The "Sushi Zanmai" Case: Appeal Court Decision ~ Intellectual Property High Court, October 30, 2024 (Case No. 2024 (Ne) 10031) ~

1.  Overview

              The Intellectual Property High Court overturned the Tokyo District Court’s decision, which had confirmed trademark infringement as well as the injunctions and partial damages claimed for displaying the trademarks on their webpage.  The Intellectual Property High Court dismissed all claims made by the plaintiff, Kiyomura.

              This decision is noteworthy and valuable when analyzing the potential risk of trademarks displayed on websites.  The “use of a trademark on the internet” has no borders unless technical restrictions are imposed.  Therefore, it is important to pay attention to the scope of trademark rights in each country based on the “principle of territoriality and the principle of trademark independence.”

2. Case Overview

              The plaintiff, Kiyomura, is a company engaged in running sushi restaurants, general procurement of seafood, development and manufacturing of food ingredients in Japan.  Kiyomura owns the registered trademark “SUSHI ZANMAI” in both English and Japanese, and operates a nationwide chain of restaurants under the name of ” SUSHI ZANMAI.”

              The defendant, Daisho Japan (hereinafter “Daisho Japan”), is a company engaged in importing, exporting, and selling seafood and fishery products, as well as operating and managing general eateries.  Daisho Japan is a wholly-owned subsidiary of Daisho Singapore (Daisho (Singapore) PTE LTD) and is a part of the Daisho Group, which also includes companies based in Thailand and Malaysia.  The Daisho Group handles the procurement of food ingredients in Japan and exports them to its subsidiaries in Southeast Asia.

              The non-party, Super Sushi (SUPER SUSHI SDN. BHD.), is a company based in Malaysia and a member of the Daisho Group.  Super Sushi operates restaurants in Malaysia under the name “Sushi Zanmai” and imports Japanese food ingredients from Daisho Japan.

              Daisho Japan introduced its business activities related to the procurement and export of seafood and fishery products on its corporate website in Japanese language.  Super Sushi has operated the restaurant “Sushi Zanmai” in Malaysia (herein after “Daisho’s sushi restaurant).  Daisho Japan displayed its trademark on their corporate website.

              Kiyomura argued that Daisho Japan’s act of displaying the trademark “Sushi Zanmai” on its website constituted trademark infringement and a violation of the Unfair Competition Prevention Act.

3. Summary of the Decision

The claims made by Kiyomura shall be dismissed on the ground of the following reasons.

(1) Daisho Japan’s webpage does not correspond to “advertisement related to services” of the sushi restaurant services which fall under Article 2(3)(viii) of the Trademark Act. Therefore, it cannot be considered as using Kiyomura’s trademarks and does not constitute the use of the trademark within Japan.

Even if it were to be considered as an advertisement related to the sushi restaurant services, the Daisho’s trademarks are not used in relation to the sushi restaurant services within Japan.  As the Daisho’s trademark use does not damage functions of indicating a source brought from Kiyomura’s trademark rights in Japan, it practically does not infringe the Kiyomura’s trademark rights.

(2) The webpage also does not constitute the use of “identification” under Article 2 (1)(i) and (ii) under the Unfair Competition Prevention Act.

(A) Whether Daisho Japan’s use of the mark on its website constitutes an advertisement for services related to sushi restaurants via electromagnetic means

              Daisho Japan introduced their business activities that export fresh, high-quality ingredients from Japan to restaurants in Southeast Asia on its webpage written in Japanese.  Daisho’s trademark is displayed on its webpage.  However, it was placed at the end of the webpage, along with a brief description of the sushi restaurant in Malaysia, including the link to its English website.  There is scant information for general consumers regarding the sushi restaurant services, such as specific menu items, prices, or the restaurant’s location.  The proportion of information related to the Malaysian restaurant on the entire page is also minimal.  Additionally, it is relatively easy to discern from the website that the sushi restaurant is located in Southeast Asia.

              Overall, Daisho Japan’s webpage should be considered an advertisement for the export of food ingredients from Japan.  The section using the Daisho’s trademark (it is listed with other restaurant chains operated by the Daisho Group) aims to explain to the Japanese business operators about the destinations and usage of ingredients exported through the Daisho Group, thereby serving incentives to export food ingredients with Daisho Japan.

              Such use cannot be evaluated as the source of origin or the identification for distinguishing goods/services of others related to the sushi restaurant services.  Daisho’s trademark is not used to advertise the sushi restaurant to Japanese consumers, and there is no evidence that there is such an effect.

              Therefore, the Daisho’s trademark use does not fall under “providing information via electromagnetic means regarding advertisements for services related to the sushi restaurant” (Article 2(3)(viii) of the Trademark Act).

(B) Views on infringement of Kiyomura’s trademark rights by the use of Daisho’s trademark

              Even if the use of Daisho’s trademark is considered as use under the Trademark Act discussed as above section (A), it does not infringe Kiyomura’s trademark rights because it is not used in relation to the services provided within Japan.

              The Daisho’s sushi restaurants provide restaurant services outside of Japan (in Singapore and Malaysia), and Daisho’s trademark is used when providing these services locally.

              Accordingly, Daisho’s trademark is not used in relation to sushi restaurant services within Japan.  Even if Japanese consumers who saw the Daisho’s trademarks mistakenly believe the source of the services with Kiyomura’s service, such a mistaken belief would invariably occur in locations where Japanese trademark rights do not extend because the Daisho’s sushi restaurant does not provide services in Japan.  In consequence, Kiyomura’s trademark rights are not infringed within Japan.

(C) Principle of Trademark Independence and Principle of Territoriality

              A trademark registered in one country is considered independent of trademarks registered in other countries (Article 6(1) and (3) of the Paris Convention). Furthermore, under the so-called principle of territoriality, the effect of trademark rights is understood to be limited to the domestic jurisdiction where the trademark is registered.

              Daisho’s trademarks, which were lawfully registered in a foreign country, are used on respective webpages to indicate the provision of designated services in that foreign country.  If granting an injunction or other claims based on the Kiyomura’s trademark rights, the Japanese trademark rights would, in substance, restrict the lawful use of foreign trademarks in that foreign country, even though the source of origin or other functions of the Kiyomura’s trademarks are not infringed.  Therefore, from the perspective of both the principle of trademark independence and the principle of territoriality, granting an injunction or other claims Kiyomura’s trademark rights cannot be deemed appropriate.

(D) Reference to Joint Recommendation Concerning The Protection Of Marks, and Other Industrial Property Rights In Signs,On The Internet

              The decision cites the above-mentioned Joint Recommendation and states that above interpretation is consistent with Article 2 of the Joint Recommendation, which describes, “Use of a sign on the Internet shall constitute use in a Member State for the purposes of these provisions, only if the use has a commercial effect in that Member State.”

Although the Daisho’s webpage,

• Is created in Japanese (Article 3(1)(d)(iv)), and
• Does not explicitly indicate an intention not to provide the sushi restaurant services to customers in Japan (Article 3(1)(b)(ii)),

The decision concludes that the use of Daisho’s trademarks on the relevant webpages does not have commercial effects within Japan in light of the following points.

• It is acknowledged that Daisho’s sushi restaurant in question does not provide services in Japan and there are no signs of initiating plans to provide the services (Article 3(1) (a)).
• The Daisho’s webpages do not display prices in Japanese currency (Article 3(1) (c)(ii)).
• No contact information within Japan is provided on the webpages (Article 3(1) (d)(ii)).
• Furthermore, the webpages are recognized as the advertising exporting services of food ingredients from Japan. Daisho’s trademarks are used in the context of introducing the foreign restaurant chains that utilize those ingredients from them.

              Therefore, the trademarks on the relevant webpages do not constitute the trademark use in Japan.

4. Our comments

              Daisho’s webpage is written in Japanese, and it does not explicitly indicate an intention not to provide “food and beverage services” in Japan.  However, there is very little information available for Japanese consumers about the sushi restaurant operated in Malaysia, such as specific menu details, prices, or the restaurant’s location.  The webpage serves the purpose of advertising the export of food ingredients from Japan to domestic business operators, and the Intellectual Property High Court concluded that there is no trademark infringement.

              Furthermore, the decision points out that the use of the trademark on the Internet is the use of Singapore and Malaysia trademark registrations, and it is analyzing and considering multiple factors, such as the principle of trademark independence, the principle of territoriality, and the Joint Recommendation, for determining the commercial effects.  These considerations are useful for assessing whether the use of the trademark on the website constitutes the trademark use in any given country.

Sources:

Appellate Court Decision (Summary/Full Text: Japanese)

https://www.ip.courts.go.jp/app/hanrei_jp/detail?id=6255

Original Court Decision (Full Text: Japanese)”

https://www.courts.go.jp/app/files/hanrei_jp/924/092924_hanrei.pdf