J-Phone triumphs in landmark cybersquatting case

Facts
Decision
Impact

A Tokyo court recently prevented a defendant from using a domain name, awarding damages for defamation and legal costs. This was the first time a Japanese court had awarded damages in a domain name dispute.

Facts

The plaintiff, a cellular phone operator, changed its name to J-PHONE on February 7 1997. The defendant then registered the domain name 'j-phone.co.jp' on August 29 1997. It was alleged that the defendant had a longstanding grudge against the plaintiff.

The defendant included on the web site a number of messages and statements that would lead consumers to believe they were viewing the official J-PHONE web site (including "Welcome to the home page of J-PHONE!" and "Thanks for using J-PHONE"). There were also links to the home page of the actual J-PHONE group of sites. The defendant advertised women's underwear and placed pornographic images on its home page, thereby damaging the plaintiff's corporate reputation.

The defendant also attacked Sanwa Bank Co Ltd on the web site. Sanwa Bank was an investor in the plaintiff's business. By pretending to be the plaintiff company, the defendant intentionally tried to damage the business relationship of the plaintiff with a major investor.

In April 2000 the plaintiff filed suit in the Tokyo District Court, stating that the defendant's use of the 'j-phone.co.jp' domain name contravened Japan's Unfair Competition Prevention Law. The plaintiff asked for an injunction against use of the domain name, and damages for defamation and legal expenses.

Decision

Article 2, Clause 1 of the Unfair Competition Prevention Law states:

"According to this law, 'unfair competition' is defined as:

(1) Using the same name as an indication of a product of others (eg, the name of a business person, a firm name, a trademark, a brand, a package of a product, wrapping or other products, or something which indicates the business) which is generally known by consumers, or to sell, to exhibit, to export or to import a product using such a name and to confuse consumers;

(2) Using a famous indication of another's product as an indication of one's own product, or selling, exhibiting, exporting or importing a product using such name."

The court considered a number of the terms included in Article 2 in relation to their applicability to J-PHONE and found:

• The term 'indication of a product' does apply to a domain name.
  
  
• The name J-PHONE is a 'famous indication'. When the company changed its name to J-PHONE it was advertised in newspapers, magazines, and on television and radio. The number of people contracting with J-PHONE increased at the same time, indicating that the advertising was reaching a wide audience.
  
  
• The term J-PHONE was not generally known as a word or abbreviation for 'Japanese Phone' as the defendant argued, and was therefore not a general term.

The defendant argued that it used the domain name before the plaintiff's company was well known. The court disagreed, finding that J-PHONE was a well-known term before the defendant obtained the domain name.

The court ruled that the plaintiff needed an injunction for the following reasons:

• The defendant was advertising obscene products and pornography on its page.
  
  
• The only difference between the two names was the use of capital letters.
  
  
• The defendant had defamed Sanwa Bank.

The 'j-phone.co.jp' site was shut down and the defendant is prohibited from using it again, to prevent further confusion to consumers.

The court granted monetary damages because the defendant had intentionally set out to confuse consumers and damage the plaintiff's reputation, objectives which he had achieved. The defendant was ordered to pay ¥2 million ($16,000) in damages for defamation and ¥1 million ($8,000) for legal fees.

Impact

It is unclear whether this case is limited to its facts (ie, the involvement of defamation). Generally, Japanese law is based on the civil law system, and thus precedents are not always followed - judges have the choice of whether to follow previous cases. Other Japanese domain name cases are more clearly about use of domain names by those who do not hold the trademark, without the additional damage that has been caused by defamation in this case.

Pauline C Reich, Waseda University School of Law, Tokyo, Japan. The assistance of Akiko Shinohara, Reiko Yoshida and Akiko Kikuchi in the preparation of this article is gratefully acknowledged.