Court Case Review (Trademark):“REEBOK ROYAL FLAG case” (2016) Publication carrying this article Patent News No. 14287Publisher Research Institute of Economy, Trade and Industry

REEBOK ROYAL FLAG case (Similarity of Composite mark containing famous or well-known mark)

1. Background

The plaintiff, Reebok International Limited (Reebok International) filed an application to register a trademark REEBOK ROYAL FLAG in standard characters in connection with “footwear; special shoes for sports; headgear, and other clothing; garters; sock suspenders; suspenders [braces]; waistbands; belts for clothing; masquerade costumes; special clothes for sports” in Class 25 in Japan.

The Japan Patent Office (JPO) refused to register the applied-for mark, on the ground that the applied-for mark is similar to a prior registered mark ROYAL FLAG (Cited Mark) owned by a Japanese company, Haruyama Shoji K.K, covering “clothing; garters; sock suspenders; suspenders [braces]; waistbands; belts for clothing; footwear; masquerade costumes; special clothes for sports; special shoes for sports” in Class 25.

[Cited Mark]

2. JPO Decision

Reebok International filed an appeal trial against the decision of refusal issued against the applied-for mark.

The JPO Trial Board dismissed the appeal trial because, taking into consideration the fame of the REEBOK mark for “shoes” etc. among Japanese consumers and traders, the ROYAL FLAG part, which is a coined word, can be seen as a “product mark”, by contrast the REEBOK part can be seen as a “house mark”, and therefore can function as a source identifier independently.

The plaintiff brought a suit in an attempt to reverse the JPO decision of dismissal and argued, inter alia, that the applied-for mark REEBOK ROYAL FLAG should be compared in its entirety, or only the component part REEBOK can function as a source identifier independently if the applied-for mark is dissected, because the component part ROYAL FLAG alone does not attract viewers’ attention from the composition of the applied-for mark and the distinctiveness of the component part ROYAL FLAG is very weak, compared with the other component part REEBOK which has a very strong distinctiveness because of its fame as a source identifier among consumers and traders, and therefore the applied-for mark should be judged as not similar to the Cited Mark, ROYAL FLAG.

3. IP High Court Decision

The IP High Court reversed the JPO Trial decision, finding as follows:

i) The component part REEBOK is famous as an abbreviation of the plaintiff’s name, its brand name, or a source identifier of goods in connection with the business of the plaintiff among Japanese traders and consumers. The component part “REEBOK” provides to Japanese traders and consumers a strong dominant impression as a source identifier because of its fame, and therefore, the component part REEBOK can function both as a source identifier independently as well as the applied-for mark in entirety.

ii) The applied-for mark consists of the characters REEBOK ROYAL FLAG in standard characters, the size and font of all characters are the same and all of the characters are placed on one line in a cohesive manner with a space between each word. Therefore, it cannot be concluded that the ROYAL FLAG part alone attracts the visual attention of viewers.

The term ROYAL FLAG itself is not a dictionary word. However, considering that not only each term of ROYAL and FLAG, but also terms containing either of the terms ROYAL and FLAG such as “royal wedding”, “royal family”, “checker flag”, “national flag” and so on are dictionary words and that many trademarks containing either of the terms ROYAL and FLAG have been registered at the JPO, ROYAL FLAG is merely a combination of common English terms. Therefore, although the source-identifying function of the term ROYAL FLAG itself cannot be denied, the component part ROYAL FLAG does not give to Japanese traders and consumers a strong dominant impression as a source identifier of goods, compared with the other component part REEBOK.

Under the circumstances, it is found that only the component part ROYAL FLAG should not be dissected from the applied-for mark in comparison with the Cited Mark.

iii) When contrasting the applied-for mark REEBOK ROYAL FLAG and the Cited Mark, ROYAL FLAG, there is a difference between them as to whether REEBOK is contained or not, and therefore, both marks are distinguishable from each other visually, conceptually and phonetically. Further, there is no evidence submitted by the plaintiff showing trade circumstances where goods of the applied-for mark are traded by using only the sub-brand name without the house mark REEBOK. Therefore, it is concluded that there is no likelihood of confusion between them.

4. Author’s comment

When judging similarity of a composite mark “A+B” and a mark consisting only of a single component element “B”, courts have followed the following criteria which the Supreme Court observed in the TSUTSUMINOOHINAKKOYA case (Hei19(Gyohi)223, September 8, 2008).

“If component parts of a composite mark are recognized to be so well combined indivisibly that it is unnatural to separately observe one or more component parts away from the other component parts in trade, in principle, a composite mark should not be compared with a conflicting mark by being dissected into its component parts. On the other hand, if a component part (A) of a composite mark (A+B) gives a strong dominant impression as a source identifier of goods or services to traders or consumers or if any pronunciation and idea as a source identifier do not arise from the other component part (B) of a composite mark (A+B), and so on, the component part (A) can be separated from the composite mark (A+B) for comparison with a conflicting mark.”

In the REEBOK ROYAL FLAG case, following the first half of the above criteria, the IP High Court found that first, the applied-for mark REEBOK ROYAL FLAG (A+B) is to be compared by looking at it as a whole, and then, following the latter part, inter alia, the underlined part of the above criteria, that only the component part REEBOK (A) is also to be compared because of its fame. Further, comparing both marks in view of appearance, idea and pronunciation based on the above and taking into consideration trade circumstances as to the goods, the IP High Court held that there is no likelihood of confusion between them.

As for this point, the IP High Court concluded that the component part ROYAL FLAG (B) is not separated from the applied-for mark REEBOK ROYAL FLAG (A+B), because the component part ROYAL FLAG (B) does not give to Japanese traders and consumers a strong dominant impression as a source identifier of goods, compared with the other component part REEBOK (A).

It is unclear, from the above criteria itself which the Supreme Court observed in the TSUTSUMINOOHINAKKOYA case, how the component element B (ROYAL FLAG in the REEBOK ROYAL FLAG case) is treated in the above underlined case. However, considering that in the TSUTSUMINOOHINAKKOYA case, the Supreme Court observed that there are no trade circumstances justifying that one element of a composite mark should be dissected from the composite mark, the above criteria does not show that under the underlined case, one component part B is not separated from the composite mark, and courts should finally consider whether in view of the trade circumstances of goods, the component part B can function independently as a source identifier of goods or not under the underlined case.

We have an impression that the IP High Court did not consider the trade circumstances of the goods sufficiently in the REEBOK ROYAL FLAG case. Further, it is difficult for a component part B, no matter what word(s) B consists of, to give to Japanese traders and consumers a strong dominant impression, compared with the other component part A which has a very strong distinctiveness because of its fame, unless B itself has become as famous as or more famous than A through extensive use. Therefore, the IP High Court’s decision appears to mean that if a composite mark A+B consists of a famous or well-known mark A (in this case, REEBOK) and a not famous or well-known mark B (in this case, ROYAL FLAG), the composite mark (A+B) will always be judged as not similar to a prior mark B by the component part B not being separated from the composite mark (A+B).

In Japan, a trademark right arises from the registration of an applied-for mark, and not by mere use. Also, the Japanese Trademark System adopts a first-to-fileprinciple. From the point of view of these basic principles, the result, as if the prior registered mark B (in this case, Cited Mark) is not protected unless it has become well-known or famous through extensive use, is not appropriate.

Further, even if a composite mark A+B containing a famous or well-known mark A is registered despite the existence of a prior mark B, the owner of the composite mark A+B has to be careful in using the composite mark and exercising its trademark right. If the owner of the composite mark A+B uses the trademark in a manner so that the component part B is separated from the composite mark A+B and as a result confusion arises between both goods under the circumstances whereby the owner of the composite mark A+B is aware of the existence of a prior registered mark B, the trademark right for the composite mark A+B may be cancelled by a third party’s filing a cancellation trial based on an unfair intention to use. Also, under the circumstances where registrations for a prior mark B and a composite mark A+B co-existed, the possibility is high that the owner of the composite mark A+B cannot stop a third party’s use of the mark B or similar thereto, based on its trademark right for the composite mark A+B.

On the other hand, the owner of a trademark B also has to be careful of other party’s activities. As mentioned above, even if the trademark B is registered, unless the trademark B is well-known or famous, composite marks such as A+B, C+B, D+B… (A, C and D are famous or well-known marks) filed by third parties may be registered in the future, and as a result, the distinctiveness of the trademark B may be weakened by such activities. To avoid such situation, it is advisable to keep a third party’s filing under surveillance and to collect documents which show trade circumstances where the component part B only can function as a source identifier independently in the field of the goods in question, and if any problematic application or registration is found, to provide such information to the JPO at the examination stage, to file an opposition or to file an invalidation trial.