## Facts

- In 1994, a Japanese company (plaintiff) entered an exclusive distribution agreement with a U.S. manufacturer of electric instantaneous water heaters sold under the brand “Eemax/EemaX.”
- The plaintiff marketed and sold the heaters in Japan using “Eemax,” “EemaX,” and Japanese-character equivalents (e.g., “エマックス”), and held trademarks in phonetic Japanese equivalents used in its business.
- The plaintiff showed the products at multiple trade shows in the mid-to-late 1990s, spent several million yen on advertising related to the heaters, and sold the heaters to many corporate customers (including evidence of sales to 157 companies before the parties began working together).
- In 2003, the plaintiff entered a separate agreement with another Japanese company (defendant) that sought to sell Eemax water heaters.
- In 2005, the defendant registered a trademark similar to the plaintiff’s Eemax-related marks for the relevant goods.
- Business disputes followed, resulting in litigation, an in-court settlement, and the end of the parties’ relationship around 2006–2007.
- The defendant continued marketing Eemax water heaters. In 2009, the plaintiff sought an injunction under Japan’s Unfair Competition Prevention Act (UCPA), which led to another settlement; the defendant nonetheless continued selling.
- In 2010, the defendant obtained another Eemax-related trademark registration.
- In 2012, the plaintiff filed a new action seeking an injunction. The defendant counterclaimed for an injunction for trademark infringement based on its registrations.
- The plaintiff answered that the defendant’s registrations should be treated as invalid because, at the time of the defendant’s applications, the plaintiff’s Eemax-related indications were already widely recognized among relevant consumers.
- The lower court accepted the plaintiff’s showing and ruled for the plaintiff. The defendant appealed to the Supreme Court of Japan.

## Issues

1. After the five-year period in Trademark Act Article 47(1) has elapsed, may an accused infringer rely on the Patent Act Article 104-3(1) invalidity defense (as applied by Trademark Act Article 39) to defeat a trademark infringement claim by asserting that the registration violates Trademark Act Article 4(1)(x) (conflict with another’s well-known mark)?
2. Even if that statutory invalidity defense is unavailable after the five-year period, may the accused infringer still argue that the trademark owner’s enforcement is an abuse of rights when the defendant’s earlier mark was widely recognized at the time of the owner’s filing?
3. What level of market recognition is required for “widely recognized among consumers” under UCPA Article 2(1)(i) and Trademark Act Article 4(1)(x), and was the lower court’s reasoning adequate on that point?

## Decision

- The Supreme Court partially quashed the lower appellate judgment and remanded for further proceedings, and partially dismissed on the merits to the extent consistent with its legal holdings.
- The Court held that, once five years have passed from registration and no invalidation trial was timely sought on the ground of Trademark Act Article 4(1)(x), the accused infringer generally cannot invoke the Patent Act Article 104-3(1) invalidity defense (via Trademark Act Article 39) based on that ground.
- The Court recognized an exception where the trademark registration was obtained for an unfair competition purpose; in that event, the post–five-year bar does not control in the same way.
- The Court held that, even after the five-year period, a defendant may still argue abuse of rights against enforcement of a registered mark that conflicts with the defendant’s earlier indication that was widely recognized among consumers at the filing time, absent special circumstances.
- The Court found the lower court’s explanation for concluding that the plaintiff’s Eemax-related indications were “widely recognized among consumers” at the relevant time was insufficient, so the case required further examination on remand.

## Legal Principles

- Trademark Act Article 47(1) limits challenges to registrations that violate Article 4(1)(x) (similarity to another’s well-known mark): after five years from registration, an invalidation trial on that ground is generally barred unless the registration was obtained for an unfair competition purpose.
- Because Patent Act Article 104-3(1) (as applied to trademarks by Trademark Act Article 39) turns on whether the registration “would be invalidated” in an invalidation trial, the defense is generally unavailable where Article 47(1) makes such an invalidation trial time-barred.
- Abuse of rights remains a separate defense in trademark litigation: even if statutory invalidity routes are blocked by the five-year bar, enforcement may still be denied where the registrant seeks to exclude the party whose earlier, widely recognized indication created the Article 4(1)(x) conflict, absent special circumstances.
- “Widely recognized among consumers” is assessed in light of the relevant consumer group and market conditions. Evidence may include trade show activity, industry-media exposure, advertising outlays, sales history, and whether customers identify the indication as a source sign; courts must explain why the evidence satisfies the required level of recognition at the relevant time.

## Conclusion

This decision distinguishes between (i) a statutory invalidity defense tied to the availability of an invalidation trial, which is generally blocked after five years for Article 4(1)(x) conflicts, and (ii) an abuse-of-rights defense, which can still prevent enforcement against a prior user whose mark was already widely recognized when the later registrant applied; because the lower court’s reasoning on recognition was not adequately supported, the Supreme Court sent the case back for further findings.


Saiko Saibansho Daiichi Sho Hotei [Supreme Court First Petit Bench] February 28, 2017, Heisei 27 (Ju) no. 1876, 71 Saiko Saibansho Minji Hanreishu [Minshu] (2017)