Japanese Report for Special Topic
to
Anti-Counterfeit Committee
at
2007 APAA Council Meeting at Adelaide, Australia
Reporter: Masashi Kurose
Yoshio Kumakura
Members of Japanese Anti-Counterfeiting
Committee;
Yoshio Kumakura
Masashi Kurose
Kiyoshi Muraki
Hiromichi Aoki
Takeshi Sagi
Nami Togawa
Ikuko Takabe
Yosuke Takenaka Reiko Tonomura
“ Sales of counterfeits on-line-- Who and what remedies are available against
them ?”
I
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General Overview
Issues specific to on-line sales, especially Internet auction
On-line sale including Internet auctions have developed into a gigantic
market throughout the world, because anyone can readily access to the
transaction. However, on-line sales and Internet auctions have also
become the most convenient sales channels for selling counterfeits. The
Japanese police report shows that criminal cases involving intellectual
property infringement at Internet auctions are very much increasing.
Needless to say, the problem of counterfeiting using on-line sales must be
considered in view of several different public interests, on one hand,
consumers are to be deceived by such counterfeit products and the
trademark holders’ reputations are to be seriously damaged. On the other
hand, too much restrictions on the virtual shops, Internet malls, Internet
auctions will disturb the development of e-commerce in general.
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In view of the protection of intellectual property right, it is not easy to
solve the problem of on-line counterfeits sales because there are special
aspects in such on-line sales and Internet auctions, as discussed below.
2
Difficulty to identify counterfeit products and sellers
Generally speaking, it is not easy for a trademark owner to identify
counterfeits and to distinguish them from genuine products until the
trademark owner actually purchases the products. First, it is difficult
even for the trademark owner to find counterfeits from only on pictures on
web sites. Second, counterfeit sellers often post the pictures of genuine
products on web sites (either at Internet auctions or cyber malls) and
deliver counterfeits to customers. Under these circumstances, if you
suspect that a product offered at Internet auctions might be counterfeit,
you will have to actually purchase said product and analyze whether the
product is counterfeit or not.
However, even if you could decide the specific product to be a counterfeit,
the same seller will continue the sale of same counterfeits under
different fictitious names, addresses and different IDs. This is because
sellers can easily get several different IDs in different names. As a result,
it becomes difficult for trademark owners to identify counterfeit product
sellers.
Therefore, the trademark owners will have to continue the endless
purchase, analysis and warning, with less fruitful outcome.
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Variety of nationality and kinds of transactions
Given with the Special Topic to read “Sales of counterfeits on-line-- Who
and what remedies are available against them?", we may consider a
number of related players in electronic commerce, in view of whether the
transaction is “cross border” or “ domestic”, or what types of on-line sales
are used.
For example:
(1) Foreign sellers may have no addresses in Japan. Various counterfeits
(such as Counterfeit Viagra, Recording Media etc.) are sold by
foreign sellers through website shops targeted to Japanese
customers in Japanese language. Both an on-line seller and
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internet service provider (ISP) may stay abroad. Foreign seller
may also use a domestic (Japanese) ISP, but using false names and
addresses .
(2)
Even if the seller stays in Japan, the manners of on -line sales are
various:
(ⅰ) The seller may have website on its own internet server. The
seller may open the cyber shop or virtual shop using a Japanese
ISP.
（ⅱ）The seller may offer counterfeits on an auction site operated by
an auction operator of a Japanese ISP.
Thus, considering the legal issues stemmed from diversity of
national laws concerning the jurisdiction on IP infringement
litigations and enforcement of foreign judgments, this study will not
handle such international jurisdiction and enforcement and will be
limited to the given topics to domestic laws.
II
1
Who are liable ?
The following will be an unexhausted list of relevant players in on-line
sales of counterfeits:
(a)
Foreign manufacturer of counterfeits (attaching the trademark to
the products outside of Japan);
(b)
Domestic manufacturer of counterfeits (attaching the trademark
within Japan);
(c)
Foreign seller (having no address in Japan) through cyber shops or
auction sites operated by others but accessible by Japanese
customers;
(d)
Importer of foreign-made counterfeits;
(e)
Domestic seller through cyber shops or auction sites operated by
others;
(f)
Cyber mall operators or auction operators on ISP such as e Bay (in
case the auction site is operated by other companies than ISP),
where counterfeits are sold;
(g)
ISP which operates its own auction business such as eBay, Yahoo;
(h)
ISP whose internet service is indirectly used by cyber mall
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operators auction and counterfeiters thereon.
2 Liability
(1)
The following is apparently liable groups as their acts constitute the
infringement of domestic trademark right or other IP rights:
(a)
Domestic manufacturer of counterfeits (attaching the trademark
within Japan) (Trademark Act Art.2.(3).i );
(b) Importer of foreign-made counterfeits (even if he does not put the
counterfeits on a Japanese cyber shop or internet
auction);( Art.2.(3).ii );
(c) Domestic seller through cyber shops or auction sites operated by
itself or others (Art.2.(3).ii, viii)
(2)
The liability of the following groups are a little more complicated under
Japanese laws:
(a) Foreign manufacturer of counterfeits (attaching the trademark
outside of Japan)
The acts to manufacture and the attach the trademarks outside
Japan will not be infringement the Japanese rights, but
advertisement in Japan (such as the display in an exhibition or
tradeshow) constitutes the infringement (Art. 2.(3).ⅷ).
In addition, once the counterfeit product and foreign manufacturer
or importer is identified, further import of the same products will be
prevented by the water front measure at the customs house (Tariff
Act).
Advertisement on website directed to Japanese customers may also
be considered infringing advertisement. Theoretically the Japanese
court may exercise jurisdiction on the basis of the “place of the tort”
(place of the occurrence of tort) (Civil Procedure Code Art. 5.ⅸ.)
under the theory of joint infringer in co-tort feasor. However,
there are few precedents so far, Japanese court exercised the
jurisdiction for the reason that there is no act committed in Japan,
unless more active advertisement or sales activities by foreign
manufacturers (such as tradeshow or offering by a Japanese
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representative office are found in Japan).
Offer for sale by a foreign seller (having no address in Japan)
through cyber shops or auction sites operated by foreign ISP but
accessible by Japanese customers should be considered to be the
same issue as mentioned above. However, the most difficult
practical problem in this category is how to find the person and his
address of such foreign manufacturer, especially when the
manufacturer uses its own server or a foreign ISP.
(3)
The following groups are the service companies which business itself is
legal but their services are often utilized by counterfeiters;
(a) Cyber mall operator or auction operator on ISP ( in case the auction
site is operated by other companies than ISP), where counterfeits
are sold;
(b) ISP which operates its own auction business such as eBay, Yahoo;
(c) ISP whose internet service is used by counterfeiters;
ⅰ)
These service providers, cyber mall operators, auction site
operators and ISP are not sellers of counterfeits, and they are not
liable for infringement, unless they knowingly or in negligence
allow the sale of counterfeits thorough their services. However,
recently, their liability become controversial under the concept that
they may prevent the sale of counterfeits, by adequate technically
possible measures. Therefore, it is argued that these service
providers (especially cyber mall operators and auction site
operators) are liable for not taking the adequate prevention
measures and for have allowed the counterfeits to be sold at such
cyber malls or through auctions.
ⅱ) In the United States, Tiffany sued eBay in June 2004 ( US
District Court, Southern District of New York ) on the ground of ①
direct and contributory infringement of Tiffany’s trademark, ②
violation of common law unfair competition, ③ violation of the
dilution statute, etc. In this case, Tiffany argued that eBay enabled
many members to offer counterfeits of Tiffany merchandise, that
FBI arrested several members in charge of trademark infringement,
and that eBay knew about continuing sale of counterfeits and was
willfully blind about such facts, etc.
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ⅲ ) Similar litigations were filed against eBay in Germany and
France. On April 2007, German Federal Supreme Court issued a
landmark judgment (published on June 19, 2007) to order eBay to
take adequate electronic measures to prevent the continuous sale of
counterfeits of Rolex watches by applying a filter searching system
so that illegal auction products of exceptionally low price are to be
removed.
III
Japanese situation and efforts
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Current situation
The number of counterfeits on the Internet is rapidly increasing (Please
see our national report). According to the statistics of the Police, 20 % of
the trademark infringement is found in Internet auctions. Many
counterfeit goods and pirate copies of DVD, computer software, music CD
are sold illegally through Internet auctions.
2
Measures against counterfeits through Internet auctions
(1) By strengthening domestic regulations, the Japanese Government
(GOJ) published the policy to prevent the trade of counterfeits and
pirated copies by Internet auctions.
GOJ has reviewed the Rules for e-Commerce based on the actual
situation of counterfeits and pirated copies and is intending the
revisions.
With the cooperation between the public and private sectors and
consideration given to consumers and sellers at auctions, GOJ is
encouraging auction providers to correctly identify sellers (names,
addresses, IDs) in order to prevent malicious sellers from bringing
counterfeits into auctions and to raise awareness among sellers and
consumers in order to prevent them from bringing counterfeits into
auctions such goods.
GOJ is considering additional measures to prevent the counterfeits by
Internet auctions, and may revise laws and develop systems as
appropriate.
(2) On the other hand the use of the Information Sharing Scheme
established among the IP right holders, auction providers, and
investigation authorities are being encouraged.
(3) The Japanese Patent Office (JPO) proposed the Model Guideline to
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prevent counterfeits and pirated copies in the 23rd APEC Intellectual
Property Rights Experts Group which was held in August 15-16 2006.
(4) Further, Japan has entered into several bilateral Free Trade
Agreements, for example, with Singapore, Malaysia, Philippines,
Thailand etc. in which the party countries agreed to cooperate to take
the border measures to prevent the counterfeits.
IV Deletion and disclosure by ISP of sellers' information
( Provider's Liability Limitation Law")
1
In the event that ISP (such as Yahoo!) sends through or publish on the
website the illegal information (for example an offer for sale of
counterfeits, in our case), knowingly or in negligence, ISP may bear the
liability to the trademark holder as the joint-infringer, contributory
infringer or joint-tort feasor.
On the other hand, under the Japanese Telecommunications Business
Law, ISP bears the statutory or contractual obligation to maintain the
customer’s information as confidential. In violation of such confidentiality
obligation, ISP will bear the liability to pay damages to the customers
(seller, in our situation). However, in order for a trademark owner to
take a legal action against a counterfeit seller, it is necessary to know the
seller's information such as the name and address. It is difficult to obtain
such information for several reasons through the Internet transaction
itself. Counterfeit sellers will not only refrain from revealing their true
identifications at Internet auctions, but also often use false names and
addresses.
2 In under to adjust these contradict interests and also the public interests
of the right holders, ISP’s interests as well as private interest of Internet
users (legitimate sellers), the so-called "Provider's Liability Limitation
Law" (PLLL) was adopted and became effective in 2002.
PLLL provides for (i) limitation of ISP’s liability to the right holders (such
as trademark owners, copyright owners, privacy right, publicity right),
(ii) the demand by the right holder (trademark owner) to ISP to delete the
illegal information (offer of counterfeits) from the website and limitation
of ISP's liability for the deletion, and (iii) the demand by the right holder
(trademark owner) for the disclosure by ISP of the source of the illegal
information and limitation to ISP's liability from the disclosure.
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3 Limitation of ISP’s liability to the right holder
Under PLLL, ISP is liable for damages caused to a right holder
(trademark owner), only when the following conditions are fulfilled
(Art.3.(1)):
(1-1) ISP knew the existence of the illegal information (offer of
counterfeits) infringing the right of the right holder (trademark
right ) on ISP’s website; or
(1-2) ISP knew the existence of the information and there is a
reasonable ground that ISP could know that the information (offer
for sale) infringes the right holder’s right (trademark right) : and
(2) It is technically possible to delete such illegal information.
In other words, ISP is not liable for sending the infringing
information, either if ISP could not find the infringement as
reasonable operator or if it is technically impossible to delete such
infringing information even when ISP knew the infringement.
It should be noted that the law does not require ISP to voluntarily
watch to check the illegality of information (namely, ISP is not
required to always check whether all offers for sale by customers do
not infringe someone’s trademark rights).
4
Demand for Deletion of Infringing Information
ISP is also released from the contractual or other obligation to its
customers (such as sellers) even if ISP deletes the relevant information
(such as the offer for sale of counterfeits), subject to the following
conditions:
(1-1) When there is a reasonable ground for ISP to believe that the
information on the website (offer for sale) in question constitutes the
infringement (trademark infringement); or
(1-2) When ISP is demanded by the right holder (trademark owner) to
take a prevention measure (usually request for deletion) and ISP
informs to and requests the customer to delete the infringing
information from the website, and seven(7) days have passed
without any response: and,
(2) The measures taken by ISP (such as deletion of the information, i.e.
offer for sale) is within the extent necessary to prevent further
sending the infringing information out to the public.
As see above, while such a deletion demand is not a legally
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recognized right of the trademark owner, ISP had the tendency to
reflect the right holder the sufficient information about infringement
avoid its own decision (to avoid the risk to be sued by the customer)
and then the right holder had been compelled to get a judgment from
a court.
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Deletion demand via “Reliable Organization”
(1) While it is important to act quickly in demanding the deletion of
infringing information in order to avoid the increase of damages, ISPs
are not in a position to easily evaluate the existence of infringement
and very clear evidence for infringement is requested, but such
evidence can be obtained only after the trial purchase and analysis of
individual goods, Also, there is a concern that waiting for the
established seven(7)-day period may result in increased damages to
the trademark owner.
(2) As a way to resolve this problem, Japan authorized a corporate body,
who has a long experience for handling the trademark disputes and
an ability to judge the trademark infringement, as the “Reliable
Organization” and this Organization is being used to submit a
demand for deletion without having to wait until the established
seven(7)-day waiting period is over.
(3) In order to be recognized as the “Reliable Organization”, the following
conditions must be met.
i) The Organization must be a legal entity
ii) The Organization must be able to confirm the contents of the rights
held by the applicant
iii) The Organization must have working knowledge of trademark
rights, etc. and have established long-term achievements
iv) The Organization must be able to take confirmation procedures
according to the established guidelines
Currently, the Union De Fabrican Tokyo is recognized as a Reliable
Organization .
(4) It is important to note here, that even in the event that a deletion
request is issued by a trademark owner, for example by a company,
submission of intellectual property and trademark right knowledge
and other evidence that can establish that infringement is indeed
occurring may help a ISP to decide to take action quickly.
(5) In Japan, the majority of auction sites are facilitated by Yahoo
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Auction. Yahoo Auction has established its own special watching
program to protect intellectual property rights, and when they receive
a request for deletion from a party that has registered his own
trademarks through this program, they act rather quickly to delete
the information in question. The problem is, however, that there are
so many counterfeits offered which cannot be identified from the offer
for auction as only product names or at most photographs are
uploaded by sellers.
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Rights of request for disclosure information of the infringing party
(1) With respect to the infringing parties who are advertising or selling
counterfeits or imitation branded products on the website, it is
possible to demand injunction order by court against the advertising
or sales activities, request compensation for damages or demand to
publish apologies etc.
However, while it is relatively easy to take legal action when the
infringing parties can be specifically identified by the website or trial
purchase, in many cases infringing parties register under false
names and addresses, making legal action difficult.
(2) Under PLLL, a trademark owners is entitled to request ISP to
disclose information (name and address) relating to the infringing
party (infringing information sender). ISP who receives such a request
take the following steps in disclosing the information.
(ⅰ) The accused infringing party must be informed of the request for
disclose of information and their opinion is heard.
(ⅱ）In the event that the accused infringing party does not agree to the
information disclose or two weeks pass without a response from
the infringing party, ISP must judge whether or not the
infringement is clear and whether the requesting party has a
reasonable ground for the disclosure, such as the necessity for
filing litigations.
(iii) If the infringement is clear and it is determined that reasons
dictate that accepting the request by the trademark owner is the
correct course of action, the user-related information is disclosed
to the trademark owner.
(3) If said conditions are fulfilled, but ISP does not disclose the infringing
party the necessary information to the trademark owner, the
trademark owner may then take a legal action to request the
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information release in a court of law. This kind of litigations are
usually very fast and the court decision will be issued after only one
hearing date.
(4) If the disclosure of information claim is accepted by ISP or by the court,
the infringing party’s name, home address, e-mail address etc., are
disclosed to the trademark owner. The trademark owner can then
attempt to take legal action against the infringing party based on this
information.
(5) Similar guidelines have also been announced with respect to
internet-related copyright infringement, and efforts are increasing to
utilize these laws to control of using the internet to advertise and sell
goods that infringe trademark rights and copyrights.
V Practical Approach
(1) Buying counterfeit products at Internet auctions
In order to determine whether suspected products sold at Internet
auction are counterfeit or not, you need to purchase and analyze these
products. You should not, however, buy these products by yourselves
because if sellers find that a trademark owner has bought the counterfeit
products, sellers will stop selling these products and disappear. It is
advisable that you ask an outside agency to buy counterfeit products.
(2) Obtaining information about sellers, etc.
If you (or your outside agency) purchase counterfeits at an Internet
auction, you will be able to find much seller's information in your
correspondence with sellers, delivery tickets, etc. You should keep seller's
name, address, telephone number, e-mail address, etc.
(3) Preparing an expert's written opinion telling genuine products from
counterfeits
You should have an expert's written opinion prepared in which the
criteria telling genuine products from counterfeit ones should be clarified.
Such an expert's written opinion would be helpful for taking
countermeasure against possible counterfeits in the future.
(4) "Feedback profile"
You have to study "feedback profile" about sellers at Internet auction
sites. This "feedback profile" would probably provide you with
information about the history of seller's trading at the auction sites,
including information about counterfeit products sold in the past.
(5) Providing information calling for attention
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You have to provide your customers on your websites or in other media
with the information pointing out that counterfeits are in the market.
You should recommend your customers not to purchase such
counterfeits.
(6) Approaching ISP
You have to give ISP or auction operator a notice requesting them to stop
posting counterfeits at their Internet auction site.
VI A successful example
1. History of exposure of counterfeits
Sony found that a large amount of counterfeit memory sticks imitating
Sony's genuine ones had been sold. The customs office in Tokyo seized
counterfeit memory sticks in February 2006. Such counterfeit memory
sticks sold at Internet auctions were increasing at a great rate. The price
of counterfeits was less than 1/2 of the genuine memory stick (2MG).
On May 20, 2006, Sony provided its customers with information pointing
out about counterfeit memory sticks on Sony's website. Further, Sony
offered to customers the services to check whether they are genuine
memory sticks or counterfeits.
2. Appraising counterfeit products
Counterfeit memory sticks were often sold without any package. Since
Sony had never sold its products without a package, it was highly
probable that such memory sticks without a package were counterfeit
products. There were other differences between genuine ones and
counterfeit ones. According to the above criteria, it was easy to explain
the court and the customhouse and ISP to distinguish counterfeit
memory sticks from genuine ones on a confidential basis.
3. Buying counterfeits from a shop
Upon studying "Yahoo! Auction," Sony found that the seller using the
shop name had sold a large number of suspected memory sticks. Sony
bought a memory stick from the shop through "Yahoo! Auction" and
found that they were certainly counterfeit products.
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Genuine memory stick
Counterfeit memory stick
4. Finding the seller
Upon investigation, the real company (operated by a Chinese lady living
in Japan) and address were found with the fact that the company had
sold counterfeit memory sticks every day since March 2, 2006.
5. Filing for a provisional injunction order
Sony filed for a provisional injunction order with the Tokyo District Court
as well as consulted the criminal complaint to Tokyo Metropolitan Police
Office.
6. Settlement
The court recognized the infringement but listened to the defendant
which was against Sony’s intention. The court persuaded the defendant to
settle the matter, the stipulation which included (i) injunction order, (ii)
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placing an apology advertisement in a newspaper at the defendant
expense, and (iii) the payment of a certain amount of settlement fee as
damages.
7 The police office was reluctant to accuse the case as the defendant insisted
that they believed the products to be genuine.
8 The court stipulation including the injunction order and published
apology were useful for filing the water-front procedure before the
customs house.
End of report
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