Japanese trademarks made international news last week when it was reported that a trademark application for “PPAP” (which stands for “Pen Pineapple Apple Pen”) was filed by a notorious trademark squatter only days before a similar application made by Avex Group Holdings, Inc., the company behind Japanese singer Pikotaro’s hit viral video “PPAP(Pen-Pineapple-Apple-Pen)”.

The video, which is just over one minute long, has amassed over 112 million views on YouTube at the time of writing and features Pikotaro dancing and singing in a yellow leopard-print outfit. First uploaded to YouTube in August 2016, the video shot to viral status after Justin Bieber tweeted an endorsement of it as his “favorite video on the internet.” Pikotaro’s management company Avex filed a trademark application for “PPAP” with the Japan Patent Office (JPO) on October 14, 2016 – 9 days after an application for “PPAP” was filed by the unrelated Best License Co., Ltd.

Best License is run by Ikuhiro Ueda, who has said publicly that he reviews newspapers and online articles for ideas for new trademark filings, filing up to 50 applications per day. As of January 31, 2017, the JPO database lists 11,247 trademark applications in the name of Best License Company, and an additional 2,656 applications under his personal name. These applications in Japanese and English range from the simple (“WOW”, “NUMBERS”) to the specific (“PHASED ARRAY RADAR”), and cover technical buzzwords (“SMART HYBRID”, “DIGITAL LEARNING”), politics (“BREXIT”) and, of course, include filings for many words and phrases made famous by others, including “PPAP”. Despite this large number of applications, Best License and Ueda have only 7 trademark registrations between them – the vast majority of applications are rejected for non-payment of the application fee.

Trademark squatters such as Ueda hope to earn a profit by selling or licensing the acquired trademark rights to others. The key to this tactic is contained in Article 5-2 of the Trademark Act and Article 5 of the Singapore Treaty on the Law of Trademarks, which grant priority to trademark applications based on the filing date of the application, even if the application has not yet been registered, and even if no application fee has been paid. As properly-divided applications have application dates retroactive to the original filing dates, it becomes possible for a chain of divided applications to maintain a filing date for years, and indeed such applications currently exist in the JPO database. Best License has also recently been more active in using these applications as bases for opposition against allegedly similar marks, which may increase the incentives for bone fide applicants to strike a deal for a relatively simple and quick resolution.

However, a prior application in the name of Best License or any other trademark squatter does not necessarily spell the end for a subsequent bone fide applicant. For example, applications which have been divided for these purposes often have deficiencies which disqualify them from using the retroactive filing date. In terms of risk of use, infringing use of another’s trademark in Japan is limited to use of the trademark in a trademark manner, and would exclude, for instance, Pikotaro’s performances of “PPAP(Pen-Pineapple-Apple-Pen)”. Furthermore, infringement damages are calculated according to the amount of profit which would have been made by the trademark holder had the infringing goods not have been sold. In the case of a trademark squatter, it is likely to be difficult in light of the circumstances for such a holder to make out a substantive claim for damages.

In cases where the application fee has not been paid, the JPO will dismiss such applications after five or six months, with no action required by a party hoping to register the same mark. As dismissal of the application extinguishes all prior rights to the mark, the first step in overcoming a trademark squatter’s prior application is to wait.

We would advise anyone doing business in Japan to consult with a specialized trademark attorney who can assist with the prevention and handling of these types of situations.