2019.4.11 What's new » Japanese IP case summary: “Filter Cartridge” case. Takagi Co., Ltd. v. Graceland LLC and Koyu Printing Corporation. Tokyo District Court Case No. 2017(Wa)14637. Decided 26 July 2018.

  • “Filter Cartridge” case
  • Takagi Co., Ltd. v. Graceland LLC and Koyu Printing Corporation
  • Tokyo District Court Case No. 2017(Wa)14637
  • Decided 26 July 2018

In this civil action brought by water purifier filter cartridge manufacturer Takagi alleging trademark infringement and unfair competition by defendants Graceland and Koyu Printing, the Tokyo District Court found that use by defendants of plaintiff’s name (Takagi) in the <title> and <meta> tags of defendant Graceland’s website did not infringe Takagi’s trademark but did violate Article 2, section (1), paragraph (i) of the Japanese Unfair Competition Prevention Act, which makes it illegal to “create confusion with the goods or business of another by using an indication of goods identical or similar to an indication of goods well-known among consumers as belonging to the other, or by transferring or delivering goods that use such indication, or by displaying goods that use such indication for the purpose of transfer or delivery, or by causing goods that use such indication to be exported, imported, or provided through a telecommunication line“.

This case is somewhat unusual in that the defendants were found liable for unfair competition but not for infringement of plaintiff’s trademark, a finding somewhat contrary to the typical expectation that trademark infringement is easier to prove than unfair competition.

While the Court acknowledged that Graceland’s website itself made adequately clear that the products advertised thereon were not genuine Takagi products, this fact did not save defendants from a finding of unfair competition, since the issue before the Court was not whether a consumer arriving at Graceland’s website directly, without reliance on Internet search results, would have been misled, but whether Graceland’s tagged content would have led a typical consumer, arriving at that website via search results produced by that tagged content, to believe that they were purchasing genuine Takagi products when in fact they were not.

In reaching this result, the Court found that the name “Takagi” was “well-known among consumers” and that use of the word “Takagi” in <title> and <meta> tags on Graceland’s website constituted “an indication of goods identical or similar to an indication of goods well-known among consumers as belonging to the other“. While there is room for interpretation regarding which of several purportedly misleading aspects of the tag-based search results it was that swayed the Court, it would seem that presence of the name “Takagi” in search results together with photographs of Graceland’s products and a clickable link to Graceland’s website are perhaps what struck the Court as “creat[ing] confusion with the goods or business of another“.

A cautious person noting that the Court reached this result despite the fact that all of the relevant tags at Graceland’s website appear to have contained ample warnings that Graceland’s products were not genuine Takagi products (but which warnings may have been truncated or displayed in less-than-prominent fashion by search engines) may well conclude that this case stands for the proposition that a website owner can be held responsible under the Japanese Unfair Competition Prevention Act for how a third-party search engine displays tagged content from that website in search results. Such a cautious person may deem it prudent not to rely on disclaimers or warnings but instead to completely avoid the use of competitor names, insignia, marks, and so forth in web page titles, markup language tags, keywords, and other content that may be indexed by a search engine.

The Court also considered whether the party identified in Court documents only as “A” (but who can safely be assumed to be Takeshi Yasuda based on descriptions to the effect that “A” was the sole corporate officer of Graceland and simultaneously the CEO of Koyu Printing) should be held personally liable. While the Court noted that “A” was basically self-employed and essentially one-and-the-same as the Graceland entity, the Court nonetheless found that the evidence fell short of proving that “A” was acting in a personal rather than corporate capacity.

This case is also instructive as an example of how Japanese courts apportion court costs, attorney fees, and damages. While Japanese courts may award all or some portion of “court costs” to the prevailing party, this term does not include attorney compensation and other out-of-pocket expenses but merely refers to the trivial-by-comparison fee that the plaintiff must pay the court when filing the Complaint (the Complaint filing fee varies depending on the amount sought in damages, but by way of example would have been JPY 17,000, or about USD $ 150, for a Complaint seeking damages in the amount JPY 2,500,000, or about USD $ 22,000, as in the present case; the Court in the present case determined that the prevailing party should bear 9/10 of the parties’ combined court costs and that the defendants should bear 1/10 thereof). Separately from any award for court costs, a Japanese court may award all or some portion of “attorney fees” to the prevailing party, but it is unlikely that the amount awarded by the court for attorney fees will come close to covering the total amount actually disbursed to attorneys and other third parties by the prevailing party (e.g., the Court awarded JPY 50,000, or about USD $ 450, in attorney fees to be paid by the defendants to the plaintiff in the present case). Typically larger, therefore, than any award for court costs or attorney fees is the amount of damages that the court awards the prevailing party; by way of example, the Court in the present case awarded damages in the form of lost profits to the prevailing party (Takagi) in the amount JPY 230,000, or about USD $ 2,000, which is still only about 1/10 of the amount that plaintiff Takagi sought at the time that the Complaint was filed (in addition to damages, Takagi also sought injunctive relief, which was not granted by the Court).

The foregoing Japanese intellectual-property-related court case summary has been provided by the Japanese patent attorneys at Unius Patent Attorneys Office. A complete list (in Japanese) of all cases reviewed by Unius Patent Attorneys Office can be found at http://www.unius-pa.com/precedent.