Trademarks: use them or lose them
Japanese electronics company NEC was the first company worldwide to successfully add this ringtone function to mobile phones.
In Japanese, the ringtone is known as ‘chaku-mero’, which is short for ‘chakushin melody’, which means incoming melody. The Chaku-mero wording was registered as trademark no. 4194385 in 1998 and no. 4707135 in 2003 in the name of Yozan Co. The trademarks are quite widespread in Japan.
The Chaku-mero trademarks were subsequently sold by Tokyo’s metropolitan government via a Yahoo tax sale auction on February 16, 2010, after Yozan failed to pay its taxes to the city. Trademark no. 4194385 was earning royalties from two companies of ¥0.378 million (about $4,000) a year and its value was estimated at ¥1.57 million (about $17,000). Trademark no. 4707135, meanwhile, was estimated to have a value of ¥0.43 million (about $4,600).
“At one time, ‘Escalator’ was a registered tradem ark owned by Otis Elevator Company, but this generic trademark lapsed with the support of the proprietor. The same was true of DuPont’s ‘nylon’ mark and Bayer AG’s ‘Aspirin’ mark. If a proprietor can’t control a trademark, it is difficult to justify a large expense to obtain a generic trademark, as it is difficult to identify the value to the bidder.”
However, the eventual total price paid was ¥25.5 million (about $270,000), with trademark no. 4707135 valued at ¥16 million (about $170,000) and trademark no. 4194385 at ¥9.5 million (about $100,000), more than 10 times the estimate.
The successful bidder, VisualArts Co, said: “It is really difficult for us to create a generic word by ourselves; however, it was a pleasure for us to get a generic trademark such as Chaku-mero, which improves our company’s value.” The company also said it will not use execution rights for the trademarks or restrict the use of the trademarks.
At one time, ‘Escalator’ was a registered trademark owned by Otis Elevator Company, but this generic trademark lapsed with the support of the proprietor. The same was true of DuPont’s ‘nylon’ mark and Bayer AG’s ‘Aspirin’ mark. If a proprietor can’t control a trademark, it is difficult to justify a large expense to obtain a generic trademark, as it is difficult to identify the value to the bidder.
If the proprietor Yozan had managed its brand properly, it could have earned more than enough royalties to pay its tax liability, and it would not have been necessary for the government to sell the trademarks.
This case provides a good lesson for filing and registering trademarks for a purpose, i.e. to be used and not to be mothballed. The bidder still has the opportunity to manage the trademark as the brand Chaku-mero; however, it needs to develop branding strategies to ensure that it can successfully exploit its trademark rights.
Ryo Maruyama is a patent attorney and vice president of Kyosei International Patent Office. He can be contacted at: kyosei@tkc.att.ne.jp
