Chapter IV Trade Names

①A merchant (other than a company or foreign company; hereinafter the same applies in this Part) may use the merchant's surname, full name, or any other name as a trade name.

②A merchant may register its trade name.

①It is prohibited for any person to use, with a wrongful purpose, a name or trade name that could give rise to the misconception that the person is another merchant.

②A merchant whose business interests have been or are likely to be infringed upon by the use of a name or trade name that violates the provisions of the preceding paragraph may demand that the person infringing or likely to infringe upon those business interests discontinue or refrain from the infringement.

A person violating the provisions of paragraph (1) of the preceding Article is subject to a civil fine of not more than one million yen.

A merchant that permits another person to carry on a business or engage in operations using the merchant's trade name is jointly and severally liable, together with that other person, to a party that has dealings with the other person based on the misconception that the merchant is the one carrying on the business, for performance of the obligations arising from those dealings.

①A merchant may transfer its trade name, but only if it transfers this together with its business or if it discontinues its business.

②The transfer of a trade name under the provisions of the preceding paragraph may not be asserted against a third party unless it is registered.

①Unless the parties manifest a different intention, a merchant that transfers business (hereinafter referred to as the "transferor" in this Chapter) must not engage in the same line of business within the limits of the same city, town, or village (including within the limits of the same special ward; or within the limits of the same ward or administratively consolidated ward, as it concerns designated cities referred to in Article 252-19, paragraph (1) of the Local Autonomy Act (Act No. 67 of 1947); the same applies hereinafter), or within the limits of a neighboring city, town, or village, for 20 years after the day of the business transfer.

②If a transferor specifically agrees not to engage in the same line of business, that special agreement is only valid for 30 years after the day of the business transfer.

③Notwithstanding the provisions of the preceding two paragraphs, the transferor must not engage in the same line of business with the intention of engaging in unfair competition.

①If a merchant to which business is transferred (hereinafter referred to as the "transferee" in this Chapter) continues to use the trade name of the transferor, the transferee is also liable for performance of obligations arising from the business of the transferor.

②The provisions of the preceding paragraph do not apply if, without delay after the business transfer, the transferee makes a registration indicating that the transferee is not liable for performance of the transferor's obligations. If the transferee and transferor notify third parties of this without delay after the business transfer, the same applies with respect to a third party that has been so notified.

③If the transferee is liable for performance of the transferor's obligations pursuant to the provisions of paragraph (1), the transferor's liability to an obligee that fails to demand performance or give advance notice of its claim within the two years after the business transfer date is extinguished once those two years have passed.

④In a case as prescribed in paragraph (1), any performance made to the transferee on a claim arising from the business of the transferor is valid if the party performing the obligation does so in good faith and without gross negligence.

①Even if a transferee does not continue to use the trade name of the transferor, if the transferee advertises that it will assume the obligations arising from the business of the transferor, the obligees of the transferor may demand that the transferee perform those obligations.

②If the transferee is liable for performance of the transferor's obligations pursuant to the provisions of the preceding paragraph, the transferor's liability to an obligee that fails to demand performance of the obligations or give advance notice of its claim within the two years after the day that the transferor advertises as referred to in that paragraph is extinguished once those two years have passed.

①If a transferor transfers business knowing that this will harm the obligee of an obligation not assumed by the transferee (hereinafter referred to as a "person that remains the obligee" of the transferor in this Article), the person that remains the obligee of the transferor may demand that the transferee perform that obligation, up to the value of the assets to which the transferee has succeeded; provided, however, that this does not apply if the transferee, at the time the business transfer becomes effective, is unaware that the transfer will harm the persons that remain the obligees of the transferor.

②If a transferee is liable to perform the obligations referred to in the preceding paragraph pursuant to the provisions of that paragraph, its liability towards a person that remains the obligee of the transferor but that fails to demand performance of the obligation or give advance notice of its claim within the two years after the day on which it learns that the transferor has transferred the business with the knowledge that it harms the persons that remain its obligees is extinguished once those two years have passed. The same applies once ten years have passed since the day on which the business transfer becomes effective.

③A person that remains the obligee of the transferor may not exercise the right to a claim against the transferee pursuant to the provisions of paragraph (1) if an order commencing bankruptcy proceedings or order commencing rehabilitation proceedings involving the transferor has been issued.