A question of trust: licensing trademarks
It is a common practice for Japanese businesses to borrow and use internationally famous brands’ trademarks from the companies that own the trademarks, so as to boost their business activities in Japan.
Our firm has often negotiated and administered such borrowing of famous trademarks on behalf of our Japanese clients. We believe that this trademark-borrowing trend will continue for some time, due to the Japanese people’s penchant for name brands and the trademark owners’ desire to earn royalty income for the use of their trademarks.
However, we are fully aware of the difference between the Japanese and some foreign countries’ concepts concerning the granting and registering of rights to use a trademark.
“THIS SYSTEM IS ESPECIALLY ADVANTAGEOUS IF A LICENSOR MUST SIMULTANEOUSLY ADMINISTER THE LICENSING OF BOTH A TRADEMARK AND A COPYRIGHT.”
Although in some other countries registration of a right of exclusive use or non-exclusive use of a trademark is not required for a licensee to secure such a right, or to make third parties aware of such a licensee’s right, the system in Japan is the opposite of that.
In Japan, granting and registering a right of exclusive use or non-exclusive use of a trademark tends not to occur, because of the costs and time required for registering such a right.
For patents, since the Patent Law revision enacted on April 2, 2012, it has not been necessary to register a non-exclusive licence or a provisional non-exclusive licence to use a patent, because since then such licensing has been deemed to be an inherent right that is protected against third parties.
However, the Trademark Law was not revised in the same way as the Patent Law, and therefore it is still necessary, as before, to register a non-exclusive trademark use right in order for a licensee to secure its rights against third parties.
Accordingly, the costs and time required for such registration have not changed, and the owner of a trademark to be licensed must register a licensee’s right to exclusive use or non-exclusive use based on a licence contract. In view of the difficulties associated with the licensing of a trademark in Japan, we wish to explain the IP trust system that was introduced when the IP Law was revised in 2004.
As a result of that revision, if a licensor uses this trust system, there are virtually no costs, and almost no time is necessary to license a trademark.
The various rights that are licensed are administered by a trustee who is a property administration expert. This system is especially advantageous if a licensor must simultaneously administer the licensing of both a trademark and a copyright.
For example, in fictional character-based businesses in Japan, a trademark right concerning a character is obtained—in addition to developing businesses based on the copyright relating to the character—because of the greater enforcement power of a trademark right relative to a copyright, which need not be registered, and usually isn’t.
In such a case, the trustee of a licensed trademark right can perform all administration work for the right, such as the renewal of the trademark registration, the administration of the licensing contract, and so on.
Also, if the licensor expects to acquire many licensees (each of whom will be granted a right to non-exclusive use), the licensor will not be bothered by having to engage in activities relating to licensing if it uses a trustee, so that the licensor can direct its attention solely to its main business. We believe that the IP trust system can be effectively used by trademark owners.
Our firm also assists licensors in entering into trust agreements.
