goods or other indication is used, thereby causing confusion with another person’s goods or business.

Article 2(1)(ii)

The act of using goods or other indications as one’s own while it is identical with, or similar to, another person’s famous goods or other indication, or the act of selling, distributing, displaying for the purpose of selling or distributing, exporting, importing or offering via telecommunication lines.

The UCPL provides legal remedies for famous trademarks even though they have yet to be registered in Japan under the Trademark Law. The UCPL privileges owners of the famous trademarks to take legal action against unauthorized use of the mark on goods or services remotely associated with their business, however, it does not go beyond the “similar” marks theoretically.

Tokyo District Court awards record damages of JPY200M over a dead copy of bra design

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The Tokyo District Court, on September 3, 2021, awarded record damages of 202 million Japanese Yen to Co-medical who brought a lawsuit against VIDAN under the Unfair Competition Prevention Law, accusing the defendant of unlawfully imitating P’s bra design bearing a trademark “Funwari Room-Bra.”
[Judicial case no. Reiwa1(Wa)11673]

Plaintiff, Co-medical Co., Ltd., has launched the sale of brassiere for use at home under the trademark of “Funwari Room-Bra” on September 12, 2016. By virtue of comfort to wear and elegant design of non-wired bra with adjustable breast support band under the cups and longline lace frill (see below left), the bra was a huge hit, ranked No. 1 on Amazon Japan. Total sales over three year period exceeded 1.4 million bras.   

In October 2018, the defendant began to sell non-wired bras under the trademark of “Moriage” (see above right) that has substantially the same configuration as P’s “Funwari Room Bra.” Sales of D’s bra reached 30 million JP Yen by the time D terminated the sale in September 2019.

Co-medical filed a lawsuit at the Tokyo District Court in May 2019, and argued the configuration of D’s bras constitute an act of unfair competition under Article 2(1)(iii) of the Unfair Competition Prevention Law that prohibits “commercial act to assign goods that imitates the configuration of another person’s goods unrelated to achieve a technical function before the lapse of three years from the date of release in Japan.” If so, given substantial resemblance in shape and design between two bras, D shall be liable for 202 million JP Yen damages caused by their act under Article 5(2) and attorney fee.

The court found D’s bra constitutes an unfair competition act prohibited under Article 2(1)(iii) and awarded damages of 200 million JP Yen over a dead copy of bra design by stating as follows.

  • There is a slight difference in details between the two bras. However, since it would not affect a whole configuration, in fact, D’s bra shall be deemed practically identical with P’s bra in shape.
  • In view of the recent popularity and advertisement of P’s bra, there is reasonable doubt that D in the same trade would have been aware of and knowingly relied on P’s bra to manufacture their bra.
  • Under Article 5(2), D’s profit gaiend by their unfair act shall be construed marginal profit, calculated by deducting direct costs incurred to manufacture and sell D’s bras from the sales. Therefore, D is liable for 184 milliom JP Yen damages. Besides, the court has a good reason to believe that 18 million JP Yen shall be awarded as damages to recover P’s attorney fees.

Hermès beat Birkin Bag Imitator for Trademark Infringement

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On December 17, 2020, the Japan IP High Court upheld awards for JPY2,900,000 for damages suffered by Hermès in relation to a trademark infringement and passing-off case regarding the Birkin Bag imitations.
[Court case no. Reiwa2(Ne)10040]

Hermès Birkin Bag

HERMES INTERNATIONAL, a French luxury fashion house, has owned Japanese trademark registration no. 5438059 for the 3D shape of the “Birkin” bag in connection with handbags of class 25 since 2011 by successfully demonstrating acquired secondary meaning as a specific source indicator of Hermès’ luxury bags.

The iconic Birkin bag was firstly created for Jane Birkin in 1984. It is known for its superior craftsmanship and jaw-dropping price tag, with standard models starting around JPY1,000,000. Its annual sales figures exceed 3,000 in 1998, 8,000 in 2003, and 17,000 in 2009.

Birkin Bag Imitations

Hermes sued Kabushiki Kaisha Tia Maria at the Tokyo District Court for violating its trademark right and the unfair competition prevention law by allegedly promoting 100 or more Birkin look-alike bags (see below) in Japan with a price tag of JPY27,300 from August 2010 to February 2018.

Court decision

On June 3, 2020, the Tokyo District Court decided in favor of HERMES INTERNATIONAL and awarded damages for trademark infringement and passing-off in the amount of JPY2,900,000.
[court case no. Heisei31(wa)9997]

In the decision, the Tokyo District Court found that Hermès Birkin Bag has acquired distinctiveness and become remarkably famous as a source indicator of Hermès’ luxury bags by 2009.

Besides, the court held that defendant’s goods constitutes an infringement of the 3D shape of the “Birkin” bag trademark since both are confusingly similar in view of the following aspects:
(a) a distinctive three-lobed flap design with keyhole-shaped notches to fit around the base of the handle, (b) a dimpled triangular profile, (c) a closure which consists of two thin, horizontal straps designed to fit over the flap, with metal plates at their end that fit over a circular turn lock, (d) a padlock which fits through the center eye of the turn lock and (e), typically, a key fob affixed to a leather strap, one end of which is affixed to the bag by wrapping around the base of one end of the handle.

Screen capture of TIA MARIA’s website (http://tiamaria.zf.shopserve.jp/SHOP/V1172S.html)

The court measured damages to recover (i) defendant’s actual sales of infringing bags (JPY2,730,780) by subtracting appropriate variable cost (40% of the offered price) for JPY1,638,468, (ii) “mental suffering” caused by an infringement for JPY1,000,000, and (iii) reasonable attorney fee for JPY260,000.

The district court decision was challenged by the defendant before the High Court to set aside or vary it, however, the IP High Court dismissed the appeal entirely and sided with HERMES INTERNATIONAL.

To read a full text of the IP High Court decision (Japanese only), click here.

Japan IP High Court Ordered Unofficial Mario Kart To Pay Nintendo Over $450,000

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On January 29, 2020, the Japan IP High Court ruled in favor of Nintendo over a case against go-kart operator Mari Mobility (the company formally named Maricar) and ordered damage compensation of 50 million JP.

Mari Mobility, the go-karting company formerly known as Maricar, has provided services for tourists riding around Tokyo streets in go-karts and offered Nintendo-themed costumes for customers to wear as various Mario characters, strongly resembling the likes of Mario Kart. The service has been a popular tourist attraction.

Nintendo quickly stepped in and sued Mari Mobility for their Street Kart service, initially winning in 2018. 

Subsequently, Mari Mobility has re-branded its service as Street Kart, providing superhero-themed outfits and swapping out all Nintendo references with various superhero ones. Besides, “Unrelated to Nintendo,” was written on Mari Mobility’s karts.

The official site reads:

We at Street Kart is providing our service as usual. Street Kart is fully complied [sic] through local governing laws in Japan. Street Kart is in no way a reflection of Nintendo, the game ‘Mario Kart’. (We do not provide rental of costumes of Mario Series.)

Mari Mobility hoped to reduce the damages owed to Nintendo, a sum of 10 million yen (around $92,000) awarded by the lower court. The strategy has backfired, however, with Mari Mobility losing and IP High Court judge ordering them to pay five times the damages, now totaling 50 million yen ($458,000)

In a statement following the ruling, Nintendo stressed that it will continue defending violations of its intellectual property that damages the brands it has built up over numerous years.

[Judicial case no. Heisei30(Ne)10081]

JPY 71 Million Damages Award Against Design Copycat of BAO BAO ISSEY MIYAKE

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In a civil legal battle involving design copycat of luxurious “BAO BAO” bags designed by ISSEY MIYAKE, a Japanese fashion designer, the Tokyo District Court sided with ISSEY MIYAKE and found infringement under the Unfair Competition Prevention Act on June 18, 2019.
[Judicial case no. H29(Gyo-wa)31572]

BAO BAO ISSEY MIYAKE

Issey Miyake’s innovative and unique bag designs under the brand of “BAO BAO” since 2010 earned it accolades and wide recognition in the fashion world. Its most prominent design is crafted with a tessellating triangular structure that shifts as it’s moved to create new three-dimensional forms. Capturing a seamless fusion of geometric shapes and fluid silhouettes, the designs are often a kaleidoscope of color. Most of the pieces consist of rectangular equilateral triangle.

Disputed bags

Defendant, Largu Co., Ltd. began to promote following women’s shoulder bags, pouches, backpacks and tote bags under the brand of “Avancer” from 2016. Defendant copied tessellating triangular structure on disputed bags likewise. Most of the pieces are not rectangular equilateral triangle.

Defendant sold these goods for JPY 1,000 ~ 6,000. It was far cheaper than BAO BAO ISSEY MIYAKE – sometimes up to one-thirteenth.

Court decision

In the judgment, at the outset, the court assessed whether the geometric shapes of tessellating triangular structure shall play a role of source indicator protectable under the Unfair Competition Prevention Act. The judge found the shape of plaintiff’s goods has a distinctive and different feature from other women’s bags by taking account of produced evidences. Its unique and innovative design, inter alia, creating various three-dimensional forms when used, apparently gives unusual impression to consumers. If so, the prominent design consisting of triangular structure shall be protectable under the Unfair Competition Prevention Act.

Besides, the court found the triangular structure of plaintiff’s goods obtained a certain degree of popularity and reputation as a source indicator of BAO BAO ISSEY MYAKE by the time defendant launched disputed bags in 2016.

In assessing a likelihood of confusion, the court dismissed defendant’s counterargument on different shape of triangle by stating that disputed goods give rise to a same visual effect with BAO BAO ISSEY MIYAKE by means of creating various three-dimensional forms when used. Price difference is not a material factor to negate a likelihood of confusion as long as consumers conceive BAO BAO ISSEY MIYAKA at the sight of disputed bags.

After significant litigation, the trade dress suit ended with an injunction barring all future sales of the copied designs and a hefty damages award, JPY 71,068,000 under the Unfair Competition Prevention Act.

In the meantime, the court dismissed plaintiff’s allegation of copyright infringement on the ground that plaintiff’s goods are rather suitable for industrial design. In fact, plaintiff’s goods are produced in quantity at factory. If so, it shall be unprotectable under the Copyright Law.

Louis Vuitton victory in trademark battle for remake use

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In a trademark battle involving famous Louis Vuitton Monogram for remake use, the Japan IP High Court ruled in favor of Louis Vuitton and ordered appellant to pay 1.7 million JP-Yen for damages on October 23, 2018.

Custom-made Remake

Appellant has produced shoes, caps and other fashion items by making use of material of secondhand Louis Vuitton goods (see below) and promoted the items as a custom-made remake, e.g. LOUIS VUITTON REMAKE DENIM CAP/BLUE, through internet.

Unfair Competition Prevention Act

Louis Vuitton filed a lawsuit and demanded to stop selling the items as well as payment for the damage on the grounds that appellant’s act constitutes unfair competition under Article 2(1)(ii) of the Japan Unfair Prevention Act.

Article 2(1)(ii) of the Unfair Competition Prevention Act is a provision to prohibit any person from using a famous source indicator of another person without permission.

Appeal

Appellant argued they become popular among relevant consumers as a business entity to produce a custom-made remake from secondhand of genuine brand. If so, since consumers are fully aware that the items are remake, neither faked goods nor brand-new article, confusion is unlikely to happen in the mind of consumers. Besides, appellant insisted as long as the Louis Vuitton Monogram is not used as a source indicator but design, the Unfair Competition Prevention Act is not applicable to the items.

IP High Court decision

The IP High Court decisively dismissed appellant’s allegations and decided the monogram on the items still plays a role of source indicator in view of remarkable reputation of Louis Vuitton Monogram. It can be easily presumed that average consumers at sight of the items shall conceive Louis Vuitton. Even if the items are sold as a custom-made remake or with any description to appeal the items made from secondhand, such facts will not affect the decision on the merit.
[Heisei 30 (Ne)10042]

The Unfair Competition Prevention Act is essential to the case where actual confusion would not happen in fact regardless of unauthorized commercial use of famous brand.

Fashion design and copycat

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On July 30, the Tokyo District Court delivered a ruling in the case of copycat fashion dispute pertinent to the shape of cold shoulder blouse.
[Case no. Heisei 29(Wa)30499]

 

Cold Shoulder Blouse

The case was brought into the court by PETTERS Co., Ltd. who complained MAXIM Co., Ltd. of unlawfully imitating a unique shape of cold shoulder blouse designed by plaintiff and damaging business interests by distribution of defendant’s “KOBE LETTUCE” cold shoulder blouses.

According to the court decision, plaintiff allegedly designed a new cold shoulder blouse featuring unique ruffle sleeve and long ribbon (see right in below) in February 2016 and began selling from August of the year. Subsequently, defendant imported similar blouses (see left in below) from Korea and promoted for sale in Japan since May 2017.

Unfair Competition Prevention Law

Plaintiff argued defendant shall be liable for his conduct because it constitutes violation of Article 2(1)(iii) of the Unfair Competition Prevention Law.

Article 2(1)(iii) of the Unfair Prevention Law prohibits unauthorized party from assignment, lease, display for assignment or lease, export or import of goods which shape results from imitation of goods belonging to other entity.

The party shall be exempted from liability if it passes three months from initial offer for sale of imitated goods at the time of his misconduct.
From the case law, it is construed that the article does not apply for imitation of a commonly used-shape in light of the purposes and objectives of the article.

 

Court decision

The judge, however, did not clearly state if overall shape of plaintiff’s cold shoulder blouse shall be protectable under the article.
As a consequence, the court totally dismissed the case on the grounds that:

  1. There exists difference in the shape of ruffle sleeve and ribbon between disputed goods.
  2. The difference gives rise to distinctive impressive in the mind of consumers
  3. If so, the shape of defendant’s goods shall neither be identical with, nor deemed imitation of plaintiff’s goods.

Japan IP High Court Ruling – Shape of “Unit Shelf” functions as a source indicator of Ryohin Keikaku

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The Japan IP High Court has affirmed an earlier ruling by the Tokyo District Court, and sided with Ryohin Keikaku Co., Ltd, an operator of the MUJI retail chain, in a lawsuit accusing CAINZ Corporation, the second largest DIY store chain in Japan, of violating the Unfair Competition Prevention Act (UCPA) by distributing ready-to-assemble storage rack “Joint System Shelf” which is allegedly an imitation of MUJI’s “Unit Shelf”.

CAINZ (appellant) contested the early ruling made an error of judgment  in finding that relevant consumers conceive the shape of “Unit Shelf” as a source indicator of Ryohin Keikaku (appellee) based on the research results which showed approx. 98 percent of general consumers were unable to associate the shape with appellee, and 9 merchants out of 10 who daily deals with living ware and furniture could not identify the shape as “Unit Shelf”.

Besides, appellant claimed appellee violated clean hands doctrine and thus abused the right given he pursued the case knowing that his act to promote the “Unit Shelf” constitutes infringement of  design right belonging to a third party.

The IP High Court ruled the research was neither adequate nor persuasive  enough to negate distinctive function of “Unit Shelf” as a source indicator, stating that it just targeted people in their 20s to 40s despite consumers of goods in dispute cover whole generations having an interest in household furniture. The questionnaire to ask a specific name of retail shop was far from the case. Some of the researched merchants have business with appellant. In addition, opinions of 10 merchants are way too insufficient  to bolster appellant’s allegation.

Fact that an entity who suffered damage by unfair misconduct of competitor admittedly infringes design right belonging to third party  does not immediately hinder him from making a legal claim based on the UCPA. Being that appellant’s act to promote  the “Joint System Shelf” is likely to cause confusion with appellee’s “Unit Shelf”, the court finds  higher degree of necessity to put a restriction on appellant’s misconduct. From the foregoing findings, the court ruled in favor of appellee and dismissed the allegations as well as abuse of right.

 

When you conduct market research pertinent to trademark, you should be more careful to decide questionnaire and respondent. Non-existence of design or trademark registration does not guarantee risk-free transaction of a similarly shaped goods with hot-selling product if the shape functions as source indicator.