## Facts

- ASRock Inc., a Taiwan-based manufacturer of computer motherboards, used the name and logo “ASRock” and had obtained trademark registrations for it in multiple countries.
- Before ASRock obtained trademark registration in Japan and South Korea, a South Korean individual registered in both countries a similarly designed mark also bearing “ASRock/Asrock” (the trademark holder).
- The trademark holder claimed to run a computer and electronics retail/wholesale business, but the evidence suggested limited activity, including only a small number of sales efforts conducted through internet auction listings.
- Evidence also indicated the trademark holder’s registered business address did not show signs of being used as an active business location.
- After securing the Japanese registration, the trademark holder contacted official dealers of ASRock products and demanded unusually large sums of money to purchase (or otherwise obtain) the Japanese trademark rights.
- Unistar Kabushiki Kaisha (Unistar), an authorized Japanese importer/distributor of ASRock products and one of the dealers contacted, sought an invalidation trial at the Japan Patent Office (JPO) against the Japanese “Asrock” registration.
- Unistar argued that the registration violated several provisions of the Trademark Act, including Trademark Act Article 4(1)(vii) (registration contrary to public order or morality / improper purpose), among others.
- The JPO dismissed the invalidation request. It reasoned that ASRock’s mark was not well known in Japan at the time of the trademark holder’s filing, and it also suggested the trademark holder might make fuller use of the mark in the future.
- Unistar filed an administrative action in the Intellectual Property High Court seeking rescission of the JPO trial decision.

## Issues

1. Whether, in light of the registrant’s conduct and surrounding circumstances, the “Asrock” registration should be treated as having been filed for an improper purpose and therefore as falling within Trademark Act Article 4(1)(vii).
2. Whether the JPO erred by denying relief based mainly on the foreign mark’s lack of recognition in Japan at the filing date and the speculative possibility of future legitimate use.

## Decision

- The Intellectual Property High Court rescinded the JPO’s trial decision.
- The court held that the JPO’s determination denying application of Trademark Act Article 4(1)(vii) was incorrect.
- Based on the overall factual record, the court concluded the “Asrock” application was filed for the purpose of obtaining unfair benefit through assignment/transfer of the trademark right or causing damage to ASRock Inc. and its distributors, rather than for bona fide use in Japan.

## Legal Principles

- Under Trademark Act Article 4(1)(vii), a trademark registration may be refused or invalidated when, considering the full set of circumstances, the filing is tied to an improper purpose such as seeking unfair gain or harming another party, and is inconsistent with the function of the trademark system.
- In assessing improper purpose under Article 4(1)(vii), the court may rely on objective indicia such as: uncertain or minimal business activity by the registrant, distribution limited to narrow channels (for example, internet auctions), absence of actual transactions in Japan for an extended period after filing, and attempts to demand excessive sums from legitimate sellers for transfer of the mark.
- Lack of strong recognition of the foreign brand in Japan at the filing date does not, by itself, bar a finding of improper purpose under Article 4(1)(vii) where the registrant’s behavior indicates an intent to extract money from the brand owner or its distribution network.
- In administrative review of JPO trial decisions, the Intellectual Property High Court may reassess the JPO’s factual inferences and legal evaluation and rescind a decision that misapplies Article 4(1)(vii) to the proven circumstances.

## Conclusion

The Intellectual Property High Court set aside the JPO’s refusal to invalidate the “Asrock” registration, finding that the total circumstances showed the filing was made for unfair gain through transfer of the trademark right, or to harm ASRock Inc. and its distributors, bringing the registration within Trademark Act Article 4(1)(vii) despite the JPO’s view that the mark lacked sufficient recognition in Japan at the filing date.


Chiteki Zaisan Koto Saibansho [Intellectual Property High Court] August 19, 2010, Heisei 22 (Gyo-ke) no. 10297 (2010)