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On April 1, 2024, the “Bill for Partial Revision of the Unfair Competition Prevention Act”, which was enacted last year, came into effect.

Among these amendments, we will introduce the specific details of the revision to the Trademark Act regarding the “introduction of the consent system,” which is expected to have a significant impact on trademark practice (including the newly established Article 4(4), etc.).

It should be noted that the consent system applies to applications filed on or after April 1, 2024.

1. What Is the Consent System?

The consent system generally refers to a system whereby, even if a trademark identical or similar to a prior registered or filed trademark is applied for, coexistence registration of both trademarks is permitted if the prior right holder gives consent. Trademark, Japan: Introduction of Consent System

Some countries, such as the United States, have provisions for this system in their trademark laws, while in others, such as China, there is no statutory provision, but registration based on consent has been recognized in practice.

Furthermore, the consent system can be broadly divided into two types: the “reserved” and the “absolute” types.

Most countries, including Japan, adopt the “reserved” type, under which, even if the prior rights holder consents, registration is not permitted if the examiner determines there is a likelihood of confusion as to the source. Only a few countries, such as New Zealand, adopt the “absolute” type, where registration is granted without further examination if consent is given.

2. Background to Introducing the Consent System

One of the most common grounds for refusal in office actions against trademark applications is Article 4(1)(xi), which cites a prior registered trademark. Traditionally, the main methods for overcoming such refusals have been as follows.

(1) Amendment to delete conflicting designated goods/services (if protection for the conflicting goods/services is not essential)

(2) Submission of an argument asserting non-similarity of the trademarks or goods/services

(3) Filing a non-use cancellation action against the cited prior registration

(4) Registration by assign-back*

*The assign-back procedure involves temporarily assigning the rights arising from the trademark application to the owner of the cited trademark, thereby overcoming the refusal, obtaining registration, and then having the cited trademark owner re-assign the rights back to the original applicant.

In cases where the methods of (1) to (3) were not available, it was not uncommon in practice to negotiate with the prior rights holder to obtain consent and then proceed with the assign-back method of (4). However, assign-back procedures are complex, unfamiliar to foreign applicants, and require additional explanation by Japanese representatives. From the perspectives of international harmonization and user-friendliness, there has been demand for the introduction of a consent system.

The Japan Patent Office (JPO) introduced the “Statement of Actual Circumstances of Transaction” system in 2017, allowing consideration of actual circumstances of transactions in the assessment of similarity of goods/services (but not similarity of trademarks) even in cases falling under Article 4(1)(xi). However, there has only been one case of its application to date, and it has not necessarily been user-friendly for applicants.

3. Overview of the Consent System in Japan (New Article 4(4))

As stipulated in the text, even in cases falling under Article 4(1)(xi), registration may be exceptionally permitted if (i) consent from the prior trademark rights holder has been obtained, and (ii) there is no likelihood of confusion with the prior trademark rights holder or licensee.

*From the materials for the 31st Working Group on Trademark Examination Standards

While there has been no doubt regarding (i) from the start, there were concerns that if the methods of proving (ii) were too burdensome, the system would not be utilized, as was the case with the “Statement of Actual Circumstances of Transaction” system. The Japan Trademark Association had also called for a reduction in the evidentiary burden on applicants.

Following discussions in the working group and a public comment process, the following examination standards were published [bold emphasis by the author].

Items (i) to (vii) are identical to the examination standards for Article 4(1)(xv), which prohibits registration of trademarks likely to cause confusion.

Therefore, it can be inferred from items (i) to (vii) that the consent system will be difficult to apply to trademarks identical or similar to well-known prior trademarks as defined in Article 4(1)(xv), but the methods of proof are relatively straightforward. Notably, “(viii) manner of use of the trademark and other actual circumstances of transaction” is not familiar from previous examination standards.

This is also specifically described in the draft examination standards, with a list of evidentiary materials mainly concerning the actual manner of use. The draft standards can be summarized in the following table.

In addition, not only the likelihood of confusion at the time of examination but also the potential for future confusion is to be considered, as stated in the draft examination standards.

4. Anticipated Issues Going Forward

The newly introduced consent system requires not only the submission of a “consent form” permitting registration of the later-filed trademark, but also proof that “there is no likelihood of confusion”. In particular, “(viii) the manner of use of the trademark and other actual circumstances of transaction” in the draft examination standards refers not only to the manner of use, but also to sales methods, sales regions, seasons, and price ranges, as well as the potential for future confusion (e.g., no changes or fluctuations in the manner of use). As these matters relate to each company’s business strategy, the obstacles to disclosing such information or making a written commitment not to change it in the future is considered to be quite high. Considering the costs for both parties to prepare such information and the fact that registration is not guaranteed, some applicants may judge that the traditional assign-back method is more reliable.

However, the examination standards also state: “[i]n principle, rather than immediately refusing the application, the content of the evidence will be considered, and the submission of additional materials, etc., will be requested as necessary”. Therefore, while waiting for the accumulation of registration examples under the consent system, in cases where the system is used, it may be advisable not to submit all evidentiary materials at the outset, but rather to wait for guidance from the examiner and then submit additional materials as needed, in order to minimize disclosure.

In addition, there will be some impact on trademark search practice. While coexistence registrations have always been a reference point in assessing similarity, it will now be necessary to confirm whether such coexistence registrations were granted under the consent system.

5. Other Related Amendments Accompanying the Introduction of the Consent System (Articles 8, 24quater, and 52bis)

Article 8 (Prior-Filed Trademarks)

Article 8, which prohibits registration of later-filed trademarks identical or similar to prior-filed trademarks (whereas Article 4(1)(xi) concerns “prior-registered trademarks”), will also be amended to add a proviso with the same content as the newly established Article 4(4).

Article 24quater (Demand for Indication to Prevent Confusion)

Where the rights to identical trademarks for similar goods (or similar trademarks for identical or similar goods) come to belong to different rights holders A and B due to the transfer of trademark rights, B may demand that A adopt an indication to prevent confusion if the use by rights holder A is likely to harm the business interests of B (Trademark Act Article 24quater).

Previously, this provision applied only to trademarks after transfer of rights, but with the amendments to Article 4(4), Article 8, etc., trademarks registered under the consent system will also be included.

Article 52bis (Trial for Cancellation)

Article 24quater concerns demands for indications to prevent confusion, but its requirements also serve as grounds for a trial for cancellation under Article 52bis. Previously, Article 52bis applied only to trademarks after transfer of rights, but as it has been amended to “for reasons listed in each item of Article 24quater,” trademark rights arising from the consent system will also be subject to cancellation if use is likely to harm the business interests of the other party.

*From materials for the 31st Working Group of the Trademark Examination Standards

6. Reference Data: Consent Systems in Major Jurisdictions

Ryouhei HORIE