Trademark Infringement Warning Letters: First Steps on Receipt and Checks Before Sending One

Hello, I'm Noriaki Asato, Representative Attorney at Legal Agent.

You have just started selling a product when a warning letter arrives saying, "That name infringes our trademark rights." When the letter demands not only that you stop using the name but also that you destroy your inventory, submit sales records, and pay damages, you may be unsure where to begin. In some cases, simply changing the name on your website is enough; in others, you may need to revise your packaging, your notices to retailers, and even your advertising contracts.

In responding to a warning letter, you need to check the content of the rights and how your company actually uses the mark before answering the other side's demands. At the same time, if you continue selling even though infringement is likely, the damages may grow. I think it is important to proceed with fact-finding and interim business measures in parallel.

In this article, I explain everything from the first steps for the recipient of a warning letter, to the checks the sender should make, to the terms involved when the parties reach an agreement.

1. Preserving Evidence and Interim Measures Immediately After Receipt

The first things to preserve are the warning letter and its envelope, the date and time of receipt, and the attachments. If it arrived by email, keep not only the body text but also the sender information and the attachments. Internally, designate the people responsible from legal, product, public relations, and sales administration, and consolidate communications with the other side into a single point of contact. If each person gives a different explanation, it becomes difficult to correct the facts later.

Next, record when, where, and on what the name or logo in question was used. Preserve the current web pages, advertisements, product photos, packaging, sales history, and the background to the adoption of the name. When saving screens, make sure the URL and the date of capture can be identified, and if you change what is displayed, keep the state before the change. If you delete records while the rights situation is still unclear, you may lose the materials you need for later explanations and counterarguments.

Whether to continue or stop using the mark should be decided separately from preserving evidence. Where infringement is likely, for example because you are using the same name as the registered trademark cited in the warning for the same type of goods, consider temporarily halting additional shipments and new advertising. On the other hand, if only some of the products concerned are at issue, determine whether it is really necessary to suspend unaffected business across the board. Record internally the reason for, scope of, and start time of the interim measures, and in explanations to the other side, make clear whether or not they are meant as an admission of infringement.

Handling the Response Deadline

You must distinguish between the response deadline the other side specifies in the warning letter and deadlines in court proceedings. Merely letting the date in the warning letter pass does not mean you have admitted the other side's claims. However, if you ignore it, the matter may proceed to a provisional injunction or litigation.

If you need time to investigate, tell the other side that you have received the letter, that you are looking into it, and when you will be able to respond, and request an extension. Even if the other side agrees to an extension, that does not automatically create an agreement to refrain from seeking an injunction or an agreement regarding the statute of limitations. If you have received a complaint or provisional injunction papers from a court, you need to check the designated hearing dates and filing deadlines separately from your response to the warning letter.

2. Comparing the Registration With How the Mark Is Actually Used

If the warning letter includes a registration number, identify the right on J-PlatPat. Check the right holder, filing date, registration date, registered trademark, and designated goods and services, and obtain the trademark register if necessary. If the sender of the warning letter differs from the right holder, confirm the basis of the claim, such as whether the sender is an agent or an exclusive licensee.

Trademark rights arise upon registration. However, this does not mean "you can ignore it because it is still only an application." Article 13-2 of the Trademark Act (Japanese) provides a system under which, for use after a certain warning, the applicant can claim money after registration. You need to consider separately an injunction based on a registered right and the significance of a warning given while an application is pending.

Also, even if the expiry date of the term of protection has passed, a request for renewal registration filed after expiry or similar may become an issue. Do not conclude that the right has definitively lapsed based only on the date shown; check the renewal procedures and the status history.

Compare the Goods and Services, Not Just the Names

In the general analysis under Article 25 and Article 37, item 1 of the Trademark Act, you check separately whether the marks are identical or similar and whether the goods and services are identical or similar. An assertion that "the names are similar" alone does not clarify the scope of the goods concerned.

The similarity of trademarks is judged comprehensively, taking into account actual trade circumstances, based on appearance (how the marks look), pronunciation (how they are read), and concept (their meaning or image). You cannot reach a conclusion based on a single circumstance, such as part of the reading being shared or the logo colors being different. As for goods and services, it is not the case that everything with the same registered class number is similar and everything with a different class number is dissimilar.

For example, even if a warning letter points to multiple products together, the outcome of the analysis may differ among the flagship product, accessories, and online services. Creating a table for each product showing the name displayed, where it appears, its use, the customers it is sold to, and its relationship to the other side's designated goods makes it easier to grasp the points in dispute and the scope of the response.

3. Requirements for a Counterargument and Supporting Materials

After confirming the existence and scope of the right, consider whether there are circumstances under which the right does not extend to your use. A counterargument needs not only to name the relevant legal doctrine but to tie it to materials that satisfy its requirements.

Prior Use

The right of prior use under Article 32 of the Trademark Act is not recognized merely because you came up with the name or began selling earlier than the other side. As a rule, it requires, among other things, that you used the trademark in Japan without the purpose of unfair competition from before the other side's filing, and that at the time of the filing the trademark was widely recognized among consumers as indicating your business. It is a system for continued use in relation to those goods or services, and it does not automatically extend to new products.

The first delivery slip alone is not sufficient as supporting material. Gather sales up to the filing date, sales regions, the reach of advertising, the number of business partners, media coverage, and the like, and consider whether you can explain how widely the mark was recognized. Even where a right of prior use is recognized, the other side may require you to add an indication to prevent confusion.

Whether It Is Use as a Product Name or Logo

Article 26, paragraph 1, item 6 of the Trademark Act provides that trademark rights do not extend to a trademark used in a manner that does not allow consumers to recognize whose goods or services they are. However, an internal explanation that "it was meant as decoration" is not enough.

Check the condition that purchasers actually see, including the position and size of the display, the surrounding wording, its relationship to the product, and how it is treated in advertising. Even a decorative design may be perceived as indicating a brand depending on how it is displayed. This is why you should preserve the packaging and the entire sales page rather than cropping out only part of a product image.

Considering a Trial for Cancellation for Non-Use

If the other side's trademark is not being used, consider a trial for cancellation for non-use under Article 50 of the Trademark Act. That article provides a system for cases in which the trademark right holder or others have not used the registered trademark in Japan in connection with the designated goods or services continuously for three years or more.

What the right holder must prove under paragraph 2 of that article is, as a rule, use in Japan within three years before the registration of the request for a trial. "Registration" here does not mean the date the trademark was first registered, but the registration of the request for the trial. Not only use by the right holder itself but also use by an exclusive licensee or a non-exclusive licensee is relevant, and the article also provides for cases in which there are legitimate reasons for non-use.

Therefore, cancellation will not necessarily be granted merely because the product cannot be found on online shopping sites. Consider the scope of goods and services to be covered by the request, the outlook for evidence of use, and the time and cost of the trial. Also, filing a request does not by itself extinguish the trademark right. Article 54, paragraph 2 of that Act provides for the point at which the right is extinguished when cancellation for non-use becomes final, and care is needed because liability for past use is not necessarily resolved all at once.

4. Checking Your Rights and Demands Before Sending a Warning Letter

The sender should preserve the display in question before the other side's products or advertisements are changed. If the user cannot be identified from the web page alone, confirm the selling entity, the manufacturing entity, the operator of the domain, and so on, and decide whom you will ask to do what. It is important not to broaden the target of the warning to "all of your company's products," but to identify it concretely by product name, URL, image, and date of confirmation.

In addition to your own registration details and renewal status, also check when the other side began using the mark, the possibility of a right of prior use, and your own evidence of use. Your own record of use is not always a prerequisite for an injunction claim, but you need to know before sending what you could submit if a trial for cancellation for non-use is requested against you.

Structure your demands according to their legal basis and feasibility. Article 36 of the Trademark Act provides for the suspension and prevention of infringement and for measures necessary for that purpose, such as destruction, but you cannot automatically demand destruction of the entire stock for products where a change of name would suffice. As for damages, the amount is not determined by the same explanation as for an injunction; you need to consider the basis of liability, the damage, and the materials for calculation.

What should be handled with particular care is notifying the other side's business partners or sales platforms. Depending on the content and circumstances, this may raise an issue under Article 2, paragraph 1, item 21 of the Unfair Competition Prevention Act (Japanese) as the communication or dissemination of false facts that harm the business reputation of a competitor. At a stage where whether there is infringement is disputed, I think you should avoid spreading categorical statements to business partners and should consider the recipients and the wording of any notice on a case-by-case basis.

5. Business Checks When Deciding on Settlement Terms

Possible resolutions include ceasing use, changing the name, coexistence on certain conditions, and a license agreement. In choosing among them, check not only the legal outlook but also the cost of the change, remaining inventory, contracts with business partners, and the need to maintain the brand. The fact that sales regions differ does not necessarily eliminate the problem; you also need to consider the reach of online sales and advertising.

If you change the name, specify what will be changed, such as the website, packaging, invoices, social media, and domain. If the sale of existing inventory is to be permitted, set out the quantity covered, the sales deadline, and whether additional manufacturing is allowed. Write separately the transition period to the new name and what each party will not claim regarding past use.

For coexistence or a license, the core points are the permitted displays, goods and services, territory, sales channels, royalties, quality control, and treatment after the contract ends. Also confirm whether use by affiliates and sales agents is included. When reviewing the contract, the points to review in a license agreement may also be helpful.

A warning letter is not a document whose issues end at the moment it is sent or answered. I believe that, for both the recipient and the sender, preserving evidence, confirming the scope of the rights, and working out terms that can actually be carried out lead to a resolution that limits the impact on the business.