Saiko Saibansho Daiichi Sho Hotei [Supreme Court First Petit Bench] February 28, 2017

In 1994, a Japanese company (plaintiff) entered a distribution agreement with an American manufacturer of electric water heaters, which were sold under a brand known as Eemax or EemaX. The company held trademarks in the phonetic equivalents of the brand names rendered in traditional Japanese characters. In 2003, the plaintiff company entered a separate agreement with another Japanese company (defendant) that sought to sell Eemax water heaters. In 2005, the defendant company registered an Eemax trademark similar to those already in use by the plaintiff company. Later, a dispute arose between the plaintiff and defendant companies, leading to a lawsuit, in-court settlement, and dissolution of the business relationship in 2006 and 2007. The defendant company continued to market Eemax water heaters. In 2009, the plaintiff company filed an action against the defendant company, seeking an injunction under the Japanese unfair-competition statute. This led to another settlement, but the defendant company continued selling the water heaters. The defendant company registered another Eemax trademark in 2010. In 2012, the plaintiff company filed a new action for an injunction. The defendant company counterclaimed for an injunction of its own. The plaintiff company responded by asserting the invalidity of the defendant company’s trademarks due to their similarity to the plaintiff company’s trademarks, which it argued were well known among consumers prior to the defendant company’s applications for trademark registration. The plaintiff company presented evidence that it exhibited Eemax water heaters at several trade shows in the mid to late 1990s, for which it spent several million yen on advertising, and that it sold water heaters to 157 companies prior to the beginning of its relationship with the defendant company. The court accepted this evidence and found in favor of the plaintiff company. The defendant company appealed to the Japan Supreme Court.