Regulatory Developments In recent years, the Government of Japan has taken significant steps towards protecting intellectual property rights. Since the inception of the 10-year action plan under the 2002 Intellectual Property Strategy Council and adoption of the basic law on IP, the legislature has passed a total of 40 laws and revisions aimed at enhancing intellectual property protection. From 2003, revisions to the Customs and Tariff Law made it easier for companies to apply to customs authorities to seize suspected counterfeit products at the Japanese border. In 2004, rights holders were given the right to obtain information about the importers of suspected counterfeit goods. In April 2005, Japan established the first High Court of Intellectual Property. Since April 2006, the Unfair Competition Prevention Law prohibits importation of goods similar to famous, widely known brands. Injunctions against counterfeit importers are now attainable within 6 months. The Trademark Law was revised to increase the fine applicable to importers of counterfeit goods from 150 million to 300 million Yen for legal entities and from 5 million to 10 million Yen for individuals. METI , under instruction from the Intellectual Property Policy Headquarters (IPPH), is considering further revisions to the Trademark Law to prohibit the import of counterfeit goods for personal use, but little has happened during 2007. Progress can also be attributed to active engagement by the Japanese Customs authorities. They now proactively provide information on counterfeiters to rights holders and have stepped up efforts to enforce the ban on imports that violate patent rights as well as imports resembling brand name products. Customs authorities are now increasingly sharing information with rights holders by using image transmission via the Internet rather than requiring the company or rights holder representative to be present at the customs office to inspect the merchandise in person. Japan continues to collaborate with the EU and international trading partners under the auspices of the WTO TRIPS and WIPO. Despite these significant achievements, counterfeit goods in Japan continue to be a serious problem for businesses and a significant threat to consumer protection and government tax revenues. Trade on the Internet is a special source of concern as more than half the branded goods sold over the Internet are counterfeits. The EBC urges the Government of Japan to introduce concrete measures for more rigorous enforcement of trademark violations by focusing on border control, the sale of counterfeit goods on the Internet, and the import of counterfeit goods for personal use. Prospects for EU-Japan Economic Integration Protection of intellectual property rights is critical for Japan's knowledge-based economy. A strict intellectual rights regime brings an environment conducive to innovation, knowledge development, foreign investment, and economic growth. Counterfeit goods make up as much as 5-9% of total global trade and a considerable amount reaches Japan. The Japanese market for luxury goods is worth ?1.17 trillion, representing 40% of worldwide consumption. The stakes are high for many European companies in the sector as they generate as much as a third of their global revenues in Japan. As a leading consumer and a benefactor of strict international intellectual property protection, Japan must take a more active role in curbing the flow of counterfeit goods. The progress achieved in the past few years through a series of revisions in trademark and patent law should be reinforced by further measures. The EBC proposes that further reforms aimed at intellectual property protection be addressed and conducted through a bilateral Economic Integration Agreement (EIA) between the EU and Japan. This EIA should comprise ambitious provisions on the protection of intellectual property, establishing identical protections for right-owners of both markets. Priorities
Key Issues and Recommendations ■ Border control Yearly status report: some progress. Despite revisions of the Trademark Law and stepped up efforts by customs authorities, Japan has not been able to curb the imports of counterfeit goods. The legal acceptance of parallel imports and insufficient civil and criminal sanctions within the Customs Law contribute to the continued influx of counterfeits. Recommendation:
■ Fake goods on the internet Yearly status report: progress. The Internet is now the principal mode of distributing fake and counterfeit goods in Japan. Changes in the application of the Specific Business Transaction Law requiring sellers to provide complete identification to the site vendor along with the introduction of identity and content control measures by the main Internet Service Providers (ISPs) have been instrumental in reducing the quantity of goods sold openly as counterfeits. However, the scope of the definition of counterfeiting is too narrow, making it inherently difficult to assert violations of property rights in cases other than obvious counterfeits. Furthermore current laws and monitoring practices do not cover the auction sites selling counterfeit goods on sites for mobile phones. Recommendation:
■ Imports for personal use Yearly status report: no progress. Japanese law does not prohibit the importation of counterfeit goods into Japan that are for "personal use". Commercial importers import fake products in small quantities to reduce the risk of detection and foreign exporters use the same method to sell counterfeit goods on the Japanese market. While the Intellectual Property Headquarters have expressed an intent to prohibit "personal" imports, this has yet to materialise. The Customs authorities issued an order requiring that upon the discovery of a suspicious item by a Customs officer, a letter be sent to the recipient asking for confirmation of the product's authenticity or confirmation that the product is for personal use. If it is not for personal use, then the product is prohibited. Recommendation:
■ Designs Yearly status report: no progress. The cost of design registration in Japan remains expensive, and the examination procedures are complex and cumbersome. Furthermore, Japanese courts take a narrow view in interpreting counterfeits under the Design Law. The designs are often judged to be different, which prevents counterfeit goods from being treated as infringements. Recommendation:
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