TRADEMARK CASES_FULL TEXT
G.R. No. 103543 July 5, 1993 recall all its products bearing the mark "Beer Pale Pilsen" from its
ASIA BREWERY, INC., petitioner, vs. THE HON. COURT OF APPEALS
and SAN MIGUEL CORPORATION, respondents.
GRIÑO-AQUINO, J.:
On September 15, 1988, San Miguel Corporation (SMC) filed a
complaint against Asia Brewery Inc. (ABI) for infringement of
trademark and unfair competition on account of the latter's BEER PALE
PILSEN or BEER NA BEER product which has been competing with
SMC's SAN MIGUEL PALE PILSEN for a share of the local beer market.
(San Miguel Corporation vs. Asia Brewery Inc., Civ. Case. No. 56390,
RTC Branch 166, Pasig, Metro Manila.).
On August 27, 1990, a decision was rendered by the trial Court,
presided over by Judge Jesus O. Bersamira, dismissing SMC's complaint
because ABI "has not committed trademark infringement or unfair
competition against" SMC (p. 189, Rollo).
SMC appealed to the Court of Appeals (C.A.-G.R. CV No. 28104). On
September 30, 1991, the Court of Appeals (Sixth Division composed of
Justice Jose C. Campos, Jr., chairman and ponente, and Justices
Venancio D. Aldecoa Jr. and Filemon H. Mendoza, as members)
reversed the trial court. The dispositive part of the decision reads as
follows:
In the light of the foregoing analysis and under the plain language
of the applicable rule and principle on the matter, We find the
defendant Asia Brewery Incorporated GUILTY of infringement of
trademark and unfair competition. The decision of the trial court is
hereby REVERSED, and a new judgment entered in favor of the
plaintiff and against the defendant as follows:
(1) The defendant Asia Brewery Inc. its officers, agents, servants
and employees are hereby permanently enjoined and restrained
from manufacturing, putting up, selling, advertising, offering or
announcing for sale, or supplying Beer Pale Pilsen, or any similar
preparation, manufacture or beer in bottles and under labels
substantially identical with or like the said bottles and labels of
plaintiff San Miguel Corporation employed for that purpose, or
substantially identical with or like the bottles and labels now
employed by the defendant for that purpose, or in bottles or
under labels which are calculated to deceive purchasers and
consumers into the belief that the beer is the product of the
plaintiff or which will enable others to substitute, sell or palm off
the said beer of the defendant as and for the beer of the plaintiff-
complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered to render an
accounting and pay the San Miguel Corporation double any and all
the payments derived by defendant from operations of its business
and the sale of goods bearing the mark "Beer Pale Pilsen"
estimated at approximately Five Million Pesos (P5,000,000.00); to
retailers and deliver these as well as all labels, signs, prints,
packages, wrappers, receptacles and advertisements bearing the
infringing mark and all plates, molds, materials and other means of
making the same to the Court authorized to execute this judgment
for destruction.
(3) The defendant is hereby ordered to pay plaintiff the sum of
Two Million Pesos (P2,000,000.00) as moral damages and Half a
Million Pesos (P5,000,000.00) by way of exemplary damages.
(4) The defendant is further ordered to pay the plaintiff attorney's
fees in the amount of P250,000.00 plus costs to this suit. (p.
90, Rollo.)
Upon a motion for reconsideration filed by ABI, the above dispositive
part of the decision, was modified by the separate opinions of the
Special Sixth Division 1 so that it should read thus:
In the light of the foregoing analysis and under the plain language
of the applicable rule and principle on the matter, We find the
defendant Asia Brewery Incorporated GUILTY of infringement of
trademark and unfair competition. The decision of the trial court is
hereby REVERSED, and a new judgment entered in favor of the
plaintiff and against the defendant as follows:
(1) The defendant Asia Brewery Inc., its officers, agents, servants
and employees are hereby permanently enjoined and restrained
from manufacturing, putting up, selling, advertising, offering or
announcing for sale, or supplying Beer Pale Pilsen, or any similar
preparation, manufacture or beer in bottles and under labels
substantially identical with or like the said bottles and labels of
plaintiff San Miguel Corporation employed for that purpose, or
substantially identical with or like the bottles and labels now
employed by the defendant for that purpose, or in bottles or
under labels which are calculated to deceive purchasers and
consumers into the belief that the beer if the product of the
plaintiff or which will enable others to substitute, sell or palm off
the said beer of the defendant as and for the beer of the plaintiff-
complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered 2 to recall all
its products bearing the mark Beer Pale Pilsen from its retailers
and deliver these as well as all labels, signs, prints, packages,
wrappers, receptacles and advertisements bearing the infringing
mark and all plates, molds, materials and other means of making
the same to the Court authorized to execute this judgment for
destruction.
(3) The defendant is hereby ordered to pay plaintiff the sum of
Two Million Pesos (P2,000,000.00) as moral damages and Half a
Million Pesos (P500,000.00) by way of exemplary damages.
(4) The defendant is further ordered to pay the plaintiff attorney's
fees in the amount of P250,000.00 plus costs of this suit.
In due time, ABI appealed to this Court by a petition
for certiorari under Rule 45 of the Rules of Court. The lone issue in this
appeal is whether ABI infringes SMC's trademark: San Miguel Pale
Pilsen with Rectangular Hops and Malt Design, and thereby commits
unfair competition against the latter. It is a factual issue (Phil. Nut
Industry Inc. v. Standard Brands Inc., 65 SCRA 575) and as a general
rule, the findings of the Court of Appeals upon factual questions are
conclusive and ought not to be disturbed by us. However, there are
exceptions to this general rule, and they are:
(1) When the conclusion is grounded entirely on speculation,
surmises and conjectures;
(2) When the inference of the Court of Appeals from its findings of
fact is manifestly mistaken, absurd and impossible;
(3) Where there is grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the appellate court, in making its findings, went beyond
the issues of the case, and the same are contrary to the admissions
of both the appellant and the appellee;
(6) When the findings of said court are contrary to those of the
trial court;
(7) When the findings are without citation of specific evidence on
which they are based;
(8) When the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the
respondents; and
(9) When the findings of facts of the Court of Appeals are premised
on the absence of evidence and are contradicted on record.
(Reynolds Philippine Corporation vs. Court of Appeals, 169 SCRA
220, 223 citing, Mendoza vs. Court of Appeals, 156 SCRA 597;
Manlapaz vs. Court of Appeals, 147 SCRA 238; Sacay vs.
Sandiganbayan, 142 SCRA 593, 609; Guita vs. CA, 139 SCRA 576;
Casanayan vs. Court of Appeals, 198 SCRA 333, 336; also Apex
Investment and Financing Corp. vs. IAC, 166 SCRA 458 [citing
Tolentino vs. De Jesus, 56 SCRA 167; Carolina Industries, Inc. vs.
CMS Stock Brokerage, Inc., 97 SCRA 734; Manero vs. CA, 102 SCRA
817; and Moran, Jr. vs. CA, 133 SCRA 88].)
Under any of these exceptions, the Court has to review the evidence in
order to arrive at the correct findings based on the record (Roman
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Catholic Bishop of Malolos, Inc. vs. IAC, 191 SCRA 411, 420.) Where
findings of the Court of Appeals and trial court are contrary to each
other, the Supreme Court may scrutinize the evidence on record. (Cruz
vs. CA, 129 SCRA 222, 227.)
The present case is one of the exceptions because there is no
concurrence between the trial court and the Court of Appeals on the
lone factual issue of whether ABI, by manufacturing and selling its BEER
PALE PILSEN in amber colored steinie bottles of 320 ml. capacity with a
white painted rectangular label has committed trademark infringement
and unfair competition against SMC.
Infringement of trademark is a form of unfair competition (Clarke vs.
Manila Candy Co., 36 Phil. 100, 106). Sec. 22 of Republic Act No. 166,
otherwise known as the Trademark Law, defines what constitutes
infringement:
Sec. 22. Infringement, what constitutes. — Any person who shall
use, without the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of any registered mark or
trade-name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection
with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such
goods or services, or identity of such business; or reproduce,
counterfeit, copy or colorably imitate any such mark or trade-
name and apply such reproduction, counterfeit, copy, or colorable
imitation to labels, signs, prints, packages, wrappers, receptacles
or advertisements intended to be used upon or in connection with
such goods, business or services, shall be liable to a civil action by
the registrant for any or all of the remedies herein provided.
(Emphasis supplied.)
This definition implies that only registered trademarks, trade names
and service marks are protected against infringement or unauthorized
use by another or others. The use of someone else's registered
trademark, trade name or service mark is unauthorized, hence,
actionable, if it is done "without the consent of the registrant." (Ibid.)
The registered trademark of SMC for its pale pilsen beer is:
San Miguel Pale Pilsen With Rectangular Hops and Malt
Design. (Philippine Bureau of Patents, Trademarks and Technology
Transfer Trademark Certificate of Registration No. 36103, dated 23
Oct. 1986, (p. 174, Rollo.)
As described by the trial court in its decision (Page 177, Rollo):
. . . . a rectangular design [is] bordered by what appears to
be minute grains arranged in rows of three in which there appear
in each corner hop designs. At the top is a phrase written in small
print "Reg. Phil. Pat. Off." and at the bottom "Net Contents: 320
Ml." The dominant feature is the phrase "San Miguel" written
horizontally at the upper portion. Below are the words "Pale
Pilsen" written diagonally across the middle of the rectangular
design. In between is a coat of arms and the phrase "Expertly
Brewed." The "S" in "San" and the "M" of "Miguel," "P" of "Pale"
and "Pilsen" are written in Gothic letters with fine strokes of serifs,
the kind that first appeared in the 1780s in England and used for
printing German as distinguished from Roman and Italic. Below
"Pale Pilsen" is the statement "And Bottled by" (first line, "San
Miguel Brewery" (second line), and "Philippines" (third line). (p.
177, Rollo; Emphasis supplied.)
On the other hand, ABI's trademark, as described by the trial court,
consists of:
. . . a rectangular design bordered by what appear to
be buds of flowers with leaves. The dominant feature is "Beer"
written across the upper portion of the rectangular design. The
phrase "Pale Pilsen" appears immediately below in smaller block
letters. To the left is a hop design and to the right, written in small
prints, is the phrase "Net Contents 320 ml." Immediately below
"Pale Pilsen" is the statement written in three lines "Especially
brewed and bottled by" (first line), "Asia Brewery Incorporated"
(second line), and "Philippines" (third line), (p. 177, Rollo; Emphasis
supplied.)
Does ABI's BEER PALE PILSEN label or "design" infringe upon SMC's SAN
MIGUEL PALE PILSEN WITH RECTANGULAR MALT AND HOPS DESIGN?
The answer is "No."
Infringement is determined by the "test of dominancy" rather than by
differences or variations in the details of one trademark and of
another. The rule was formulated in Co Tiong Sa vs. Director of
Patents, 95 Phil. 1, 4 (1954); reiterated in Lim Hoa vs. Director of
Patents, 100 Phil. 214, 216-217 (1956), thus:
It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity
in size, form and color, while relevant, is not conclusive. If the
competing trademark contains the main or essential or dominant
features of another, and confusion and deception is likely to result,
infringement takes place. Duplication or imitation is not necessary;
nor it is necessary that the infringing label should suggest an effort
to imitate. [C. Neilman Brewing Co. vs. Independent Brewing Co.,
191 F., 489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180
Fed. 579]. The question at issue in cases of infringement of
trademarks is whether the use of the marks involved would be
likely to cause confusion or mistakes in the mind of the public or
deceive purchasers. (Auburn Rubber Corporation vs. Honover
Rubber Co., 107 F. 2d 588; . . . .) (Emphasis supplied.)
In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275, the test
was similarity or "resemblance between the two (trademarks) such as
would be likely to cause the one mark to be mistaken for the other. . . .
[But] this is not such similitude as amounts to identity."
In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA 575, the
court was more specific: the test is "similarity in the dominant features
of the trademarks."
What are the dominant features of the competing trademarks before
us?
There is hardly any dispute that the dominant feature of SMC's
trademark is the name of the product: SAN MIGUEL PALE PILSEN,
written in white Gothic letters with elaborate serifs at the beginning
and end of the letters "S" and "M" on an amber background across the
upper portion of the rectangular design.
On the other hand, the dominant feature of ABI's trademark is the
name: BEER PALE PILSEN, with the word "Beer" written in large amber
letters, larger than any of the letters found in the SMC label.
The trial court perceptively observed that the word "BEER" does not
appear in SMC's trademark, just as the words "SAN MIGUEL" do not
appear in ABI's trademark. Hence, there is absolutely no similarity in
the dominant features of both trademarks.
Neither in sound, spelling or appearance can BEER PALE PILSEN be said
to be confusingly similar to SAN MIGUEL PALE PILSEN. No one who
purchases BEER PALE PILSEN can possibly be deceived that it is SAN
MIGUEL PALE PILSEN. No evidence whatsoever was presented by SMC
proving otherwise.
Besides the dissimilarity in their names, the following other
dissimilarities in the trade dress or appearance of the competing
products abound:
(1) The SAN MIGUEL PALE PILSEN bottle has a slender tapered neck.
The BEER PALE PILSEN bottle has a fat, bulging neck.
(2) The words "pale pilsen" on SMC's label are printed in bold and laced
letters along a diagonal band, whereas the words "pale pilsen" on ABI's
bottle are half the size and printed in slender block letters on a
straight horizontal band. (See Exhibit "8-a".).
(3) The names of the manufacturers are prominently printed on their
respective bottles.
SAN MIGUEL PALE PILSEN is "Bottled by the San Miguel Brewery,
Philippines," whereas BEER PALE PILSEN is "Especially brewed and
bottled by Asia Brewery Incorporated, Philippines."
(4) On the back of ABI's bottle is printed in big, bold letters, under a
row of flower buds and leaves, its copyrighted slogan:
"BEER NA BEER!"
Whereas SMC's bottle carries no slogan.
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(5) The back of the SAN MIGUEL PALE PILSEN bottle carries the SMC
logo, whereas the BEER PALE PILSEN bottle has no logo.
(6) The SAN MIGUEL PALE PILSEN bottle cap is stamped with a coat of
arms and the words "San Miguel Brewery Philippines" encircling the
same.
The BEER PALE PILSEN bottle cap is stamped with the name "BEER" in
the center, surrounded by the words "Asia Brewery Incorporated
Philippines."
(7) Finally, there is a substantial price difference between BEER PALE
PILSEN (currently at P4.25 per bottle) and SAN MIGUEL PALE PILSEN
(currently at P7.00 per bottle). One who pays only P4.25 for a bottle of
beer cannot expect to receive San Miguel Pale Pilsen from the
storekeeper or bartender.
The fact that the words pale pilsen are part of ABI's trademark does not
constitute an infringement of SMC's trademark: SAN MIGUEL PALE
PILSEN, for "pale pilsen" are generic words descriptive of the color
("pale"), of a type of beer ("pilsen"), which is a light bohemian beer
with a strong hops flavor that originated in the City of Pilsen in
Czechoslovakia and became famous in the Middle Ages. (Webster's
Third New International Dictionary of the English Language,
Unabridged. Edited by Philip Babcock Gove. Springfield, Mass.: G & C
Merriam Co., [c] 1976, page 1716.) "Pilsen" is a "primarily
geographically descriptive word," (Sec. 4, subpar. [e] Republic Act No.
166, as inserted by Sec. 2 of R.A. No. 638) hence, non-registerable and
not appropriable by any beer manufacturer. The Trademark Law
provides:
Sec. 4. . . .. The owner of trade-mark, trade-name or service-mark
used to distinguish his goods, business or services from the goods,
business or services of others shall have the right to register the
same [on the principal register], unless it:
xxx xxx xxx
(e) Consists of a mark or trade-name which, when applied to or
used in connection with the goods, business or services of the
applicant is merely descriptive or deceptively misdescriptive of
them, or when applied to or used in connection with the goods,
business or services of the applicant is primarily geographically
descriptive or deceptively misdescriptive of them, or is primarily
merely a surname." (Emphasis supplied.)
The words "pale pilsen" may not be appropriated by SMC for its
exclusive use even if they are part of its registered trademark: SAN
MIGUEL PALE PILSEN, any more than such descriptive words as
"evaporated milk," "tomato ketchup," "cheddar cheese," "corn flakes"
and "cooking oil" may be appropriated by any single manufacturer of
these food products, for no other reason than that he was the first to
use them in his registered trademark. In Masso Hermanos, S.A. vs.
Director of Patents, 94 Phil. 136, 139 (1953), it was held that a dealer in
shoes cannot register "Leather Shoes" as his trademark because that
would be merely descriptive and it would be unjust to deprive other
dealers in leather shoes of the right to use the same words with
reference to their merchandise. No one may appropriate generic or
descriptive words. They belong to the public domain (Ong Ai Gui vs.
Director of Patents, 96 Phil. 673, 676 [1955]):
A word or a combination of words which is merely descriptive of
an article of trade, or of its composition, characteristics, or
qualities, cannot be appropriated and protected as a trademark to
the exclusion of its use by others. . . . inasmuch as all persons have
an equal right to produce and vend similar articles, they also have
the right to describe them properly and to use any appropriate
language or words for that purpose, and no person can
appropriate to himself exclusively any word or expression, properly
descriptive of the article, its qualities, ingredients or characteristics,
and thus limit other persons in the use of language appropriate to
the description of their manufactures, the right to the use of such
language being common to all. This rule excluding descriptive
terms has also been held to apply to trade-names. As to whether
words employed fall within this prohibition, it is said that the true
test is not whether they are exhaustively descriptive of the article
designated, but whether in themselves, and as they are commonly
used by those who understand their meaning, they are reasonably
indicative and descriptive of the thing intended. If they are thus
descriptive, and not arbitrary, they cannot be appropriated from
general use and become the exclusive property of anyone. (52 Am.
Jur. 542-543.)
. . . . Others may use the same or similar descriptive word in
connection with their own wares, provided they take proper steps
to prevent the public being deceived. (Richmond Remedies Co. vs.
Dr. Miles Medical Co., 16 E. [2d] 598.)
. . . . A descriptive word may be admittedly distinctive, especially if
the user is the first creator of the article. It will, however, be
denied protection, not because it lacks distinctiveness, but rather
because others are equally entitled to its use. (2 Callman. Unfair
Competition and Trademarks, pp. 869-870.)" (Emphasis supplied.)
The circumstance that the manufacturer of BEER PALE PILSEN, Asia
Brewery Incorporated, has printed its name all over the bottle of its
beer product: on the label, on the back of the bottle, as well as on the
bottle cap, disproves SMC's charge that ABI dishonestly and
fraudulently intends to palm off its BEER PALE PILSEN as SMC's
product. In view of the visible differences between the two products,
the Court believes it is quite unlikely that a customer of average
intelligence would mistake a bottle of BEER PALE PILSEN for SAN
MIGUEL PALE PILSEN.
The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is bottled
in amber-colored steinie bottles of 320 ml. capacity and is also
advertised in print, broadcast, and television media, does not
necessarily constitute unfair competition.
Unfair competition is the employment of deception or any other
means contrary to good faith by which a person shall pass off the
goods manufactured by him or in which he deals, or his business, or
services, for those of another who has already established goodwill for
his similar goods, business or services, or any acts calculated to
produce the same result. (Sec. 29, Republic Act No. 166, as amended.)
The law further enumerates the more common ways of committing
unfair competition, thus:
Sec. 29. . . .
In particular, and without in any way limiting the scope of unfair
competition, the following shall be deemed guilty of unfair
competition:
(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as
to the goods themselves or in the wrapping of the packages in
which they are contained, or the devices or words thereon, or in
any other feature of their appearance, which would be likely to
influence purchasers to believe that the goods offered are those of
a manufacturer or dealer other than the actual manufacturer or
dealer, or who otherwise clothes the goods with such appearance
as shall deceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent of any
vendor engaged in selling such goods with a like purpose.
(b) Any person who by any artifice, or device, or who employs any
other means calculated to induce the false belief that such person
is offering the services of another who has identified such services
in the mind of the public; or
(c) Any person who shall make any false statement in the course of
trade or who shall commit any other act contrary to good faith of a
nature calculated to discredit the goods, business or services of
another.
In this case, the question to be determined is whether ABI is using a
name or mark for its beer that has previously come to designate SMC's
beer, or whether ABI is passing off its BEER PALE PILSEN as SMC's SAN
MIGUEL PALE PILSEN.
. . ..The universal test question is whether the public is likely to be
deceived. Nothing less than conduct tending to pass off one man's
goods or business as that of another will constitute unfair
competition. Actual or probable deception and confusion on the
part of the customers by reason of defendant's practices must
always appear. (Shell Co., of the Philippines, Ltd. vs. Insular
Petroleum Refining Co. Ltd. et al., 120 Phil. 434, 439.)
The use of ABI of the steinie bottle, similar but not identical to the SAN
MIGUEL PALE PILSEN bottle, is not unlawful. As pointed out by ABI's
counsel, SMC did not invent but merely borrowed the steinie bottle
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from abroad and it claims neither patent nor trademark protection for
that bottle shape and design. (See rollo, page 55.) The Cerveza Especial
and the Efes Pale Pilsen use the "steinie" bottle. (See Exhibits 57-D, 57-
E.) The trial court found no infringement of SMC's bottle —
The court agrees with defendant that there is no infringement of
plaintiff's bottle, firstly, because according to plaintiff's witness
Deogracias Villadolid, it is a standard type of bottle called steinie,
and to witness Jose Antonio Garcia, it is not a San Miguel
Corporation design but a design originally developed in the United
States by the Glass Container Manufacturer's Institute and
therefore lacks exclusivity. Secondly, the shape was never
registered as a trademark. Exhibit "C" is not a registration of a beer
bottle design required under Rep. Act 165 but the registration of
the name and other marks of ownership stamped on containers as
required by Rep. Act 623. Thirdly, the neck of defendant's bottle is
much larger and has a distinct bulge in its uppermost part. (p.
186, Rollo.)
The petitioner's contention that bottle size, shape and color may not
be the exclusive property of any one beer manufacturer is well taken.
SMC's being the first to use the steinie bottle does not give SMC a
vested right to use it to the exclusion of everyone else. Being of
functional or common use, and not the exclusive invention of any one,
it is available to all who might need to use it within the industry.
Nobody can acquire any exclusive right to market articles supplying
simple human needs in containers or wrappers of the general form,
size and character commonly and immediately used in marketing such
articles (Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190, 194-195.)
. . . protection against imitation should be properly confined to
nonfunctional features. Even if purely functional elements are
slavishly copied, the resemblance will not support an action for
unfair competition, and the first user cannot claim secondary
meaning protection. Nor can the first user predicate his claim to
protection on the argument that his business was established in
reliance on any such unpatented nonfunctional feature, even "at
large expenditure of money." (Callman Unfair Competition,
Trademarks and Monopolies, Sec. 19.33 [4th Ed.].) (Petition for
Review, p. 28.)
ABI does not use SMC's steinie bottle. Neither did ABI copy it. ABI
makes its own steinie bottle which has a fat bulging neck to
differentiate it from SMC's bottle. The amber color is a functional
feature of the beer bottle. As pointed out by ABI, all bottled beer
produced in the Philippines is contained and sold in amber-colored
bottles because amber is the most effective color in preventing
transmission of light and provides the maximum protection to beer. As
was ruled in California Crushed Fruit Corporation vs. Taylor B. and
Candy Co., 38 F2d 885, a merchant cannot be enjoined from using a
type or color of bottle where the same has the useful purpose of
protecting the contents from the deleterious effects of light rays.
Moreover, no one may have a monopoly of any color. Not only beer,
but most medicines, whether in liquid or tablet form, are sold in
amber-colored bottles.
That the ABI bottle has a 320 ml. capacity is not due to a desire to
imitate SMC's bottle because that bottle capacity is the standard
prescribed under Metrication Circular No. 778, dated 4 December
1979, of the Department of Trade, Metric System Board.
With regard to the white label of both beer bottles, ABI explained that
it used the color white for its label because white presents the
strongest contrast to the amber color of ABI's bottle; it is also the most
economical to use on labels, and the easiest to "bake" in the furnace
(p. 16, TSN of September 20, 1988). No one can have a monopoly of
the color amber for bottles, nor of white for labels, nor of the
rectangular shape which is the usual configuration of labels. Needless
to say, the shape of the bottle and of the label is unimportant. What is
all important is the name of the product written on the label of the
bottle for that is how one beer may be distinguished form the others.
In Dy Buncio v. Tan Tiao Bok, 42 Phil. 190, 196-197, where two
competing tea products were both labelled as Formosan tea, both sold
in 5-ounce packages made of ordinary wrapping paper of conventional
color, both with labels containing designs drawn in green ink and
Chinese characters written in red ink, one label showing a double-
decked jar in the center, the other, a flower pot, this court found that
the resemblances between the designs were not sufficient to mislead
the ordinary intelligent buyer, hence, there was no unfair competition.
The Court held:
. . . . In order that there may be deception of the buying public in
the sense necessary to constitute unfair competition, it is
necessary to suppose a public accustomed to buy, and therefore to
some extent familiar with, the goods in question. The test of
fraudulent simulation is to be found in the likelihood of the
deception of persons in some measure acquainted with an
established design and desirous of purchasing the commodity with
which that design has been associated. The test is not found in the
deception, or possibility of the deception, of the person who
knows nothing about the design which has been counterfeited,
and who must be indifferent as between that and the other. The
simulation, in order to be objectionable, must be such as appears
likely to mislead the ordinarily intelligent buyer who has a need to
supply and is familiar with the article that he seeks to purchase.
The main thrust of SMC's complaint if not infringement of its
trademark, but unfair competition arising form the allegedly "confusing
similarity" in the general appearance or trade dress of ABI's BEER PALE
PILSEN beside SMC's SAN MIGUEL PALE PILSEN (p. 209, Rollo)
SMC claims that the "trade dress" of BEER PALE PILSEN is "confusingly
similar" to its SAN MIGUEL PALE PILSEN because both are bottled in
320 ml. steinie type, amber-colored bottles with white rectangular
labels.
However, when as in this case, the names of the competing products
are clearly different and their respective sources are prominently
printed on the label and on other parts of the bottle, mere similarity in
the shape and size of the container and label, does not constitute
unfair competition. The steinie bottle is a standard bottle for beer and
is universally used. SMC did not invent it nor patent it. The fact that
SMC's bottle is registered under R.A. No. 623 (as amended by RA 5700,
An Act to Regulate the Use of Duly Stamped or Marked Bottles, Boxes,
Casks, Kegs, Barrels and Other Similar Containers) simply prohibits
manufacturers of other foodstuffs from the unauthorized use of SMC's
bottles by refilling these with their products. It was not uncommon
then for products such as patis (fish sauce) and toyo (soy sauce) to be
sold in recycled SAN MIGUEL PALE PILSEN bottles. Registration of
SMC's beer bottles did not give SMC a patent on the steinie or on
bottles of similar size, shape or color.
Most containers are standardized because they are usually made by
the same manufacturer. Milk, whether in powdered or liquid form, is
sold in uniform tin cans. The same can be said of the standard ketchup
or vinegar bottle with its familiar elongated neck. Many other grocery
items such as coffee, mayonnaise, pickles and peanut butter are sold in
standard glass jars. The manufacturers of these foodstuffs have equal
right to use these standards tins, bottles and jars for their products.
Only their respective labels distinguish them from each other. Just as
no milk producer may sue the others for unfair competition because
they sell their milk in the same size and shape of milk can which he
uses, neither may SMC claim unfair competition arising from the fact
that ABI's BEER PALE PILSEN is sold, like SMC's SAN MIGUEL PALE
PILSEN in amber steinie bottles.
The record does not bear out SMC's apprehension that BEER PALE
PILSEN is being passed off as SAN MIGUEL PALE PILSEN. This is unlikely
to happen for consumers or buyers of beer generally order their beer
by brand. As pointed out by ABI's counsel, in supermarkets and tiendas,
beer is ordered by brand, and the customer surrenders his empty
replacement bottles or pays a deposit to guarantee the return of the
empties. If his empties are SAN MIGUEL PALE PILSEN, he will get SAN
MIGUEL PALE PILSEN as replacement. In sari-sari stores, beer is also
ordered from the tindera by brand. The same is true in restaurants,
pubs and beer gardens — beer is ordered from the waiters by brand.
(Op. cit. page 50.)
Considering further that SAN MIGUEL PALE PILSEN has virtually
monopolized the domestic beer market for the past hundred years,
those who have been drinking no other beer but SAN MIGUEL PALE
PILSEN these many years certainly know their beer too well to be
deceived by a newcomer in the market. If they gravitate to ABI's
cheaper beer, it will not be because they are confused or deceived, but
because they find the competing product to their taste.
4
TRADEMARK CASES_FULL TEXT
Our decision in this case will not diminish our ruling in "Del Monte
Corporation vs. Court of Appeals and Sunshine Sauce Manufacturing
Industries," 181 SCRA 410, 419, 3 that:
. . . to determine whether a trademark has been infringed, we
must consider the mark as a whole and not as dissected. If the
buyer is deceived, it is attributable to the marks as a totality, not
usually to any part of it.
That ruling may not apply to all kinds of products. The Court itself
cautioned that in resolving cases of infringement and unfair
competition, the courts should "take into consideration several factors
which would affect its conclusion, to wit: the age, training and
education of the usual purchaser, the nature and cost of the article,
whether the article is bought for immediate consumption and also the
conditions under which it is usually purchased" (181 SCRA 410, 418-
419).
The Del Monte case involved catsup, a common household item which
is bought off the store shelves by housewives and house help who, if
they are illiterate and cannot identify the product by name or brand,
would very likely identify it by mere recollection of its appearance.
Since the competitor, Sunshine Sauce Mfg. Industries, not only used
recycled Del Monte bottles for its catsup (despite the warning
embossed on the bottles: "Del Monte Corporation. Not to be refilled.")
but also used labels which were "a colorable imitation" of Del Monte's
label, we held that there was infringement of Del Monte's trademark
and unfair competition by Sunshine.
Our ruling in Del Monte would not apply to beer which is not usually
picked from a store shelf but ordered by brand by the beer drinker
himself from the storekeeper or waiter in a pub or restaurant.
Moreover, SMC's brand or trademark: "SAN MIGUEL PALE PILSEN" is
not infringed by ABI's mark: "BEER NA BEER" or "BEER PALE PILSEN."
ABI makes its own bottle with a bulging neck to differentiate it from
SMC's bottle, and prints ABI's name in three (3) places on said bottle
(front, back and bottle cap) to prove that it has no intention to pass of
its "BEER" as "SAN MIGUEL."
There is no confusing similarity between the competing beers for the
name of one is "SAN MIGUEL" while the competitor is plain "BEER" and
the points of dissimilarity between the two outnumber their points of
similarity.
Petitioner ABI has neither infringed SMC's trademark nor committed
unfair competition with the latter's SAN MIGUEL PALE PILSEN product.
While its BEER PALE PILSEN admittedly competes with the latter in the
open market, that competition is neither unfair nor fraudulent. Hence,
we must deny SMC's prayer to suppress it.
WHEREFORE, finding the petition for review meritorious, the same is
hereby granted. The decision and resolution of the Court of Appeals in
CA-G.R. CV No. 28104 are hereby set aside and that of the trial court is
REINSTATED and AFFIRMED. Costs against the private respondent.
SO ORDERED.
G.R. No. 143993 August 18, 2004
MCDONALD'S CORPORATION and MCGEORGE FOOD INDUSTRIES,
INC., petitioners, vs. L.C. BIG MAK BURGER, INC., FRANCIS B. DY,
EDNA A. DY, RENE B. DY, WILLIAM B. DY, JESUS AYCARDO, ARACELI
AYCARDO, and GRACE HUERTO, respondents.
CARPIO, J.:
The Case
This is a petition for review1 of the Decision dated 26 November 1999
of the Court of Appeals2 finding respondent L.C. Big Mak Burger, Inc.
not liable for trademark infringement and unfair competition and
ordering petitioners to pay respondents P1,900,000 in damages, and of
its Resolution dated 11 July 2000 denying reconsideration. The Court of
Appeals' Decision reversed the 5 September 1994 Decision3 of the
Regional Trial Court of Makati, Branch 137, finding respondent L.C. Big
Mak Burger, Inc. liable for trademark infringement and unfair
competition.
The Facts
Petitioner McDonald's Corporation ("McDonald's") is a corporation
organized under the laws of Delaware, United States. McDonald's
operates, by itself or through its franchisees, a global chain of fast-food
restaurants. McDonald's4 owns a family of marks5 including the "Big
Mac" mark for its "double-decker hamburger sandwich."6McDonald's
registered this trademark with the United States Trademark Registry on
16 October 1979.7 Based on this Home Registration, McDonald's
applied for the registration of the same mark in the Principal Register
of the then Philippine Bureau of Patents, Trademarks and Technology
("PBPTT"), now the Intellectual Property Office
("IPO"). Pending approval of its application, McDonald's introduced its
"Big Mac" hamburger sandwiches in the Philippine market in
September 1981. On 18 July 1985, the PBPTT allowed registration
of the "Big Mac" mark in the Principal Register based on its Home
Registration in the United States.
Like its other marks, McDonald's displays the "Big Mac" mark in
items8 and paraphernalia9 in its restaurants, and in its outdoor and
indoor signages. From 1982 to 1990, McDonald's spent P10.5 million in
advertisement for "Big Mac" hamburger sandwiches alone.10
Petitioner McGeorge Food Industries ("petitioner McGeorge"), a
domestic corporation, is McDonald's Philippine franchisee.11
Respondent L.C. Big Mak Burger, Inc. ("respondent corporation") is a
domestic corporation which operates fast-food outlets and snack vans
in Metro Manila and nearby provinces.12 Respondent corporation's
menu includes hamburger sandwiches and other food
items.13 Respondents Francis B. Dy, Edna A. Dy, Rene B. Dy, William B.
Dy, Jesus Aycardo, Araceli Aycardo, and Grace Huerto ("private
respondents") are the incorporators, stockholders and directors of
respondent corporation.14
On 21 October 1988, respondent corporation applied with the PBPTT
for the registration of the "Big Mak" mark for its hamburger
sandwiches. McDonald's opposed respondent corporation's application
on the ground that "Big Mak" was a colorable imitation of its registered
"Big Mac" mark for the same food products. McDonald's also informed
respondent Francis Dy ("respondent Dy"), the chairman of the Board of
Directors of respondent corporation, of its exclusive right to the "Big
Mac" mark and requested him to desist from using the "Big Mac" mark
or any similar mark.
Having received no reply from respondent Dy, petitioners on 6 June
1990 sued respondents in the Regional Trial Court of Makati, Branch
137 ("RTC"), for trademark infringement and unfair competition. In its
Order of 11 July 1990, the RTC issued a temporary restraining order
("TRO") against respondents enjoining them from using the "Big Mak"
mark in the operation of their business in the National Capital
Region.15 On 16 August 1990, the RTC issued a writ of preliminary
injunction replacing the TRO.16
In their Answer, respondents admitted that they have been using the
name "Big Mak Burger" for their fast-food business. Respondents
claimed, however, that McDonald's does not have an exclusive right to
the "Big Mac" mark or to any other similar mark. Respondents point
out that the Isaiyas Group of Corporations ("Isaiyas Group") registered
the same mark for hamburger sandwiches with the PBPTT on 31 March
1979. One Rodolfo Topacio ("Topacio") similarly registered the same
mark on 24 June 1983, prior to McDonald's registration on 18 July
1985. Alternatively, respondents claimed that they are not liable for
trademark infringement or for unfair competition, as the "Big Mak"
mark they sought to register does not constitute a colorable imitation
of the "Big Mac" mark. Respondents asserted that they did not
fraudulently pass off their hamburger sandwiches as those of
petitioners' Big Mac hamburgers.17 Respondents sought damages in
their counterclaim.
In their Reply, petitioners denied respondents' claim that McDonald's is
not the exclusive owner of the "Big Mac" mark. Petitioners asserted
that while the Isaiyas Group and Topacio did register the "Big Mac"
mark ahead of McDonald's, the Isaiyas Group did so only in the
Supplemental Register of the PBPTT and such registration does not
provide any protection. McDonald's disclosed that it
had acquired Topacio's rights to his registration in a Deed of
Assignment dated 18 May 1981.18
The Trial Court's Ruling
On 5 September 1994, the RTC rendered judgment ("RTC Decision")
finding respondent corporation liable for trademark infringement and
unfair competition. However, the RTC dismissed the complaint against
5
TRADEMARK CASES_FULL TEXT
private respondents and the counterclaim against petitioners for lack
of merit and insufficiency of evidence. The RTC held:
Undeniably, the mark "B[ig] M[ac]" is a registered trademark for
plaintiff McDonald's, and as such, it is entitled [to] protection
against infringement.
xxxx
There exist some distinctions between the names "B[ig] M[ac]" and
"B[ig] M[ak]" as appearing in the respective signages, wrappers
and containers of the food products of the parties. But
infringement goes beyond the physical features of the questioned
name and the original name. There are still other factors to be
considered.
xxxx
Significantly, the contending parties are both in the business of
fast-food chains and restaurants. An average person who is hungry
and wants to eat a hamburger sandwich may not be discriminating
enough to look for a McDonald's restaurant and buy a "B[ig]
M[ac]" hamburger. Once he sees a stall selling hamburger
sandwich, in all likelihood, he will dip into his pocket and order a
"B[ig] M[ak]" hamburger sandwich. Plaintiff McDonald's fast-food
chain has attained wide popularity and acceptance by the
consuming public so much so that its air-conditioned food outlets
and restaurants will perhaps not be mistaken by many to be the
same as defendant corporation's mobile snack vans located along
busy streets or highways. But the thing is that what is being sold
by both contending parties is a food item – a hamburger sandwich
which is for immediate consumption, so that a buyer may easily be
confused or deceived into thinking that the "B[ig] M[ak]"
hamburger sandwich he bought is a food-product of plaintiff
McDonald's, or a subsidiary or allied outlet thereof. Surely,
defendant corporation has its own secret ingredients to make its
hamburger sandwiches as palatable and as tasty as the other
brands in the market, considering the keen competition among
mushrooming hamburger stands and multinational fast-food
chains and restaurants. Hence, the trademark "B[ig] M[ac]" has
been infringed by defendant corporation when it used the name
"B[ig] M[ak]" in its signages, wrappers, and containers in
connection with its food business. Xxxx
Did the same acts of defendants in using the name "B[ig] M[ak]" as
a trademark or tradename in their signages, or in causing the
name "B[ig] M[ak]" to be printed on the wrappers and containers
of their food products also constitute an act of unfair competition
under Section 29 of the Trademark Law?
The answer is in the affirmative. Xxxx
The xxx provision of the law concerning unfair competition is
broader and more inclusive than the law concerning the
infringement of trademark, which is of more limited range, but
within its narrower range recognizes a more exclusive right derived
by the adoption and registration of the trademark by the person
whose goods or services are first associated therewith.
xxx Notwithstanding the distinction between an action for
trademark infringement and an action for unfair competition,
however, the law extends substantially the same relief to the
injured party for both cases. (See Sections 23 and 29 of Republic
Act No. 166)
Any conduct may be said to constitute unfair competition if the
effect is to pass off on the public the goods of one man as the
goods of another. The choice of "B[ig] M[ak]" as tradename by
defendant corporation is not merely for sentimental reasons but
was clearly made to take advantage of the reputation, popularity
and the established goodwill of plaintiff McDonald's. For, as stated
in Section 29, a person is guilty of unfair competition who in selling
his goods shall give them the general appearance, of goods of
another manufacturer or dealer, either as to the goods themselves
or in the wrapping of the packages in which they are contained, or
the devices or words thereon, or in any other feature of their
appearance, which would likely influence purchasers to believe
that the goods offered are those of a manufacturer or dealer other
than the actual manufacturer or dealer. Thus, plaintiffs have
established their valid cause of action against the defendants for
trademark infringement and unfair competition and for damages.19
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of plaintiffs
McDonald's Corporation and McGeorge Food Industries, Inc. and
against defendant L.C. Big Mak Burger, Inc., as follows:
1. The writ of preliminary injunction issued in this case on [16
August 1990] is made permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay
plaintiffs actual damages in the amount ofP400,000.00, exemplary
damages in the amount of P100,000.00, and attorney's fees and
expenses of litigation in the amount of P100,000.00;
3. The complaint against defendants Francis B. Dy, Edna A. Dy,
Rene B. Dy, Wiliam B. Dy, Jesus Aycardo, Araceli Aycardo and
Grace Huerto, as well as all counter-claims, are dismissed for lack
of merit as well as for insufficiency of evidence.20
Respondents appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered judgment
("Court of Appeals' Decision") reversing the RTC Decision and ordering
McDonald's to pay respondents P1,600,000 as actual and
compensatory damages and P300,000 as moral damages. The Court of
Appeals held:
Plaintiffs-appellees in the instant case would like to impress on this
Court that the use of defendants-appellants of its corporate name
– the whole "L.C. B[ig] M[ak] B[urger], I[nc]." which appears on
their food packages, signages and advertisements is an
infringement of their trademark "B[ig] M[ac]" which they use to
identify [their] double decker sandwich, sold in a Styrofoam box
packaging material with the McDonald's logo of umbrella "M"
stamped thereon, together with the printed mark in red bl[o]ck
capital letters, the words being separated by a single space.
Specifically, plaintiffs-appellees argue that defendants-appellants'
use of their corporate name is a colorable imitation of their
trademark "Big Mac".
xxxx
To Our mind, however, this Court is fully convinced that no
colorable imitation exists. As the definition dictates, it is
not sufficient that a similarity exists in both names, but that more
importantly, the over-all presentation, or in their essential,
substantive and distinctive parts is such as would likely MISLEAD or
CONFUSE persons in the ordinary course of purchasing the genuine
article. A careful comparison of the way the trademark "B[ig]
M[ac]" is being used by plaintiffs-appellees and corporate name
L.C. Big Mak Burger, Inc. by defendants-appellants, would
readily reveal that no confusion could take place, or that the
ordinary purchasers would be misled by it. As pointed out by
defendants-appellants, the plaintiffs-appellees' trademark is used
to designate only one product, a double decker sandwich sold in a
Styrofoam box with the "McDonalds" logo. On the other
hand, what the defendants-appellants corporation is using is not a
trademark for its food product but a business or corporate name.
They use the business name "L.C. Big Mak Burger, Inc." in their
restaurant business which serves diversified food items such as
siopao, noodles, pizza, and sandwiches such as hotdog, ham, fish
burger and hamburger. Secondly, defendants-appellants'
corporate or business name appearing in the food packages and
signages are written in silhouette red-orange letters with the "b"
and "m" in upper case letters. Above the words "Big Mak" are the
upper case letter "L.C.". Below the words "Big Mak" are the words
"Burger, Inc." spelled out in upper case letters. Furthermore, said
corporate or business name appearing in such food packages and
signages is always accompanied by the company mascot, a young
chubby boy named Maky who wears a red T-shirt with the upper
case "m" appearing thereinand a blue lower garment. Finally, the
defendants-appellants' food packages are made of plastic material.
Xxxx
xxx [I]t is readily apparent to the naked eye that there appears a
vast difference in the appearance of the product and
the manner that the tradename "Big Mak" is being used and
presented to the public. As earlier noted, there are glaring
dissimilarities between plaintiffs-appellees' trademark and
defendants-appellants' corporate name. Plaintiffs-appellees'
6
TRADEMARK CASES_FULL TEXT
product carrying the trademark "B[ig] M[ac]" is a double decker
sandwich (depicted in the tray mat containing photographs of the
various food products xxx sold in a Styrofoam box with the
"McDonald's" logo and trademark in red, bl[o]ck capital letters
printed thereon xxx at a price which is more expensive than the
defendants-appellants' comparable food products. In order to buy
a "Big Mac", a customer needs to visit an air-conditioned
"McDonald's" restaurant usually located in a nearby commercial
center, advertised and identified by its logo - the umbrella "M",
and its mascot – "Ronald McDonald". A typical McDonald's
restaurant boasts of a playground for kids, a second floor to
accommodate additional customers, a drive-thru to allow
customers with cars to make orders without alighting from their
vehicles, the interiors of the building are well-lighted, distinctly
decorated and painted with pastel colors xxx. In buying a "B[ig]
M[ac]", it is necessary to specify it by its trademark. Thus, a
customer needs to look for a "McDonald's" and enter it first before
he can find a hamburger sandwich which carry the mark "Big
Mac". On the other hand,defendants-appellants sell their goods
through snack vans xxxx
Anent the allegation that defendants-appellants are guilty of unfair
competition, We likewise find the same untenable.
Unfair competition is defined as "the employment of deception
or any other means contrary to good faith by which a
person shall pass off the goods manufactured by him or in which
he deals, or his business, or service, for those of another who has
already established good will for his similar good, business or
services, or any acts calculated to produce the same result" (Sec.
29, Rep. Act No. 166, as amended).
To constitute unfair competition therefore it
must necessarily follow that there was malice and that the entity
concerned was in bad faith.
In the case at bar, We find no sufficient evidence adduced by
plaintiffs-appellees that defendants-appellants deliberately tried
to pass off the goods manufactured by them for those of plaintiffs-
appellees. The mere suspected similarity in the sound of the
defendants-appellants' corporate name with the plaintiffs-
appellees' trademark is not sufficient evidence to conclude unfair
competition. Defendants-appellants explained that the name
"M[ak]" in their corporate name was derived from both the first
names of the mother and father of defendant Francis Dy, whose
names are Maxima and Kimsoy. With this explanation, it is up to
the plaintiffs-appellees to prove bad faith on the part
of defendants-appellants. It is a settled rule that the law always
presumes good faith such that any person who seeks to be
awarded damages due to acts of another has the burden
of proving that the latter acted in bad faith or with ill motive. 21
Petitioners sought reconsideration of the Court of Appeals' Decision
but the appellate court denied their motion in its Resolution of 11 July
2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN FINDING THAT
RESPONDENTS' CORPORATE NAME "L.C. BIG MAK BURGER,
INC." IS NOT A COLORABLE IMITATION OF THE MCDONALD'S
TRADEMARK "BIG MAC", SUCH COLORABLE IMITATION BEING
AN ELEMENT OF TRADEMARK INFRINGEMENT.
A. Respondents use the words "Big Mak" as trademark for
their products and not merely as their business or
corporate name.
B. As a trademark, respondents' "Big Mak" is undeniably
and unquestionably similar to petitioners' "Big Mac"
trademark based on the dominancy test and the idem
sonans test resulting inexorably in confusion on the part of
the consuming public.
II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER
THE INHERENT SIMILARITY BETWEEN THE MARK "BIG MAK"
AND THE WORD MARK "BIG MAC" AS AN INDICATION OF
RESPONDENTS' INTENT TO DECEIVE OR DEFRAUD
FOR PURPOSES OF ESTABLISHING UNFAIR COMPETITION.22
Petitioners pray that we set aside the Court of Appeals' Decision and
reinstate the RTC Decision.
In their Comment to the petition, respondents question the propriety
of this petition as it allegedly raises only questions of fact. On the
merits, respondents contend that the Court of Appeals committed no
reversible error in finding them not liable for trademark infringement
and unfair competition and in ordering petitioners to pay damages.
The Issues
The issues are:
1. Procedurally, whether the questions raised in this petition are
proper for a petition for review under Rule 45.
2. On the merits, (a) whether respondents used the words "Big Mak"
not only as part of the corporate name "L.C. Big Mak Burger, Inc." but
also as a trademark for their hamburger products, and (b) whether
respondent corporation is liable for trademark infringement and unfair
competition.23
The Court's Ruling
The petition has merit.
On Whether the Questions Raised in the Petition are Proper for a
Petition for Review
A party intending to appeal from a judgment of the Court of Appeals
may file with this Court a petition for review under Section 1 of Rule 45
("Section 1")24 raising only questions of law. A question of law exists
when the doubt or difference arises on what the law is on a certain
state of facts. There is a question of fact when the doubt or difference
arises on the truth or falsity of the alleged facts. 25
Here, petitioners raise questions of fact and law in assailing the Court
of Appeals' findings on respondent corporation's non-liability for
trademark infringement and unfair competition. Ordinarily, the Court
can deny due course to such a petition. In view, however, of the
contradictory findings of fact of the RTC and Court of Appeals, the
Court opts to accept the petition, this being one of the recognized
exceptions to Section 1.26 We took a similar course of action in Asia
Brewery, Inc. v. Court of Appeals27 which also involved a suit for
trademark infringement and unfair competition in which the trial court
and the Court of Appeals arrived at conflicting findings.
On the Manner Respondents Used "Big Mak" in their Business
Petitioners contend that the Court of Appeals erred in ruling that the
corporate name "L.C. Big Mak Burger, Inc." appears in the packaging
for respondents' hamburger products and not the words "Big Mak"
only.
The contention has merit.
The evidence presented during the hearings on petitioners' motion for
the issuance of a writ of preliminary injunction shows that the plastic
wrappings and plastic bags used by respondents for their hamburger
sandwiches bore the words "Big Mak." The other descriptive words
"burger" and "100% pure beef" were set in smaller type, along with the
locations of branches.28 Respondents' cash invoices simply refer to their
hamburger sandwiches as "Big Mak."29It is respondents' snack vans
that carry the words "L.C. Big Mak Burger, Inc."30
It was only during the trial that respondents presented in evidence the
plastic wrappers and bags for their hamburger sandwiches relied on by
the Court of Appeals.31 Respondents' plastic wrappers and bags were
identical with those petitioners presented during the hearings for the
injunctive writ except that the letters "L.C." and the words "Burger,
Inc." in respondents' evidence were added above and below the words
"Big Mak," respectively. Since petitioners' complaint was based on facts
existing before and during the hearings on the injunctive writ, the facts
established during those hearings are the proper factual bases for the
disposition of the issues raised in this petition.
On the Issue of Trademark Infringement
7
TRADEMARK CASES_FULL TEXT
Section 22 ("Section 22) of Republic Act No. 166, as amended ("RA
166"), the law applicable to this case,32 defines trademark infringement
as follows:
Infringement, what constitutes. — Any person who [1] shall use,
without the consent of the registrant, anyreproduction,
counterfeit, copy or colorable imitation of any registered mark or
trade-name in connection withthe sale, offering for sale, or
advertising of any goods, business or services on or in connection
with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such
goods or services, or identity of such business; or [2] reproduce,
counterfeit, copy, or colorably imitate any such mark or trade-
name and apply such reproduction, counterfeit, copy, or colorable
imitation to labels, signs, prints, packages, wrappers, receptacles
or advertisements intended to be used upon or in connection
with such goods, business or services, shall be liable to a civil
action by the registrant for any or all of the
remedies herein provided.33
Petitioners base their cause of action under the first part of Section
22, i.e. respondents allegedly used, without petitioners' consent, a
colorable imitation of the "Big Mac" mark in advertising and selling
respondents' hamburger sandwiches. This likely caused confusion in
the mind of the purchasing public on the source of the hamburgers or
the identity of the business.
To establish trademark infringement, the following elements must be
shown: (1) the validity of plaintiff's mark; (2) the plaintiff's ownership
of the mark; and (3) the use of the mark or its colorable imitation by
the alleged infringer results in "likelihood of confusion."34 Of these, it is
the element of likelihood of confusion that is the gravamen of
trademark infringement.35
On the Validity of the "Big Mac"Mark and McDonald's Ownership of
such Mark
A mark is valid if it is "distinctive" and thus not barred from registration
under Section 436 of RA 166 ("Section 4"). However, once registered,
not only the mark's validity but also the registrant's ownership of the
mark is prima facie presumed.37
Respondents contend that of the two words in the "Big Mac" mark, it is
only the word "Mac" that is valid because the word "Big" is generic and
descriptive (proscribed under Section 4[e]), and thus "incapable of
exclusive appropriation."38
The contention has no merit. The "Big Mac" mark, which should be
treated in its entirety and not dissected word for word,39 is neither
generic nor descriptive. Generic marks are commonly used as the name
or description of a kind ofgoods,40 such as "Lite" for beer41 or
"Chocolate Fudge" for chocolate soda drink.42 Descriptive marks, on the
other hand, convey the characteristics, functions, qualities or
ingredients of a product to one who has never seen it or does not know
it exists,43 such as "Arthriticare" for arthritis medication.44 On the
contrary, "Big Mac" falls under theclass of fanciful or arbitrary marks as
it bears no logical relation to the actual characteristics of the product it
represents.45 As such, it is highly distinctive and thus valid. Significantly,
the trademark "Little Debbie" for snack cakes was found arbitrary or
fanciful.46
The Court also finds that petitioners have duly established McDonald's
exclusive ownership of the "Big Mac" mark. Although Topacio and the
Isaiyas Group registered the "Big Mac" mark ahead of McDonald's,
Topacio, as petitioners disclosed, had already assigned his rights to
McDonald's. The Isaiyas Group, on the other hand, registered its
trademark only in the Supplemental Register. A mark which is not
registered in the Principal Register, and thus not distinctive, has no real
protection.47 Indeed, we have held that registration in the
Supplemental Register is not even a prima facie evidence of the validity
of the registrant's exclusive right to use the mark on the goods
specified in the certificate.48
On Types of Confusion
Section 22 covers two types of confusion arising from the use of similar
or colorable imitation marks, namely, confusion of goods (product
confusion) and confusion of business (source or origin confusion). In
Sterling Products International, Incorporated v. Farbenfabriken Bayer
Aktiengesellschaft, et al.,49 the Court distinguished these two types of
confusion, thus:
[Rudolf] Callman notes two types of confusion. The first is
the confusion of goods "in which event the ordinarily
prudent purchaser would be induced to purchase one
product in the belief that he was purchasing the other." xxx
The other is the confusion of business: "Here though the
goods of the parties are different, the defendant's product
is such as might reasonably be assumed to originate with
the plaintiff, and the public would then be deceived either
into that belief or into the belief that there is some
connection between the plaintiff and defendant which, in
fact, does not exist."
Under Act No. 666,50 the first trademark law, infringement was limited
to confusion of goods only, when the infringing mark is used on "goods
of a similar kind."51 Thus, no relief was afforded to the party whose
registered mark or its colorable imitation is used on different although
related goods. To remedy this situation, Congress enacted RA 166 on
20 June 1947. In defining trademark infringement, Section 22 of RA 166
deleted the requirement in question and expanded its scope to include
such use of the mark or its colorable imitation that is likely to result in
confusion on "the source or origin of such goods or services, or identity
of such business."52 Thus, while there is confusion of goods when the
products are competing, confusion of business exists when the
products are non-competing but related enough to produce confusion
of affiliation.53
On Whether Confusion of Goods and Confusion of Business are
Applicable
Petitioners claim that respondents' use of the "Big Mak" mark on
respondents' hamburgers results in confusion of goods,
particularly with respect to petitioners' hamburgers labeled "Big
Mac." Thus, petitioners alleged in their complaint:
1.15. Defendants have unduly prejudiced and clearly
infringed upon the property rights of plaintiffs in the
McDonald's Marks, particularly the mark "B[ig]
M[ac]". Defendants' unauthorized acts are likely, and
calculated, to confuse, mislead or deceive the public into
believing that the products and services offered by
defendant Big Mak Burger, and the business it is engaged in,
are approved and sponsored by, or affiliated with,
plaintiffs.54 (Emphasis supplied)
Since respondents used the "Big Mak" mark on the same
goods, i.e. hamburger sandwiches, that petitioners' "Big Mac" mark is
used, trademark infringement through confusion of goods is a proper
issue in this case.
Petitioners also claim that respondents' use of the "Big Mak" mark in
the sale of hamburgers, the same business that petitioners are
engaged in, results in confusion of business. Petitioners alleged in their
complaint:
1.10. For some period of time, and without the consent of plaintiff
McDonald's nor its licensee/franchisee, plaintiff McGeorge, and in
clear violation of plaintiffs' exclusive right to use and/or
appropriate the McDonald's marks, defendant Big Mak Burger
acting through individual defendants, has been operating "Big Mak
Burger", a fast food restaurant business dealing in the sale of
hamburger and cheeseburger sandwiches, french fries and other
food products, and has caused to be printed on the wrapper of
defendant's food products and incorporated in its signages the
name "Big Mak Burger", which is confusingly similar to and/or is a
colorable imitation of the plaintiff McDonald's mark "B[ig] M[ac]",
xxx. Defendant Big Mak Burger has thus unjustly created the
impression that its business is approved and sponsored by, or
affiliated with, plaintiffs.xxxx
2.2 As a consequence of the acts committed by defendants, which
unduly prejudice and infringe upon the property rights of plaintiffs
McDonald's and McGeorge as the real owner and rightful
proprietor, and the licensee/franchisee, respectively, of the
McDonald's marks, and which are likely to have caused confusion
or deceived the public as to the true source, sponsorship or
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TRADEMARK CASES_FULL TEXT
affiliation of defendants' food products and restaurant business,
plaintiffs have suffered and continue to suffer actual damages in
the form of injury to their business reputation and goodwill, and
of the dilution of the distinctive quality of the McDonald's
marks, in particular, the mark "B[ig] M[ac]".55 (Emphasis supplied)
Respondents admit that their business includes selling hamburger
sandwiches, the same food product that petitioners sell using the "Big
Mac" mark. Thus, trademark infringement through confusion of
business is also a proper issue in this case.
Respondents assert that their "Big Mak" hamburgers cater mainly to
the low-income group while petitioners' "Big Mac" hamburgers cater
to the middle and upper income groups. Even if this is true, the
likelihood of confusion of business remains, since the low-income
group might be led to believe that the "Big Mak" hamburgers are the
low-end hamburgers marketed by petitioners. After all, petitioners
have the exclusive right to use the "Big Mac" mark. On the other
hand, respondents would benefit by associating their low-end
hamburgers, through the use of the "Big Mak" mark, with petitioners'
high-end "Big Mac" hamburgers, leading to likelihood of confusion in
the identity of business.
Respondents further claim that petitioners use the "Big Mac" mark
only on petitioners' double-decker hamburgers, while respondents use
the "Big Mak" mark on hamburgers and other products like siopao,
noodles and pizza. Respondents also point out that petitioners sell
their Big Mac double-deckers in a styrofoam box with the
"McDonald's" logo and trademark in red, block letters at a price more
expensive than the hamburgers of respondents. In contrast,
respondents sell their Big Mak hamburgers in plastic wrappers and
plastic bags. Respondents further point out that petitioners'
restaurants are air-conditioned buildings with drive-thru service,
compared to respondents' mobile vans.
These and other factors respondents cite cannot negate the
undisputed fact that respondents use their "Big Mak" mark on
hamburgers, the same food product that petitioners' sell with the use
of their registered mark "Big Mac." Whether a hamburger is single,
double or triple-decker, and whether wrapped in plastic or styrofoam,
it remains the same hamburger food product. Even respondents' use of
the "Big Mak" mark on non-hamburger food products cannot excuse
their infringement of petitioners' registered mark, otherwise registered
marks will lose their protection under the law.
The registered trademark owner may use his mark on the same or
similar products, in different segments of the market, and at different
price levels depending on variations of the products for specific
segments of the market. The Court has recognized that the registered
trademark owner enjoys protection in product and market areas that
are the normal potential expansion of his business. Thus, the Court
has declared:
Modern law recognizes that the protection to which the owner of
a trademark is entitled is not limited to guarding his goods or
business from actual market competition with identical or similar
products of the parties, but extends to all cases in which the use by
a junior appropriator of a trade-mark or trade-name is likely to
lead to a confusion of source, as where prospective purchasers
would be misled into thinking that the complaining party has
extended his business into the field (see 148 ALR 56 et seq; 53 Am
Jur. 576) or is in any way connected with the activities of the
infringer; or when it forestalls the normal potential expansion of
his business (v. 148 ALR, 77, 84; 52 Am. Jur. 576, 577).56 (Emphasis
supplied)
On Whether Respondents' Use of the "Big Mak" Mark Results in
Likelihood of Confusion
In determining likelihood of confusion, jurisprudence has developed
two tests, the dominancy test and the holistic test.57 The dominancy
test focuses on the similarity of the prevalent features of the
competing trademarks that might cause confusion. In contrast, the
holistic test requires the court to consider the entirety of the marks as
applied to the products, including the labels and packaging,
in determining confusing similarity.
The Court of Appeals, in finding that there is no likelihood of confusion
that could arise in the use of respondents' "Big Mak" mark on
hamburgers, relied on the holistic test. Thus, the Court of Appeals ruled
that "it is not sufficientthat a similarity exists in both name(s), but
that more importantly, the overall presentation, or in their essential,
substantive and distinctive parts is such as would likely MISLEAD or
CONFUSE persons in the ordinary course of purchasing the genuine
article." The holistic test considers the two marks in their entirety, as
they appear on the goods with their labels and packaging. It is not
enough to consider their words and compare the spelling and
pronunciation of the words.58
Respondents now vigorously argue that the Court of Appeals'
application of the holistic test to this case is correct and in accord with
prevailing jurisprudence.
This Court, however, has relied on the dominancy test rather than the
holistic test. The dominancy test considers the dominant features in
the competing marks in determining whether they are confusingly
similar. Under the dominancy test, courts give greater weight to the
similarity of the appearance of the product arising from the adoption
of the dominant features of the registered mark, disregarding
minor differences.59 Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little
weight to factors like prices, quality, sales outlets and market
segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,60 the Court
ruled:
xxx It has been consistently held that the question of infringement
of a trademark is to be determined by the test of dominancy.
Similarity in size, form and color, while relevant, is not
conclusive. If the competing trademark contains the main or
essential or dominant features of another, and confusion and
deception is likely to result, infringement takes place. Duplication
or imitation is not necessary; nor is it necessary that the infringing
label should suggest an effort to imitate. (G. Heilman Brewing Co.
vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White
Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue
in cases of infringement of trademarks is whether the use of the
marks involved would be likely to cause confusion or mistakes in
the mind of the public or deceive purchasers. (Auburn Rubber
Corporation vs. Honover Rubber Co., 107 F. 2d 588; xxx) (Emphasis
supplied.)
The Court reiterated the dominancy test in Lim Hoa v. Director of
Patents,61 Phil. Nut Industry, Inc. v. Standard Brands Inc.,62 Converse
Rubber Corporation v. Universal Rubber Products, Inc.,63 and Asia
Brewery, Inc. v. Court of Appeals.64 In the 2001 case of Societe Des
Produits Nestlé, S.A. v. Court of Appeals,65 the Court explicitly rejected
the holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary
postulate of the law on trademarks and unfair competition that
confusing similarity is to be determined on the basis of visual,
aural, connotative comparisons
and overall impressions engendered by the marks in
controversy as they are encountered in the realities of the
marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into law in Section
155.1 of the Intellectual Property Code which defines infringement
as the "colorable imitation of a registered mark xxx or a dominant
feature thereof."
Applying the dominancy test, the Court finds that respondents' use of
the "Big Mak" mark results in likelihood of confusion. First, "Big Mak"
sounds exactly the same as "Big Mac." Second, the first word in "Big
Mak" is exactly the same as the first word in "Big Mac." Third, the first
two letters in "Mak" are the same as the first two letters in "Mac."
Fourth, the last letter in "Mak" while a "k" sounds the same as "c"
when the word "Mak" is pronounced. Fifth, in Filipino, the letter "k"
replaces "c" in spelling, thus "Caloocan" is spelled "Kalookan."
In short, aurally the two marks are the same, with the first word
of both marks phonetically the same, and the second word
of both marks also phonetically the same. Visually, the two marks
have both two words and six letters, with the first word of both marks
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TRADEMARK CASES_FULL TEXT
having the same letters and the second word having the same first two
letters. In spelling, considering the Filipino language, even the last
letters of both marks are the same.
Clearly, respondents have adopted in "Big Mak" not only the
dominant but also almost all the features of "Big Mac." Applied to the
same food product of hamburgers, the two marks will likely result in
confusion in the public mind.
The Court has taken into account the aural effects of the words and
letters contained in the marks in determining the issue of confusing
similarity. Thus, in Marvex Commercial Co., Inc. v. Petra Hawpia & Co.,
et al.,66 the Court held:
The following random list of confusingly similar sounds in the
matter of trademarks, culled from Nims, Unfair Competition and
Trade Marks, 1947, Vol. 1, will reinforce our view that "SALONPAS"
and "LIONPAS" are confusingly similar in sound: "Gold Dust" and
"Gold Drop"; "Jantzen" and "Jass-Sea"; "Silver Flash" and "Supper
Flash"; "Cascarete" and "Celborite"; "Celluloid" and "Cellonite";
"Chartreuse" and "Charseurs"; "Cutex" and "Cuticlean"; "Hebe"
and "Meje"; "Kotex" and "Femetex"; "Zuso" and "Hoo Hoo". Leon
Amdur, in his book "Trade-Mark Law and Practice", pp. 419-421,
cities, as coming within the purview of the idem sonans rule,
"Yusea" and "U-C-A", "Steinway Pianos" and "Steinberg Pianos",
and "Seven-Up" and "Lemon-Up". In Co Tiong vs. Director of
Patents, this Court unequivocally said that "Celdura" and
"Cordura" are confusingly similar in sound; this Court held in
Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name "Lusolin" is
an infringement of the trademark "Sapolin", as the sound of the
two names is almost the same. (Emphasis supplied)
Certainly, "Big Mac" and "Big Mak" for hamburgers create even greater
confusion, not only aurally but also visually.
Indeed, a person cannot distinguish "Big Mac" from "Big Mak" by their
sound. When one hears a "Big Mac" or "Big Mak" hamburger
advertisement over the radio, one would not know whether the "Mac"
or "Mak" ends with a "c" or a "k."
Petitioners' aggressive promotion of the "Big Mac" mark, as borne by
their advertisement expenses, has built goodwill and reputation for
such mark making it one of the easily recognizable marks in the market
today. This increases the likelihood that consumers will mistakenly
associate petitioners' hamburgers and business with those of
respondents'.
Respondents' inability to explain sufficiently how and why they came to
choose "Big Mak" for their hamburger sandwiches indicates their
intent to imitate petitioners' "Big Mac" mark. Contrary to the Court of
Appeals' finding, respondents' claim that their "Big Mak" mark was
inspired by the first names of respondent Dy's mother (Maxima) and
father (Kimsoy) is not credible. As petitioners well noted:
[R]espondents, particularly Respondent Mr. Francis Dy, could have
arrived at a more creative choice for a corporate name by using
the names of his parents, especially since he was allegedly driven
by sentimental reasons. For one, he could have put his father's
name ahead of his mother's, as is usually done in this patriarchal
society, and derived letters from said names in that order. Or, he
could have taken an equal number of letters (i.e., two) from each
name, as is the more usual thing done. Surely, the more plausible
reason behind Respondents' choice of the word "M[ak]", especially
when taken in conjunction with the word "B[ig]", was their intent
to take advantage of Petitioners' xxx "B[ig] M[ac]" trademark, with
their allegedsentiment-focused "explanation" merely thought of as
a convenient, albeit unavailing, excuse or defense for such an
unfair choice of name.67
Absent proof that respondents' adoption of the "Big Mak" mark
was due to honest mistake or was fortuitous,68 the inescapable
conclusion is that respondents adopted the "Big Mak" mark to "ride on
the coattails" of the more established "Big Mac" mark.69 This saves
respondents much of the expense in advertising to create market
recognition of their mark and hamburgers.70
Thus, we hold that confusion is likely to result in the public mind. We
sustain petitioners' claim of trademark infringement.
On the Lack of Proof of Actual Confusion
Petitioners' failure to present proof of actual confusion does not
negate their claim of trademark infringement. As noted in American
Wire & Cable Co. v. Director of Patents,71 Section 22 requires the less
stringent standard of "likelihood of confusion" only. While proof
of actual confusion is the best evidence of infringement, its absence is
inconsequential.72
On the Issue of Unfair Competition
Section 29 ("Section 29")73 of RA 166 defines unfair competition, thus:
xxxx
Any person who will employ deception or any other means
contrary to good faith by which he shall pass off the goods
manufactured by him or in which he deals, or his business, or
services for those of the one having established such goodwill, or
who shall commit any acts calculated to produce said
result, shall be guilty of unfair competition, and shall be subject to
an action therefor.
In particular, and without in any way limiting the scope of unfair
competition, the following shall be deemed guilty of unfair
competition:
(a) Any person, who in selling his goods shall give them the
general appearance of goods of another manufacturer or dealer,
either as to the goods themselves or in the wrapping of the
packages in which they are contained, or the devices or words
thereon, or in any feature of their appearance, which would be
likely to influence purchasers to believe that the goods offered are
those of a manufacturer or dealer, other than the actual
manufacturer or dealer, or who otherwise clothes the goods with
such appearance as shalldeceive the public and defraud another of
his legitimate trade, or any subsequent vendor of such goods
or any agent of any vendor engaged in selling such goods with a
like purpose;
(b) Any person who by any artifice, or device, or who employs
any other means calculated to induce the false belief that such
person is offering the services of another who has identified such
services in the mind of the public; or
(c) Any person who shall make any false statement in the course
of trade or who shall commit any other act contrary to good faith
of a nature calculated to discredit the goods, business or services
of another. (Emphasis supplied)
The essential elements of an action for unfair competition are (1)
confusing similarity in the general appearance of the goods, and (2)
intent to deceive the public and defraud a competitor.74 The confusing
similarity may or may not result from similarity in the marks, but may
result from other external factors in the packaging or presentation
of the goods. The intent to deceive and defraud may be inferred from
the similarity of the appearance of the goods as offered for sale to the
public.75 Actual fraudulent intent need not be shown.76
Unfair competition is broader than trademark infringement and
includes passing off goods with or without trademark infringement.
Trademark infringement is a form of unfair competition. Trademark
infringement constitutes unfair competition when there is not merely
likelihood of confusion, but also actual or probable deception on the
public because of the general appearance of the goods. There can be
trademark infringement without unfair competition as when the
infringer discloses on the labels containing the mark that he
manufactures the goods, thus preventing the public from being
deceived that the goods originate from the trademark owner.78
To support their claim of unfair competition, petitioners allege that
respondents fraudulently passed off their hamburgers as "Big Mac"
hamburgers. Petitioners add that respondents' fraudulent intent can
be inferred from the similarity of the marks in question.79
Passing off (or palming off) takes place where the defendant, by
imitative devices on the general appearance of the goods, misleads
prospective purchasers into buying his merchandise under the
impression that they are buying that of his competitors.80 Thus, the
defendant gives his goods the general appearance of the goods of his
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TRADEMARK CASES_FULL TEXT
competitor with the intention of deceiving the public that the goods
are those of his competitor.
The RTC described the respective marks and the goods of petitioners
and respondents in this wise:
The mark "B[ig] M[ac]" is used by plaintiff McDonald's to identify
its double decker hamburger sandwich. The packaging material is
a styrofoam box with the McDonald's logo and trademark in red
with block capital letters printed on it. All letters of the "B[ig]
M[ac]" mark are also in red and block capital letters. On the other
hand,defendants' "B[ig] M[ak]" script print is in orange with only
the letter "B" and "M" being capitalized and the packaging
material is plastic wrapper. xxxx Further, plaintiffs' logo and
mascot are the umbrella "M" and "Ronald
McDonald's", respectively, compared to the mascot of defendant
Corporation which is a chubby boy called "Macky" displayed or
printed between the words "Big" and "Mak."81 (Emphasis supplied)
Respondents point to these dissimilarities as proof that they did not
give their hamburgers the general appearance of petitioners' "Big Mac"
hamburgers.
The dissimilarities in the packaging are minor compared to the stark
similarities in the words that give respondents' "Big Mak" hamburgers
the general appearance of petitioners' "Big Mac" hamburgers. Section
29(a) expressly provides that the similarity in the general appearance
of the goods may be in the "devices or words" used on the wrappings.
Respondents have applied on their plastic wrappers and bags almost
the same words that petitioners use on their styrofoam box. What
attracts the attention of the buying public are the words "Big Mak"
which are almost the same, aurally and visually, as the words "Big
Mac." The dissimilarities in the material and other devices are
insignificant compared to the glaring similarity in the words used in the
wrappings.
Section 29(a) also provides that the defendant gives "his goods the
general appearance of goods of another manufacturer." Respondents'
goods are hamburgers which are also the goods of petitioners. If
respondents sold egg sandwiches only instead of hamburger
sandwiches, their use of the "Big Mak" mark would not give their goods
the general appearance of petitioners' "Big Mac" hamburgers. In such
case, there is only trademark infringement but no unfair
competition. However, since respondents chose to apply the "Big Mak"
mark on hamburgers, just like petitioner's use of the "Big Mac" mark
on hamburgers, respondents have obviously clothed their goods with
the general appearance of petitioners' goods.
Moreover, there is no notice to the public that the "Big Mak"
hamburgers are products of "L.C. Big Mak Burger, Inc." Respondents
introduced during the trial plastic wrappers and bags with the words
"L.C. Big Mak Burger, Inc." to inform the public of the name of the
seller of the hamburgers. However, petitioners introduced during the
injunctive hearings plastic wrappers and bags with the "Big Mak"
mark without the name "L.C. Big Mak Burger, Inc." Respondents'
belated presentation of plastic wrappers and bags bearing the name of
"L.C. Big Mak Burger, Inc." as the seller of the hamburgers is an after-
thought designed to exculpate them from their unfair business
conduct. As earlier stated, we cannot consider respondents' evidence
since petitioners' complaint was based on facts existing before and
during the injunctive hearings.
Thus, there is actually no notice to the public that the "Big Mak"
hamburgers are products of "L.C. Big Mak Burger, Inc." and not those
of petitioners who have the exclusive right to the "Big Mac" mark. This
clearly shows respondents' intent to deceive the public. Had
respondents' placed a notice on their plastic wrappers and bags that
the hamburgers are sold by "L.C. Big Mak Burger, Inc.", then they could
validly claim that they did not intend to deceive the public. In such
case, there is only trademark infringement but no unfair
competition.82 Respondents, however, did not give such notice. We
hold that as found by the RTC, respondent corporation is liable for
unfair competition.
The Remedies Available to Petitioners
Under Section 2383 ("Section 23") in relation to Section 29 of RA 166, a
plaintiff who successfully maintains trademark infringement and unfair
competition claims is entitled to injunctive and monetary reliefs. Here,
the RTC did not err in issuing the injunctive writ of 16 August 1990
(made permanent in its Decision of 5 September 1994) and in ordering
the payment of P400,000 actual damages in favor of petitioners. The
injunctive writ is indispensable to prevent further acts of infringement
by respondent corporation. Also, the amount of actual damages is a
reasonable percentage (11.9%) of respondent corporation's gross sales
for three (1988-1989 and 1991) of the six years (1984-1990)
respondents have used the "Big Mak" mark.84
The RTC also did not err in awarding exemplary damages by way of
correction for the public good85 in view of the finding of unfair
competition where intent to deceive the public is essential. The award
of attorney's fees and expenses of litigation is also in order.86
WHEREFORE, we GRANT the instant petition. We SET ASIDE the
Decision dated 26 November 1999 of the Court of Appeals and its
Resolution dated 11 July 2000 and REINSTATE the Decision dated 5
September 1994 of the Regional Trial Court of Makati, Branch 137,
finding respondent L.C. Big Mak Burger, Inc. liable for trademark
infringement and unfair competition.
SO ORDERED.
Davide, C.J. (Chairman), Quisumbing, Ynares-Santiago and Azcuna,
JJ., concur.
G.R. No. 114508 November 19, 1999
PRIBHDAS J. MIRPURI, petitioner, vs. COURT OF APPEALS, DIRECTOR
OF PATENTS and the BARBIZON CORPORATION, respondents.
PUNO, J.:
The Convention of Paris for the Protection of Industrial Property is a
multi-lateral treaty which the Philippines bound itself to honor and
enforce in this country. As to whether or not the treaty affords
protection to a foreign corporation against a Philippine applicant for
the registration of a similar trademark is the principal issue in this case.
On June 15, 1970, one Lolita Escobar, the predecessor-in-interest of
petitioner Pribhdas J. Mirpuri, filed an application with the Bureau of
Patents for the registration of the trademark "Barbizon" for use in
brassieres and ladies undergarments. Escobar alleged that she had
been manufacturing and selling these products under the firm name "L
& BM Commercial" since March 3, 1970.
Private respondent Barbizon Corporation, a corporation organized and
doing business under the laws of New York, U.S.A., opposed the
application. It claimed that:
The mark BARBIZON of respondent-applicant is confusingly
similar to the trademark BARBIZON which opposer owns and
has not abandoned.
That opposer will be damaged by the registration of the mark
BARBIZON and its business reputation and goodwill will suffer
great and irreparable injury.
That the respondent-applicant's use of the said mark
BARBIZON which resembles the trademark used and owned by
opposer, constitutes an unlawful appropriation of a mark
previously used in the Philippines and not abandoned and
therefore a statutory violation of Section 4 (d) of Republic Act
No. 166, as amended. 1
This was docketed as Inter Partes Case No. 686 (IPC No. 686). After
filing of the pleadings, the parties submitted the case for decision.
On June 18, 1974, the Director of Patents rendered judgment
dismissing the opposition and giving due course to Escobar's
application, thus:
WHEREFORE, the opposition should be, as it is hereby,
DISMISSED. Accordingly, Application Serial No. 19010 for the
registration of the trademark BARBIZON, of respondent Lolita
R. Escobar, is given due course.
IT IS SO ORDERED. 2
This decision became final and on September 11, 1974, Lolita
Escobar was issued a certificate of registration for the trademark
"Barbizon." The trademark was "for use in "brassieres and lady's
underwear garments like panties." 3
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TRADEMARK CASES_FULL TEXT
Escobar later assigned all her rights and interest over the trademark to
petitioner Pribhdas J. Mirpuri who, under his firm name then, the
"Bonito Enterprises," was the sole and exclusive distributor of
Escobar's "Barbizon" products.
In 1979, however, Escobar failed to file with the Bureau of Patents the
Affidavit of Use of the trademark required under Section 12 of Republic
Act (R.A.) No. 166, the Philippine Trademark Law. Due to this failure,
the Bureau of Patents cancelled Escobar's certificate of registration.
On May 27, 1981, Escobar reapplied for registration of the cancelled
trademark. Mirpuri filed his own application for registration of
Escobar's trademark. Escobar later assigned her application to herein
petitioner and this application was opposed by private respondent. The
case was docketed as Inter Partes Case No. 2049 (IPC No. 2049).
In its opposition, private respondent alleged that:
(a) The Opposer has adopted the trademark BARBIZON (word),
sometime in June 1933 and has then used it on various kinds
of wearing apparel. On August 14, 1934, Opposer obtained
from the United States Patent Office a more recent
registration of the said mark under Certificate of Registration
No. 316,161. On March 1, 1949, Opposer obtained from the
United States Patent Office a more recent registration for the
said trademark under Certificate of Registration No. 507,214, a
copy of which is herewith attached as Annex "A." Said
Certificate of Registration covers the following goods —
wearing apparel: robes, pajamas, lingerie, nightgowns and
slips;
(b) Sometime in March 1976, Opposer further adopted the
trademark BARBIZON and Bee design and used the said mark
in various kinds of wearing apparel. On March 15, 1977,
Opposer secured from the United States Patent Office a
registration of the said mark under Certificate of Registration
No. 1,061,277, a copy of which is herein enclosed as Annex
"B." The said Certificate of Registration covers the following
goods: robes, pajamas, lingerie, nightgowns and slips;
(c) Still further, sometime in 1961, Opposer adopted the
trademark BARBIZON and a Representation of a Woman and
thereafter used the said trademark on various kinds of
wearing apparel. Opposer obtained from the United States
Patent Office registration of the said mark on April 5, 1983
under Certificate of Registration No. 1,233,666 for the
following goods: wearing apparel: robes, pajamas, nightgowns
and lingerie. A copy of the said certificate of registration is
herewith enclosed as Annex "C."
(d) All the above registrations are subsisting and in force and
Opposer has not abandoned the use of the said trademarks. In
fact, Opposer, through a wholly-owned Philippine subsidiary,
the Philippine Lingerie Corporation, has been manufacturing
the goods covered by said registrations and selling them to
various countries, thereby earning valuable foreign exchange
for the country. As a result of respondent-applicant's
misappropriation of Opposer's BARBIZON trademark,
Philippine Lingerie Corporation is prevented from selling its
goods in the local market, to the damage and prejudice of
Opposer and its wholly-owned subsidiary.
(e) The Opposer's goods bearing the trademark BARBIZON
have been used in many countries, including the Philippines,
for at least 40 years and has enjoyed international reputation
and good will for their quality. To protect its registrations in
countries where the goods covered by the registrations are
being sold, Opposer has procured the registration of the
trademark BARBIZON in the following countries: Australia,
Austria, Abu Dhabi, Argentina, Belgium, Bolivia, Bahrain,
Canada, Chile, Colombia, Denmark, Ecuador, France, West
Germany, Greece, Guatemala, Hongkong, Honduras, Italy,
Japan, Jordan, Lebanon, Mexico, Morocco, Panama, New
Zealand, Norway, Sweden, Switzerland, Syria, El Salvador,
South Africa, Zambia, Egypt, and Iran, among others;
(f) To enhance its international reputation for quality goods
and to further promote goodwill over its name, marks and
products, Opposer has extensively advertised its products,
trademarks and name in various publications which are
circulated in the United States and many countries around the
world, including the Philippines;
(g) The trademark BARBIZON was fraudulently registered in
the Philippines by one Lolita R. Escobar under Registration No.
21920, issued on September 11, 1974, in violation of Article
189 (3) of the Revised Penal Code and Section 4 (d) of the
Trademark Law. Herein respondent applicant acquired by
assignment the "rights" to the said mark previously registered
by Lolita Escobar, hence respondent-applicant's title is vitiated
by the same fraud and criminal act. Besides, Certificate of
Registration No. 21920 has been cancelled for failure of either
Lolita Escobar or herein respondent-applicant, to seasonably
file the statutory affidavit of use. By applying for a re-
registration of the mark BARBIZON subject of this opposition,
respondent-applicant seeks to perpetuate the fraud and
criminal act committed by Lolita Escobar.
(h) Opposer's BARBIZON as well as its BARBIZON and Bee
Design and BARBIZON and Representation of a Woman
trademarks qualify as well-known trademarks entitled to
protection under Article 6bis of the Convention of Paris for the
Protection of Industrial Property and further amplified by the
Memorandum of the Minister of Trade to the Honorable
Director of Patents dated October 25, 1983 [sic], 4 Executive
Order No. 913 dated October 7, 1963 and the Memorandum
of the Minister of Trade and Industry to the Honorable
Director of Patents dated October 25, 1983.
(i) The trademark applied for by respondent applicant is
identical to Opposer's BARBIZON trademark and constitutes
the dominant part of Opposer's two other marks namely,
BARBIZON and Bee design and BARBIZON and a
Representation of a Woman. The continued use by
respondent-applicant of Opposer's trademark BARBIZON on
goods belonging to Class 25 constitutes a clear case of
commercial and criminal piracy and if allowed registration will
violate not only the Trademark Law but also Article 189 of the
Revised Penal Code and the commitment of the Philippines to
an international treaty. 5
Replying to private respondent's opposition, petitioner
raised the defense of res judicata.
On March 2, 1982, Escobar assigned to petitioner the use of the
business name "Barbizon International." Petitioner registered the
name with the Department of Trade and Industry (DTI) for which a
certificate of registration was issued in 1987.
Forthwith, private respondent filed before the Office of Legal Affairs of
the DTI a petition for cancellation of petitioner's business name.
On November 26, 1991, the DTI, Office of Legal Affairs, cancelled
petitioner's certificate of registration, and declared private respondent
the owner and prior user of the business name "Barbizon
International." Thus:
WHEREFORE, the petition is hereby GRANTED and petitioner is
declared the owner and prior user of the business name
"BARBIZON INTERNATIONAL" under Certificate of Registration
No. 87-09000 dated March 10, 1987 and issued in the name of
respondent, is [sic] hereby ordered revoked and cancelled. . . .
.6
Meanwhile, in IPC No. 2049, the evidence of both parties were
received by the Director of Patents. On June 18, 1992, the Director
rendered a decision declaring private respondent's opposition barred
by res judicata and giving due course to petitioner's application for
registration, to wit:
WHEREFORE, the present Opposition in Inter Partes Case No.
2049 is hereby DECLARED BARRED by res judicata and is
hereby DISMISSED. Accordingly, Application Serial No. 45011
for trademark BARBIZON filed by Pribhdas J. Mirpuri is GIVEN
DUE COURSE.
SO ORDERED. 7
12
TRADEMARK CASES_FULL TEXT
Private respondent questioned this decision before the Court of
Appeals in CA-G.R. SP No. 28415. On April 30, 1993, the Court of
Appeals reversed the Director of Patents finding that IPC No. 686 was
not barred by judgment in IPC No. 2049 and ordered that the case be
remanded to the Bureau of Patents for further proceedings, viz:
WHEREFORE, the appealed Decision No. 92-13 dated June 18,
1992 of the Director of Patents in Inter Partes Case No. 2049 is
hereby SET ASIDE; and the case is hereby remanded to the
Bureau of Patents for further proceedings, in accordance with
this pronouncement. No costs. 8
In a Resolution dated March 16, 1994, the Court of Appeals denied
reconsideration of its decision. 9 Hence, this recourse.
Before us, petitioner raises the following issues:
1. WHETHER OR NOT THE DECISION OF THE DIRECTOR OF
PATENTS IN INTER PARTES CASE NO. 686 RENDERED ON JUNE
18, 1974, ANNEX C HEREOF, CONSTITUTED RES JUDICATA IN
SO FAR AS THE CASE BEFORE THE DIRECTOR OF PATENTS IS
CONCERNED;
2. WHETHER OR NOT THE DIRECTOR OF PATENTS CORRECTLY
APPLIED THE PRINCIPLE OF RES JUDICATA IN DISMISSING
PRIVATE RESPONDENT BARBIZON'S OPPOSITION TO
PETITIONER'S APPLICATION FOR REGISTRATION FOR THE
TRADEMARK BARBIZON, WHICH HAS SINCE RIPENED TO
CERTIFICATE OF REGISTRATION NO. 53920 ON NOVEMBER 16,
1992;
3. WHETHER OR NOT THE REQUISITE THAT A "JUDGMENT ON
THE MERITS" REQUIRED A "HEARING WHERE BOTH PARTIES
ARE SUPPOSED TO ADDUCE EVIDENCE" AND WHETHER THE
JOINT SUBMISSION OF THE PARTIES TO A CASE ON THE BASIS
OF THEIR RESPECTIVE PLEADINGS WITHOUT PRESENTING
TESTIMONIAL OR DOCUMENTARY EVIDENCE FALLS WITHIN
THE MEANING OF "JUDGMENT ON THE MERITS" AS ONE OF
THE REQUISITES TO CONSTITUTE RES JUDICATA;
4. WHETHER A DECISION OF THE DEPARTMENT OF TRADE AND
INDUSTRY CANCELLING PETITIONER'S FIRM NAME "BARBIZON
INTERNATIONAL" AND WHICH DECISION IS STILL PENDING
RECONSIDERATION NEVER OFFERED IN EVIDENCE BEFORE THE
DIRECTOR OF PATENTS IN INTER PARTES CASE NO. 2049 HAS
THE RIGHT TO DECIDE SUCH CANCELLATION NOT ON THE
BASIS OF THE BUSINESS NAME LAW (AS IMPLEMENTED BY THE
BUREAU OF DOMESTIC TRADE) BUT ON THE BASIS OF THE
PARIS CONVENTION AND THE TRADEMARK LAW (R.A. 166)
WHICH IS WITHIN THE ORIGINAL AND EXCLUSIVE
JURISDICTION OF THE DIRECTOR OF PATENTS. 10
Before ruling on the issues of the case, there is need for a brief
background on the function and historical development of trademarks
and trademark law.
A "trademark" is defined under R.A. 166, the Trademark Law, as
including "any word, name, symbol, emblem, sign or device or any
combination thereof adopted and used by a manufacturer or merchant
to identify his goods and distinguish them from those manufactured,
sold or dealt in by others. 11 This definition has been simplified in R.A.
No. 8293, the Intellectual Property Code of the Philippines, which
defines a "trademark" as "any visible sign capable of distinguishing
goods." 12 In Philippine jurisprudence, the function of a trademark is to
point out distinctly the origin or ownership of the goods to which it is
affixed; to secure to him, who has been instrumental in bringing into
the market a superior article of merchandise, the fruit of his industry
and skill; to assure the public that they are procuring the genuine
article; to prevent fraud and imposition; and to protect the
manufacturer against substitution and sale of an inferior and different
article as his product. 13
Modern authorities on trademark law view trademarks as performing
three distinct functions: (1) they indicate origin or ownership of the
articles to which they are attached; (2) they guarantee that those
articles come up to a certain standard of quality; and (3) they advertise
the articles they symbolize. 14
Symbols have been used to identify the ownership or origin of articles
for several centuries. 15 As early as 5,000 B.C., markings on pottery
have been found by archaeologists. Cave drawings in southwestern
Europe show bison with symbols on their flanks. 16 Archaeological
discoveries of ancient Greek and Roman inscriptions on sculptural
works, paintings, vases, precious stones, glassworks, bricks, etc. reveal
some features which are thought to be marks or symbols. These marks
were affixed by the creator or maker of the article, or by public
authorities as indicators for the payment of tax, for disclosing state
monopoly, or devices for the settlement of accounts between an
entrepreneur and his workmen. 17
In the Middle Ages, the use of many kinds of marks on a variety of
goods was commonplace. Fifteenth century England saw the
compulsory use of identifying marks in certain trades. There were the
baker's mark on bread, bottlemaker's marks, smith's marks, tanner's
marks, watermarks on paper, etc. 18 Every guild had its own mark and
every master belonging to it had a special mark of his own. The marks
were not trademarks but police marks compulsorily imposed by the
sovereign to let the public know that the goods were not "foreign"
goods smuggled into an area where the guild had a monopoly, as well
as to aid in tracing defective work or poor craftsmanship to the
artisan. 19 For a similar reason, merchants also used merchants' marks.
Merchants dealt in goods acquired from many sources and the marks
enabled them to identify and reclaim their goods upon recovery after
shipwreck or piracy. 20
With constant use, the mark acquired popularity and became
voluntarily adopted. It was not intended to create or continue
monopoly but to give the customer an index or guarantee of
quality. 21 It was in the late 18th century when the industrial revolution
gave rise to mass production and distribution of consumer goods that
the mark became an important instrumentality of trade and
commerce. 22 By this time, trademarks did not merely identify the
goods; they also indicated the goods to be of satisfactory quality, and
thereby stimulated further purchases by the consuming
public. 23 Eventually, they came to symbolize the goodwill and business
reputation of the owner of the product and became a property right
protected by law. 24 The common law developed the doctrine of
trademarks and tradenames "to prevent a person from palming off his
goods as another's, from getting another's business or injuring his
reputation by unfair means, and, from defrauding the
public." 25 Subsequently, England and the United States enacted
national legislation on trademarks as part of the law regulating unfair
trade. 26 It became the right of the trademark owner to exclude others
from the use of his mark, or of a confusingly similar mark where
confusion resulted in diversion of trade or financial injury. At the same
time, the trademark served as a warning against the imitation or faking
of products to prevent the imposition of fraud upon the public. 27
Today, the trademark is not merely a symbol of origin and goodwill; it
is often the most effective agent for the actual creation and protection
of goodwill. It imprints upon the public mind an anonymous and
impersonal guaranty of satisfaction, creating a desire for further
satisfaction. In other words, the mark actually sells the goods. 28 The
mark has become the "silent salesman," the conduit through which
direct contact between the trademark owner and the consumer is
assured. It has invaded popular culture in ways never anticipated that
it has become a more convincing selling point than even the quality of
the article to which it refers. 29 In the last half century, the unparalleled
growth of industry and the rapid development of communications
technology have enabled trademarks, tradenames and other distinctive
signs of a product to penetrate regions where the owner does not
actually manufacture or sell the product itself. Goodwill is no longer
confined to the territory of actual market penetration; it extends to
zones where the marked article has been fixed in the public mind
through advertising. 30 Whether in the print, broadcast or electronic
communications medium, particularly on the Internet, 31 advertising
has paved the way for growth and expansion of the product by creating
and earning a reputation that crosses over borders, virtually turning
the whole world into one vast marketplace.
This is the mise-en-scene of the present controversy. Petitioner brings
this action claiming that "Barbizon" products have been sold in the
Philippines since 1970. Petitioner developed this market by working
long hours and spending considerable sums of money on
advertisements and promotion of the trademark and its products.
Now, almost thirty years later, private respondent, a foreign
13
TRADEMARK CASES_FULL TEXT
corporation, "swaggers into the country like a conquering hero,"
usurps the trademark and invades petitioner's market. 32 Justice and
fairness dictate that private respondent be prevented from
appropriating what is not its own. Legally, at the same time, private
respondent is barred from questioning petitioner's ownership of the
trademark because of res judicata. 33
Literally, res judicata means a matter adjudged, a thing judicially acted
upon or decided; a thing or matter settled by judgment. 34 In res
judicata, the judgment in the first action is considered conclusive as to
every matter offered and received therein, as to any other admissible
matter which might have been offered for that purpose, and all other
matters that could have been adjudged therein. 35 Res judicata is an
absolute bar to a subsequent action for the same cause; and its
requisites are: (a) the former judgment or order must be final; (b) the
judgment or order must be one on the merits; (c) it must have been
rendered by a court having jurisdiction over the subject matter and
parties; (d) there must be between the first and second actions,
identity of parties, of subject matter and of causes of action. 36
The Solicitor General, on behalf of respondent Director of Patents, has
joined cause with petitioner. Both claim that all the four elements
of res judicata have been complied with: that the judgment in IPC No.
686 was final and was rendered by the Director of Patents who had
jurisdiction over the subject matter and parties; that the judgment in
IPC No. 686 was on the merits; and that the lack of a hearing was
immaterial because substantial issues were raised by the parties and
passed upon by the Director of Patents. 37
The decision in IPC No. 686 reads as follows:
xxx xxx xxx.
Neither party took testimony nor adduced documentary
evidence. They submitted the case for decision based on the
pleadings which, together with the pertinent records, have all
been carefully considered.
Accordingly, the only issue for my disposition is whether or
not the herein opposer would probably be damaged by the
registration of the trademark BARBIZON sought by the
respondent-applicant on the ground that it so resembles the
trademark BARBIZON allegedly used and owned by the former
to be "likely to cause confusion, mistake or to deceive
purchasers."
On record, there can be no doubt that respondent-applicant's
sought-to-be-registered trademark BARBIZON is similar, in fact
obviously identical, to opposer's alleged trademark BARBIZON,
in spelling and pronunciation. The only appreciable but very
negligible difference lies in their respective appearances or
manner of presentation. Respondent-applicant's trademark is
in bold letters (set against a black background), while that of
the opposer is offered in stylish script letters.
It is opposer's assertion that its trademark BARBIZON has been
used in trade or commerce in the Philippines prior to the date
of application for the registration of the identical mark
BARBIZON by the respondent-applicant. However, the
allegation of facts in opposer's verified notice of opposition is
devoid of such material information. In fact, a reading of the
text of said verified opposition reveals an apparent, if not
deliberate, omission of the date (or year) when opposer's
alleged trademark BARBIZON was first used in trade in the
Philippines (see par. No. 1, p. 2, Verified Notice of Opposition,
Rec.). Thus, it cannot here and now be ascertained whether
opposer's alleged use of the trademark BARBIZON could be
prior to the use of the identical mark by the herein
respondent-applicant, since the opposer attempted neither to
substantiate its claim of use in local commerce with any proof
or evidence. Instead, the opposer submitted the case for
decision based merely on the pleadings.
On the other hand, respondent-applicant asserted in her
amended application for registration that she first used the
trademark BARBIZON for brassiere (or "brasseire") and ladies
underwear garments and panties as early as March 3, 1970.
Be that as it may, there being no testimony taken as to said
date of first use, respondent-applicant will be limited to the
filing date, June 15, 1970, of her application as the date of first
use (Rule 173, Rules of Practice in Trademark Cases).
From the foregoing, I conclude that the opposer has not made
out a case of probable damage by the registration of the
respondent-applicant's mark BARBIZON.
WHEREFORE, the opposition should be, as it is hereby,
DISMISSED. Accordingly, Application Serial No. 19010, for the
registration of the trademark BARBIZON of respondent Lolita
R. Escobar, is given due course.38
The decision in IPC No. 686 was a judgment on the merits and it was
error for the Court of Appeals to rule that it was not. A judgment is on
the merits when it determines the rights and liabilities of the parties
based on the disclosed facts, irrespective of formal, technical or
dilatory objections. 39 It is not necessary that a trial should have been
conducted. If the court's judgment is general, and not based on any
technical defect or objection, and the parties had a full legal
opportunity to be heard on their respective claims and contentions, it
is on the merits although there was no actual hearing or arguments on
the facts of the case. 40 In the case at bar, the Director of Patents did
not dismiss private respondent's opposition on a sheer technicality.
Although no hearing was conducted, both parties filed their respective
pleadings and were given opportunity to present evidence. They,
however, waived their right to do so and submitted the case for
decision based on their pleadings. The lack of evidence did not deter
the Director of Patents from ruling on the case, particularly on the
issue of prior use, which goes into the very substance of the relief
sought by the parties. Since private respondent failed to prove prior
use of its trademark, Escobar's claim of first use was upheld.
The judgment in IPC No. 686 being on the merits, petitioner and the
Solicitor General allege that IPC No. 686 and IPC No. 2049 also comply
with the fourth requisite of res judicata, i.e., they involve the same
parties and the same subject matter, and have identical causes of
action.
Undisputedly, IPC No. 686 and IPC No. 2049 involve the same parties
and the same subject matter. Petitioner herein is the assignee of
Escobar while private respondent is the same American corporation in
the first case. The subject matter of both cases is the trademark
"Barbizon." Private respondent counter-argues, however, that the two
cases do not have identical causes of action. New causes of action were
allegedly introduced in IPC No. 2049, such as the prior use and
registration of the trademark in the United States and other countries
worldwide, prior use in the Philippines, and the fraudulent registration
of the mark in violation of Article 189 of the Revised Penal Code.
Private respondent also cited protection of the trademark under the
Convention of Paris for the Protection of Industrial Property,
specifically Article 6bis thereof, and the implementation of Article
6bis by two Memoranda dated November 20, 1980 and October 25,
1983 of the Minister of Trade and Industry to the Director of Patents,
as well as Executive Order (E.O.) No. 913.
The Convention of Paris for the Protection of Industrial Property,
otherwise known as the Paris Convention, is a multilateral treaty that
seeks to protect industrial property consisting of patents, utility
models, industrial designs, trademarks, service marks, trade names and
indications of source or appellations of origin, and at the same time
aims to repress unfair competition. 41 The Convention is essentially a
compact among various countries which, as members of the Union,
have pledged to accord to citizens of the other member countries
trademark and other rights comparable to those accorded their own
citizens by their domestic laws for an effective protection against unfair
competition. 42 In short, foreign nationals are to be given the same
treatment in each of the member countries as that country makes
available to its own citizens. 43 Nationals of the various member nations
are thus assured of a certain minimum of international protection of
their industrial property. 44
The Convention was first signed by eleven countries in Paris on March
20, 1883. 45 It underwent several revisions — at Brussels in 1900, at
Washington in 1911, at The Hague in 1925, at London in 1934, at
Lisbon in 1958, 46 and at Stockholm in 1967. Both the Philippines and
the United States of America, herein private respondent's country, are
signatories to the Convention. The United States acceded on May 30,
14
TRADEMARK CASES_FULL TEXT
1887 while the Philippines, through its Senate, concurred on May 10,
1965. 47 The Philippines' adhesion became effective on September 27,
1965, 48 and from this date, the country obligated itself to honor and
enforce the provisions of the Convention. 49
In the case at bar, private respondent anchors its cause of action on
the first paragraph of Article 6bis of the Paris Convention which reads
as follows:
Article 6bis
(1) The countries of the Union undertake, either
administratively if their legislation so permits, or at the
request of an interested party, to refuse or to cancel the
registration and to prohibit the use, of a trademark which
constitutes a reproduction, an imitation, or a translation, liable
to create confusion, of a mark considered by the competent
authority of the country of registration or use to be well-
known in that country as being already the mark of a person
entitled to the benefits of this Convention and used for
identical or similar goods. These provisions shall also apply
when the essential part of the mark constitutes a reproduction
of any such well-known mark or an imitation liable to create
confusion therewith.
(2) A period of at least five years from the date of registration
shall be allowed for seeking the cancellation of such a mark.
The countries of the Union may provide for a period within
which the prohibition of use must be sought.
(3) No time limit shall be fixed for seeking the cancellation or
the prohibition of the use of marks registered or used in bad
faith. 50
This Article governs protection of well-known trademarks. Under
the first paragraph, each country of the Union bound itself to
undertake to refuse or cancel the registration, and prohibit the use
of a trademark which is a reproduction, imitation or translation, or
any essential part of which trademark constitutes a reproduction,
liable to create confusion, of a mark considered by the competent
authority of the country where protection is sought, to be well-
known in the country as being already the mark of a person
entitled to the benefits of the Convention, and used for identical or
similar goods.
Art. 6bis was first introduced at The Hague in 1925 and amended in
Lisbon in 1952. 51 It is a self-executing provision and does not require
legislative enactment to give it effect in the member country. 52 It may
be applied directly by the tribunals and officials of each member
country by the mere publication or proclamation of the Convention,
after its ratification according to the public law of each state and the
order for its execution. 53
The essential requirement under Article 6bis is that the trademark to
be protected must be "well-known" in the country where protection is
sought. The power to determine whether a trademark is well-known
lies in the "competent authority of the country of registration or use."
This competent authority would be either the registering authority if it
has the power to decide this, or the courts of the country in question if
the issue comes before a court. 54
Pursuant to Article 6bis, on November 20, 1980, then Minister Luis
Villafuerte of the Ministry of Trade issued a Memorandum to the
Director of Patents. The Minister ordered the Director that:
Pursuant to the Paris Convention for the Protection of
Industrial Property to which the Philippines is a signatory, you
are hereby directed to reject all pending applications for
Philippine registration of signature and other world-famous
trademarks by applicants other than its original owners or
users.
The conflicting claims over internationally known trademarks
involve such name brands as Lacoste, Jordache, Vanderbilt,
Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar de la
Renta, Calvin Klein, Givenchy, Ralph Lauren, Geoffrey Beene,
Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine
registrants of such trademarks should be asked to surrender
their certificates of registration, if any, to avoid suits for
damages and other legal action by the trademarks' foreign or
local owners or original users.
You are also required to submit to the undersigned a progress
report on the matter.
For immediate compliance. 55
Three years later, on October 25, 1983, then Minister Roberto Ongpin
issued another Memorandum to the Director of Patents, viz:
Pursuant to Executive Order No. 913 dated 7 October 1983
which strengthens the rule-making and adjudicatory powers of
the Minister of Trade and Industry and provides inter alia, that
"such rule-making and adjudicatory powers should be
revitalized in order that the Minister of Trade and Industry can
. . . apply more swift and effective solutions and remedies to
old and new problems . . . such as infringement of
internationally-known tradenames and trademarks . . ." and in
view of the decision of the Intermediate Appellate Court in the
case of LA CHEMISE LACOSTE, S.A., versus RAM SADWHANI
[AC-G.R. SP NO. 13359 (17) June 1983] 56 which affirms the
validity of the MEMORANDUM of then Minister Luis R.
Villafuerte dated 20 November 1980 confirming our
obligations under the PARIS CONVENTION FOR THE
PROTECTION OF INDUSTRIAL PROPERTY to which the Republic
of the Philippines is a signatory, you are hereby directed to
implement measures necessary to effect compliance with our
obligations under said Convention in general, and, more
specifically, to honor our commitment under
Section 6bis 57 thereof, as follows:
1. Whether the trademark under consideration is well-
known in the Philippines or is a mark already belonging to
a person entitled to the benefits of the CONVENTION, this
should be established, pursuant to Philippine Patent
Office procedures in inter partes and ex partecases,
according to any of the following criteria or any
combination thereof:
(a) a declaration by the Minister of Trade and
Industry that the trademark being considered is
already well-known in the Philippines such that
permission for its use by other than its original owner
will constitute a reproduction, imitation, translation
or other infringement;
(b) that the trademark is used in commerce
internationally, supported by proof that goods
bearing the trademark are sold on an international
scale, advertisements, the establishment of factories,
sales offices, distributorships, and the like, in
different countries, including volume or other
measure of international trade and commerce;
(c) that the trademark is duly registered in the
industrial property office(s) of another country or
countries, taking into consideration the date of such
registration;
(d) that the trademark has long been established and
obtained goodwill and international consumer
recognition as belonging to one owner or source;
(e) that the trademark actually belongs to a party
claiming ownership and has the right to registration
under the provisions of the aforestated PARIS
CONVENTION.
2. The word trademark, as used in this MEMORANDUM,
shall include tradenames, service marks, logos, signs,
emblems, insignia or other similar devices used for
identification and recognition by consumers.
3. The Philippine Patent Office shall refuse all applications
for, or cancel the registration of, trademarks which
constitute a reproduction, translation or imitation of a
15
TRADEMARK CASES_FULL TEXT
trademark owned by a person, natural or corporate, who
is a citizen of a country signatory to the PARIS
CONVENTION FOR THE PROTECTION OF INDUSTRIAL
PROPERTY.
4. The Philippine Patent Office shall give due course to the
Opposition in cases already or hereafter filed against the
registration of trademarks entitled to protection of
Section 6bisof said PARIS CONVENTION as outlined above,
by remanding applications filed by one not entitled to
such protection for final disallowance by the Examination
Division.
5. All pending applications for Philippine registration of
signature and other world-famous trademarks filed by
applicants other than their original owners or users shall
be rejected forthwith. Where such applicants have
already obtained registration contrary to the
abovementioned PARIS CONVENTION and/or Philippine
Law, they shall be directed to surrender their Certificates
of Registration to the Philippine Patent Office for
immediate cancellation proceedings.
xxx xxx xxx. 58
In the Villafuerte Memorandum, the Minister of Trade instructed the
Director of Patents to reject all pending applications for Philippine
registration of signature and other world-famous trademarks by
applicants other than their original owners or users. The Minister
enumerated several internationally-known trademarks and ordered
the Director of Patents to require Philippine registrants of such marks
to surrender their certificates of registration.
In the Ongpin Memorandum, the Minister of Trade and Industry did
not enumerate well-known trademarks but laid down guidelines for
the Director of Patents to observe in determining whether a trademark
is entitled to protection as a well-known mark in the Philippines under
Article 6bis of the Paris Convention. This was to be established through
Philippine Patent Office procedures in inter partes and ex parte cases
pursuant to the criteria enumerated therein. The Philippine Patent
Office was ordered to refuse applications for, or cancel the registration
of, trademarks which constitute a reproduction, translation or
imitation of a trademark owned by a person who is a citizen of a
member of the Union. All pending applications for registration of
world-famous trademarks by persons other than their original owners
were to be rejected forthwith. The Ongpin Memorandum was issued
pursuant to Executive Order No. 913 dated October 7, 1983 of then
President Marcos which strengthened the rule-making and
adjudicatory powers of the Minister of Trade and Industry for the
effective protection of consumers and the application of swift solutions
to problems in trade and industry. 59
Both the Villafuerte and Ongpin Memoranda were sustained by the
Supreme Court in the 1984 landmark case of La Chemise Lacoste, S.A.
v. Fernandez. 60 This court ruled therein that under the provisions of
Article 6bis of the Paris Convention, the Minister of Trade and Industry
was the "competent authority" to determine whether a trademark is
well-known in this country. 61
The Villafuerte Memorandum was issued in 1980, i.e., fifteen (15) years
after the adoption of the Paris Convention in 1965. In the case at bar,
the first inter partes case, IPC No. 686, was filed in 1970, before the
Villafuerte Memorandum but five (5) years after the effectivity of the
Paris Convention. Article 6bis was already in effect five years before
the first case was instituted. Private respondent, however, did not cite
the protection of Article 6bis, neither did it mention the Paris
Convention at all. It was only in 1981 when IPC No. 2049 was instituted
that the Paris Convention and the Villafuerte Memorandum, and,
during the pendency of the case, the 1983 Ongpin Memorandum were
invoked by private respondent.
The Solicitor General argues that the issue of whether the protection of
Article 6bis of the Convention and the two Memoranda is barred by res
judicata has already been answered in Wolverine
Worldwide, Inc. v. Court of Appeals. 62 In this case, petitioner
Wolverine, a foreign corporation, filed with the Philippine Patent Office
a petition for cancellation of the registration certificate of private
respondent, a Filipino citizen, for the trademark "Hush Puppies" and
"Dog Device." Petitioner alleged that it was the registrant of the
internationally-known trademark in the United States and other
countries, and cited protection under the Paris Convention and the
Ongpin Memorandum. The petition was dismissed by the Patent Office
on the ground of res judicata. It was found that in 1973 petitioner's
predecessor-in-interest filed two petitions for cancellation of the same
trademark against respondent's predecessor-in-interest. The Patent
Office dismissed the petitions, ordered the cancellation of registration
of petitioner's trademark, and gave due course to respondent's
application for registration. This decision was sustained by the Court of
Appeals, which decision was not elevated to us and became final and
executory. 63
Wolverine claimed that while its previous petitions were filed under
R.A. No. 166, the Trademark Law, its subsequent petition was based on
a new cause of action, i.e., the Ongpin Memorandum and E.O. No. 913
issued in 1983, after finality of the previous decision. We held that the
said Memorandum and E.O. did not grant a new cause of action
because it did "not amend the Trademark Law," . . . "nor did it indicate
a new policy with respect to the registration in the Philippines of
world-famous trademarks." 64 This conclusion was based on the finding
that Wolverine's two previous petitions and subsequent petition dealt
with the same issue of ownership of the trademark. 65 In other words,
since the first and second cases involved the same issue of ownership,
then the first case was a bar to the second case.
In the instant case, the issue of ownership of the trademark "Barbizon"
was not raised in IPC No. 686. Private respondent's opposition therein
was merely anchored on:
(a) "confusing similarity" of its trademark with that of
Escobar's;
(b) that the registration of Escobar's similar trademark will
cause damage to private respondent's business reputation and
goodwill; and
(c) that Escobar's use of the trademark amounts to an
unlawful appropriation of a mark previously used in the
Philippines which act is penalized under Section 4 (d) of the
Trademark Law.
In IPC No. 2049, private respondent's opposition set forth several
issues summarized as follows:
(a) as early as 1933, it adopted the word "BARBIZON" as
trademark on its products such as robes, pajamas, lingerie,
nightgowns and slips;
(b) that the trademark "BARBIZON" was registered with the
United States Patent Office in 1934 and 1949; and that
variations of the same trademark, i.e., "BARBIZON" with Bee
design and "BARBIZON" with the representation of a woman
were also registered with the U.S. Patent Office in 1961 and
1976;
(c) that these marks have been in use in the Philippines and in
many countries all over the world for over forty years.
"Barbizon" products have been advertised in international
publications and the marks registered in 36 countries
worldwide;
(d) Escobar's registration of the similar trademark "BARBIZON"
in 1974 was based on fraud; and this fraudulent registration
was cancelled in 1979, stripping Escobar of whatsoever right
she had to the said mark;
(e) Private respondent's trademark is entitled to protection as
a well-known mark under Article 6bis of the Paris Convention,
Executive Order No. 913, and the two Memoranda dated
November 20, 1980 and October 25, 1983 of the Minister of
Trade and Industry to the Director of Patents;
(f) Escobar's trademark is identical to private respondent's and
its use on the same class of goods as the latter's amounts to a
violation of the Trademark Law and Article 189 of the Revised
Penal Code.
IPC No. 2049 raised the issue of ownership of the trademark, the
first registration and use of the trademark in the United States and
other countries, and the international recognition and reputation
of the trademark established by extensive use and advertisement
of private respondent's products for over forty years here and
abroad. These are different from the issues of confusing similarity
and damage in IPC No. 686. The issue of prior use may have been
16
TRADEMARK CASES_FULL TEXT
raised in IPC No. 686 but this claim was limited to prior use in the
Philippines only. Prior use in IPC No. 2049 stems from private
respondent's claim as originator of the word and symbol
"Barbizon," 66 as the first and registered user of the mark attached
to its products which have been sold and advertised worldwide for
a considerable number of years prior to petitioner's first
application for registration of her trademark in the Philippines.
Indeed, these are substantial allegations that raised new issues
and necessarily gave private respondent a new cause of action. Res
judicata does not apply to rights, claims or demands, although
growing out of the same subject matter, which constitute separate
or distinct causes of action and were not put in issue in the former
action. 67
Respondent corporation also introduced in the second case a fact that
did not exist at the time the first case was filed and terminated. The
cancellation of petitioner's certificate of registration for failure to file
the affidavit of use arose only after IPC No. 686. It did not and could
not have occurred in the first case, and this gave respondent another
cause to oppose the second application. Res judicata extends only to
facts and conditions as they existed at the time judgment was rendered
and to the legal rights and relations of the parties fixed by the facts so
determined. 68 When new facts or conditions intervene before the
second suit, furnishing a new basis for the claims and defenses of the
parties, the issues are no longer the same, and the former judgment
cannot be pleaded as a bar to the subsequent action. 69
It is also noted that the oppositions in the first and second cases are
based on different laws. The opposition in IPC No. 686 was based on
specific provisions of the Trademark Law, i.e., Section 4 (d) 70 on
confusing similarity of trademarks and Section 8 71 on the requisite
damage to file an opposition to a petition for registration. The
opposition in IPC No. 2049 invoked the Paris Convention, particularly
Article 6bis thereof, E.O. No. 913 and the two Memoranda of the
Minister of Trade and Industry. This opposition also invoked Article 189
of the Revised Penal Code which is a statute totally different from the
Trademark Law. 72 Causes of action which are distinct and independent
from each other, although arising out of the same contract,
transaction, or state of facts, may be sued on separately, recovery on
one being no bar to subsequent actions on others. 73 The mere fact
that the same relief is sought in the subsequent action will not render
the judgment in the prior action operative as res judicata, such as
where the two actions are based on different statutes. 74 Res
judicata therefore does not apply to the instant case and respondent
Court of Appeals did not err in so ruling.
Intellectual and industrial property rights cases are not simple property
cases. Trademarks deal with the psychological function of symbols and
the effect of these symbols on the public at large. 75 Trademarks play a
significant role in communication, commerce and trade, and serve
valuable and interrelated business functions, both nationally and
internationally. For this reason, all agreements concerning industrial
property, like those on trademarks and tradenames, are intimately
connected with economic development. 76 Industrial property
encourages investments in new ideas and inventions and stimulates
creative efforts for the satisfaction of human needs. They speed up
transfer of technology and industrialization, and thereby bring about
social and economic progress. 77 These advantages have been
acknowledged by the Philippine government itself. The Intellectual
Property Code of the Philippines declares that "an effective intellectual
and industrial property system is vital to the development of domestic
and creative activity, facilitates transfer of technology, it attracts
foreign investments, and ensures market access for our
products." 78 The Intellectual Property Code took effect on January 1,
1998 and by its express provision, 79 repealed the Trademark
Law, 80 the Patent Law, 81 Articles 188 and 189 of the Revised Penal
Code, the Decree on Intellectual Property, 82 and the Decree on
Compulsory Reprinting of Foreign Textbooks. 83 The Code was enacted
to strengthen the intellectual and industrial property system in the
Philippines as mandated by the country's accession to the Agreement
Establishing the World Trade Organization (WTO). 84
The WTO is a common institutional framework for the conduct of trade
relations among its members in matters related to the multilateral and
plurilateral trade agreements annexed to the WTO Agreement. 85 The
WTO framework ensures a "single undertaking approach" to the
administration and operation of all agreements and arrangements
attached to the WTO Agreement. Among those annexed is the
Agreement on Trade-Related Aspects of Intellectual Property Rights or
TRIPs. 86 Members to this Agreement "desire to reduce distortions and
impediments to international trade, taking into account the need to
promote effective and adequate protection of intellectual property
rights, and to ensure that measures and procedures to enforce
intellectual property rights do not themselves become barriers to
legitimate trade." To fulfill these objectives, the members have agreed
to adhere to minimum standards of protection set by several
Conventions. 87 These Conventions are: the Berne Convention for the
Protection of Literary and Artistic Works (1971), the Rome Convention
or the International Convention for the Protection of Performers,
Producers of Phonograms and Broadcasting Organisations, the Treaty
on Intellectual Property in Respect of Integrated Circuits, and the Paris
Convention (1967), as revised in Stockholm on July 14, 1967. 88
A major proportion of international trade depends on the protection of
intellectual property rights. 89 Since the late 1970's, the unauthorized
counterfeiting of industrial property and trademarked products has
had a considerable adverse impact on domestic and international trade
revenues. 90 The TRIPs Agreement seeks to grant adequate protection
of intellectual property rights by creating a favorable economic
environment to encourage the inflow of foreign investments, and
strengthening the multi-lateral trading system to bring about
economic, cultural and technological independence. 91
The Philippines and the United States of America have acceded to the
WTO Agreement. This Agreement has revolutionized international
business and economic relations among states, and has propelled the
world towards trade liberalization and economic
globalization. Protectionism and isolationism belong to the past. Trade
is no longer confined to a bilateral system. There is now "a new era of
global economic cooperation, reflecting the widespread desire to
operate in a fairer and more open multilateral trading
system." 93 Conformably, the State must reaffirm its commitment to
the global community and take part in evolving a new international
economic order at the dawn of the new millenium.
IN VIEW WHEREOF, the petition is denied and the Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 28415 are
affirmed.
SO ORDERED.
G.R. No. L-54158 November 19, 1982
PAGASA INDUSTRIAL CORPORATION, petitioner, vs. HE HONORABLE
COURT OF APPEALS, TIBURCIO S. EVALLE Director of Patents, and
YOSHIDA KOGYO KABUSHIKI KAISHA, respondents.
DE CASTRO, J.:
Sometime on November 9, 1961, the Philippines Patent Office issued
Certificate of Registration No. 9331 in favor of respondent Kaisha
covering the trademark "YKK" for slide fasteners and zippers in class
41.
On April 27, 1967 or 51/2 years after respondent's registration was
issued by the Philippines Patent Office, petitioner Pagasa filed an
application for registration of exactly the same or Identical trademark
of "YKK" for zippers under class 41 which was allowed on April 4, 1968
with Certificate of Registration No. 13756.
Alleging that both trademark ("YKK") are confusingly similar, being
used on similar products (slide fasteners or zippers) under the same
classification of goods, respondent Kaisha filed with the Director of
Patents a petition for cancellation of petitioner's registration of exactly
the same trademark "YKK".
On May 5, 1977, the Director of Patents, finding the trademark in
question "YKK" brand to be confusingly similar, and regretting the
negligence of his office in allowing the registration of the trademark
"YKK" in favor of petitioner notwithstanding the fact that the same
trademark had long been previously registered in the name of
respondent Kaisha, cancelled Registration No. 13756 in the name of
Petitioner Corporation.
The Director of Patents based his order of cancellation on Section 4 (d)
of Republic Act No. 166, as amended (An Act to Provide for the
Registration and Protection of Trade-Marks, Trade Names and Service-
Marks; etc.):
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TRADEMARK CASES_FULL TEXT
Sec. 4. Registration of trade-marks, tradenames, and service marks
on the principal register.-There is hereby established a register of
trademarks, tradenames and service marks which shall be known
as the principal register. The owner of a trademark, tradename or
service mark used to distinguish his goods, business or services
from the goods, business or services of others shall have the right
to register the same on the principal register unless it:
xxx xxx xxx
(d) Consists of or comprises a mark or trade name which so
resembles a mark or trade name registered in the Philippines or a
mark trade name previously used in the Philippines by another and
not abandoned as to be likely, when applied to or used in
connection with the goods, business or services of the applicant, to
cause confusion or mistake or to deceive purchasers; or
xxx xxx xxx
The matter was elevated by petitioner to the Court of Appeals and
argued that there was laches on the part of Kaisha considering that
notwithstanding the fact that the trademark was registered for the use
of petitioner, it was not until January 23, 1975, that Kaisha filed a
petition for cancellation after a lapse of almost seven (7) years.
The Court of Appeals affirmed the decision of the Director of Patents,
and held that the equitable principles of laches, estoppel and
acquiescence would not apply in this case for it has not been shown
that Kaisha abandoned the use of the trademark; that to apply said
principle in favor of petitioner Pagasa is far from equitable since
evidence was shown, which was not refuted by petitioner, that it has
previously known the registration of said trade mark which is a
contraction standing for the first three letters of respondent's name
Yoshida Kogyo Kabushiki, and was aware of such fact at the time of
registration since it appears that the president of respondent visited
the factory of petitioner and had preliminary business talks with the
official of the latter because both are producing zippers; that technical
help was given by the engineers of respondent to petitioner when the
latter's president, in turn, visited respondent's company sometime in
1960.
Thus, the appellate court concluded that:
xxx xxx xxx
There is therefore, no doubt in Our Mind that indeed, [petitioner]
knew of the use of trademark "YKK" by [respondent] which are the
initials of the company, and notwithstanding this knowledge it
later on sought trade registration of the same trademark in its
favor. Thus, to allow [petitioner] to continue using the trademark
"YKK" merely because [respondent] did not or was not able to
immediately seek the cancellation of the irregularity issued
registration in favor of [petitioner] would be far from equitable.
The second assigned error merely involves alleged lack of proof of
[respondent's] actual commercial use in the Philippines of the
trademark "YKK". This, to Us is of no moment. What is important is
the fact that [respondent] has been allowed the use of the
trademark "YKK" under the Certificate of Registration Nos. 9331
and 9345 issued respectively on November 9, 1961 and November
22, 1961. What could probably have saved the case for [petitioner]
is positive proof that [respondent] has totally abandoned the use
of said trademark in accordance with Our aforecited Section 4 of
Republic Act 166. However, the records are bereft of any evidence
to this effect. "
Hence, this present recourse wherein the petitioner assigned the
following errors:
I
The Honorable Court of Appeals erred when it in effect ruled that
the equitable principles of laches, estoppel and acquiescence
cannot be applied in the instant case for lack of showing that
Yoshida has abandoned the trademark in question and for Pagasa's
failure to refute previous knowledge of its existence and
registration.
II
The Honorable Court of Appeals erred when it in effect ruled that
it is the fact of registration that vests one's right to a trademark.
Anent the first assigned error, petitioner argues that considering
respondent Kaisha's failure or neglect to assert its trademark rights for
more than five (5) years, respondent should now be barred from filing
the petitioner for cancellation of trademark "YKK" of petitioner under
the equitable principles of laches, estoppel and acquiescence; and that
because of respondent's inaction, petitioner had been led to believe
that its use was unobjectionable or tolerated. It further argues that to
be entitled to the defense of estoppel by laches, it is not necessary for
the petitioner either to show that respondent has abandoned the
trademark or to prove its good faith if it is shown that respondent was
aware of petitioner's use of the trademark without the former's
protest or objection thereto leading petitioner to assume that its act
did not constitute an invasion of respondent Kaisha's trademark rights.
On the second assigned error, petitioner claims that Kaisha never
acquired ownership of the trademark, considering that the latter had
no proof of actual commercial use of "YKK" trademark in the
Philippines; that the certificate of registration issued to Kaisha is
void ab initio for without such commercial use, no trademark rights
accrue; that respondent has not presented any reliable and competent
evidence to show that the sample zippers sent to this country were
actually sold here and sample products are not for sale; that no invoice
or receipt were submitted and neither did respondent present
testimony of any buyer or distributor to which said samples were
addressed.
Petitioner likewise asserts that respondent failed to satisfy a
condition sine qua non imposed by law, that is, the two months
commercial use of the trademark prior to the filing of' an application
for registration, as provided for in Section 2 of the Trademark Law:
Section 2. What are registrable Trademarks, trade-names, and
service marks owned by persons, corporations, partnerships or
associations domiciled in the Philippines and by persons,
corporations, partnerships or associations domiciled in any foreign
country may be registered in accordance with the provisions of
this Act: Provided, that said trademarks, trade-names, or service
marks are actually in use in commerce and services not less than
two months in the Philippines before the time the applications for
registration are filed.
Respondent in its comment, argued that the mark applied for by
petitioner not only resembles the mark which it previously registered
but is exactly the same or is Identical to respondent's trademark; that
petitioner should have presented clear, positive proof that Kaisha
abandoned the trademark, because there exists already a prima
facieevidence of continuing use by the latter by virtue of its
registration; that it was incumbent upon petitioner which raised the
defense of laches, to establish by clear evidence that either respondent
was aware of the use of its trademark by petitioner or that respondent
has performed an act which misled petitioner into believing that
respondent was abandoning its rights over the trademark; and that
respondent since its organization in 1948 has endeavoured to
popularize its trademark and spent tremendous sum of money for this
purpose, thus, it is unbelievable that it will just abandon its product
after spending so many years in developing the same.
Petitioner however argued that it adopted and first used the trademark
in commerce in the Philippines on December 27, 1958 and has
continuously used the same up to the present and that respondent's
exportation in the Philippines of YKK brand zippers in 1957 were by its
own official records designated as merely "samples" and "of no
commercial value.
We find for the petitioner.
The Director of Patents, stressed in his order of cancellation, 1 that the
trademarks in question are "confusingly similar". However, the
discussion 2 made by the Senior Trademark Examiner of the Patents
Office regarding the registrability of the mark revealed that "the
concurrent registration of subject mark is not likely to cause purchasers
confusion, mistake or deception," since the "over-all commercial
impression of the marks are grossly different and used on goods not
only falling under different (Pat. Off.) classification, but also possessing
different descriptive properties." It was also emphasized by said
examiner that they are sold through different trade channels or outlets
and are non-competing. It is apparent that the foregoing was the basis
of respondent Director in allowing the registration of petitioner's
trademark.
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TRADEMARK CASES_FULL TEXT
The Court observes that respondent Director made a sudden turnabout
after the petition for cancellation was filed, when he stated in his order
that "the then examiner ... miserably overlooked the fact that at the
time there was already an existing and validly issued certificate of
registration for the trademark YKK, ...," for the records will show that
the examiner, before proceeding with her discussion, mentioned that
"a verification of Index Files show that there is registered, the
trademark 'YKK and Globe Dev.' in favor of Yoshida Kogyo YKK ... ." The
Director's order was affirmed by the Court of Appeals whose decision is
now being assailed.
The Trademark Law is very clear. It requires actual commercial use of
the mark prior to its registration. There is no dispute that respondent
corporation was the first registrant, yet it failed to fully substantiate its
claim that it used in trade or business in the Philippines the subject
mark; it did not present proof to invest it with exclusive, continuous
adoption of the trademark which should consist among others, of
considerable sales since its first use. The invoices 3 submitted by
respondent which were dated way back in 1957 show that the zippers
sent to the Philippines were to be used as "samples" and "of no
commercial, value." The evidence for respondent must, definite and
free from inconsistencies. 4"Samples" are not for sale and therefore,
the fact of exporting them to the Philippines cannot be considered to
be equivalent to the "use" contemplated by the law. Respondent did
not expect income from such "samples." There were no receipts to
establish sale, and no proof were presented to show that they were
subsequently sold in the Philippines.
It appears that it was only after more than seven (7) years when
respondent sought the cancellation of the trademark. An unreasonable
length of time had already passed before respondent asserted its right
to the trademark. There is a presumption of neglect already amounting
to "abandonment" of a right after a party had remained silent for quite
a long time during which petitioner had been openly using the
trademark in question. Such inaction on the part of respondent entitles
petitioner to the equitable principle of laches.
A perusal of the pleadings showed no explanation why respondent
allowed the use by petitioner of the trademark under a duly approved
application of registration thereof for as long as almost eight (8) years
before filing the instant petition for cancellation. Obviously,
respondent wanted goodwill and a wide market established at the
expense of the petitioner but for its benefit. It is precisely the intention
of the law, including a provision on equitable principle to protect only
the vigilant, not those guilty of laches. It is most unfair if at any time, a
previous registrant, even after a lapse of more than five (5) years, can
ask for the cancellation of a similar or the same trademark, the
registration of which was never opposed by the prior registrant. Why,
in the first place did respondent not file an opposition to the
application of petitioner, as it ought to have done? It could be because
by the fact that its own registration was defective for there being no
compliance with the requirement of the law such as the two (2)
months commercial use of the trademark prior to the filing of the
application, its own registration may be cancelled, specially as it had no
evidence of actual use of the trademark after its registration up to the
time of the filing of petitioner's application, a fact easily deducible from
the fact of respondent's complete silence and having taken no action
to cancel petitioner's trademark until after the lapse of more than
seven (7) years from the approval of petitioner's application to
respondent filing a petition for cancellation.
Section 9-A of the Trademark Law as amended provides:
Equitable principles to govern proceedings: In opposition
proceedings and all other inter partes proceedings in the Patent
Office under this Act, equitable principle of laches, estoppel and
acquiescence where applicable, may be considered applied.
Respondent by its silence, must be aware that its "title" to the subject
mark is defective since it failed to conform with the provision of the
law regarding prior use of the mark; and it must have been afraid that
it cannot fully substantiate its claim that the mark was commercially
used in the Philippines. Surely, the evidence of respondent showing
that it had advertised in magazines such as Life and Time, cannot be
considered as compliance with the law, for it is of general knowledge
that said magazines are not published in the Philippines, nor was there
any showing that the product so advertised was even sold here. Hence,
to grant the application for cancellation would greatly prejudice
petitioner since respondent would be taking advantage of the goodwill
already established by petitioner in selling its product, without the
respondent having incurred in any expense to gain this priceless asset.
Equity and justice, therefore, demand that petitioner should be
allowed to continue the use of the subject mark and the mark which
was supposedly registered under the name of respondent be deemed
cancelled.
WHEREFORE, the decision dated February 6, 1980 of the Court of
Appeals is hereby set aside. No costs.
SO ORDERED.
G.R. No. 91332 July 16, 1993
PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., AND
FABRIQUES OF TABAC REUNIES, S.A., petitioners vs. THE COURT OF
APPEALS AND FORTUNE TOBACCO CORPORATION, respondents.
MELO, J.:
In the petition before us, petitioners Philip Morris, Inc., Benson and
Hedges (Canada), Inc., and Fabriques of Tabac Reunies, S.A., are
ascribing whimsical exercise of the faculty conferred upon magistrates
by Section 6, Rule 58 of the Revised Rules of Court when respondent
Court of Appeals lifted the writ of preliminary injunction it earlier had
issued against Fortune Tobacco Corporation, herein private
respondent, from manufacturing and selling "MARK" cigarettes in the
local market.
Banking on the thesis that petitioners' respective symbols "MARK VII",
"MARK TEN", and "LARK", also for cigarettes, must be protected
against unauthorized appropriation, petitioners twice solicited the
ancillary writ in the course the main suit for infringement but the court
of origin was unpersuaded.
Before we proceed to the generative facts of the case at bar, it must be
emphasized that resolution of the issue on the propriety of lifting the
writ of preliminary injunction should not be construed as a
prejudgment of the suit below. Aware of the fact that the discussion
we are about to enter into involves a mere interlocutory order, a
discourse on the aspect infringement must thus be avoided. With
these caveat, we shall now shift our attention to the events which
spawned the controversy.
As averred in the initial pleading, Philip Morris, Incorporated is a
corporation organized under the laws of the State of Virginia, United
States of America, and does business at 100 Park Avenue, New York,
New York, United States of America. The two other plaintiff foreign
corporations, which are wholly-owned subsidiaries of Philip Morris,
Inc., are similarly not doing business in the Philippines but are suing on
an isolated transaction. As registered owners "MARK VII", "MARK TEN",
and "LARK" per certificates of registration issued by the Philippine
Patent Office on April 26, 1973, May 28, 1964, and March 25, 1964,
plaintiffs-petitioners asserted that defendant Fortune Tobacco
Corporation has no right to manufacture and sell cigarettes bearing the
allegedly identical or confusingly similar trademark "MARK" in
contravention of Section 22 of the Trademark Law, and should,
therefore, be precluded during the pendency of the case from
performing the acts complained of via a preliminary injunction (p. 75,
Court of Appeals Rollo in AC-G.R. SP No. 13132).
For its part, Fortune Tobacco Corporation admitted petitioners'
certificates of registration with the Philippine Patent Office subject to
the affirmative and special defense on misjoinder of party plaintiffs.
Private respondent alleged further that it has been authorized by the
Bureau of Internal Revenue to manufacture and sell cigarettes bearing
the trademark "MARK", and that "MARK" is a common word which
cannot be exclusively appropriated (p.158, Court of Appeals Rollo in
A.C.-G.R. SP No. 13132). On March 28, 1983, petitioners' prayer for
preliminary injunction was denied by the Presiding Judge of Branch 166
of the Regional Trial Court of the National Capital Judicial Region
stationed at Pasig, premised upon the following propositions:
Plaintiffs admit in paragraph 2 of the complaint that ". . . they
are not doing business in the Philippines and are suing on an
isolated transaction . . .". This simply means that they are not
engaged in the sale, manufacture, importation, expor[t]ation
and advertisement of their cigarette products in the
19
TRADEMARK CASES_FULL TEXT
Philippines. With this admission, defendant asks: ". . . how
could defendant's "MARK" cigarettes cause the former
"irreparable damage" within the territorial limits of the
Philippines?" Plaintiffs maintain that since their trademarks
are entitled to protection by treaty obligation under Article 2
of the Paris Convention of which the Philippines is a member
and ratified by Resolution No. 69 of the Senate of the
Philippines and as such, have the force and effect of law under
Section 12, Article XVII of our Constitution and since this is an
action for a violation or infringement of a trademark or trade
name by defendant, such mere allegation is sufficient even in
the absence of proof to support it. To the mind of the Court,
precisely, this is the issue in the main case to determine
whether or not there has been an invasion of plaintiffs' right
of property to such trademark or trade name. This claim of
plaintiffs is disputed by defendant in paragraphs 6 and 7 of the
Answer; hence, this cannot be made a basis for the issuance of
a writ of preliminary injunction.
There is no dispute that the First Plaintiff is the registered
owner of trademar[k] "MARK VII" with Certificate of
Registration No. 18723, dated April 26,1973 while the Second
Plaintiff is likewise the registered owner of trademark "MARK
TEN" under Certificate of Registration No. 11147, dated May
28, 1963 and the Third Plaintiff is a registrant of trademark
"LARK" as shown by Certificate of Registration No. 10953
dated March 23, 1964, in addition to a pending application for
registration of trademark "MARK VII" filed on November 21,
1980 under Application Serial No. 43243, all in the Philippine
Patent Office. In same the manner, defendant has a pending
application for registration of the trademark "LARK" cigarettes
with the Philippine Patent Office under Application Serial No.
44008. Defendant contends that since plaintiffs are "not doing
business in the Philippines" coupled the fact that the Director
of Patents has not denied their pending application for
registration of its trademark "MARK", the grant of a writ of
preliminary injunction is premature. Plaintiffs contend that
this act(s) of defendant is but a subterfuge to give semblance
of good faith intended to deceive the public and patronizers
into buying the products and create the impression that
defendant's goods are identical with or come from the same
source as plaintiffs' products or that the defendant is a
licensee of plaintiffs when in truth and in fact the former is
not. But the fact remains that with its pending application,
defendant has embarked in the manufacturing, selling,
distributing and advertising of "MARK" cigarettes. The
question of good faith or bad faith on the part of defendant
are matters which are evidentiary in character which have to
be proven during the hearing on the merits; hence, until and
unless the Director of Patents has denied defendant's
application, the Court is of the opinion and so holds that
issuance a writ of preliminary injunction would not lie.
There is no question that defendant has been authorized by
the Bureau of Internal Revenue to manufacture cigarettes
bearing the trademark "MARK" (Letter of Ruben B. Ancheta,
Acting Commissioner addressed to Fortune Tobacco
Corporation dated April 3, 1981, marked as Annex "A",
defendant's "OPPOSITION, etc." dated September 24, 1982).
However, this authority is qualified . . . that the said brands
have been accepted and registered by the Patent Office not
later than six (6) months after you have been manufacturing
the cigarettes and placed the same in the market." However,
this grant ". . . does not give you protection against any person
or entity whose rights may be prejudiced by infringement or
unfair competition in relation to your indicated
trademarks/brands". As aforestated, the registration of
defendant's application is still pending in the Philippine Patent
Office.
It has been repeatedly held in this jurisdiction as well as in the
United States that the right or title of the applicant for
injunction remedy must be clear and free from doubt. Because
of the disastrous and painful effects of an injunction, Courts
should be extremely careful, cautious and conscionable in the
exercise of its discretion consistent with justice, equity and fair
play.
There is no power the exercise of which is more delicate
which requires greater caution, deliberation, and sound
discretion, or (which is) more dangerous in a doubtful
case than the issuing of an injunction; it is the strong arm
of equity that never ought to be extended unless to cases
of great injury, where courts of law cannot afford an
adequate or commensurate remedy in damages. The right
must be clear, the injury impending or threatened, so as
to be averted only by the protecting preventive process of
injunction. (Bonaparte v. Camden, etc. N. Co., 3 F. Cas. No.
1, 617, Baldw. 205, 217.)
Courts of equity constantly decline to lay down any rule
which injunction shall be granted or withheld. There is
wisdom in this course, for it is impossible to foresee all
exigencies of society which may require their aid to
protect rights and restrain wrongs. (Merced M. Go v.
Freemont, 7 Gal. 317, 321; 68 Am. Dec. 262.)
It is the strong arm of the court; and to render its
operation begin and useful, it must be exercised with
great discretion, and when necessary requires it.
(Attorney-General v. Utica Inc. Co., P. John Ch. (N.Y.) 371.)
Having taken a panoramic view of the position[s] of both
parties as viewed from their pleadings, the picture reduced to
its minimum size would be this: At the crossroads are the two
(2) contending parties, plaintiffs vigorously asserting the rights
granted by law, treaty and jurisprudence to restrain defendant
in its activities of manufacturing, selling, distributing and
advertising its "MARK" cigarettes and now comes defendant
who countered and refused to be restrained claiming that it
has been authorized temporarily by the Bureau of Internal
Revenue under certain conditions to do so as aforestated
coupled by its pending application for registration of
trademark "MARK" in the Philippine Patent Office. This
circumstance in itself has created a dispute between the
parties which to the mind of the Court does not warrant the
issuance of a writ of preliminary injunction.
It is well-settled principle that courts of equity will refuse
an application for the injunctive remedy where the
principle of law on which the right to preliminary
injunction rests is disputed and will admit of doubt,
without a decision of the court of law establishing such
principle although satisfied as to what is a correct
conclusion of law upon the facts. The fact, however, that
there is no such dispute or conflict does not in itself
constitute a justifiable ground for the court to refuse an
application for the injunctive relief. (Hackensack Impr.
Commn. v. New Jersey Midland P. Co., 22 N.J. Eg. 94.)
Hence, the status quo existing between the parties prior to the
filing of this case should be maintained. For after all, an
injunction, without reference to the parties, should be violent,
vicious nor even vindictive. (pp. 338-341, Rollo in G.R. No.
91332.)
In the process of denying petitioners' subsequent motion for
reconsideration of the order denying issuance of the requested writ,
the court of origin took cognizance of the certification executed on
January 30, 1984 by the Philippine Patent Office attesting to the fact
that private respondent's application for registration is still pending
appropriate action. Apart from this communication, what prompted
the trial court judge to entertain the idea of prematurity and
untimeliness of petitioners' application for a writ of preliminary
injunction was the letter from the Bureau of Internal Revenue date
February 2, 1984 which reads:
MRS. TERESITA GANDIONGCO OLEDAN
Legal Counsel
Fortune Tobacco Corporation
Madam:
In connection with your letter dated January 25, 1984,
reiterating your query as to whether your label approval
automatically expires or becomes null and void after six (6)
months if the brand is not accepted and by the patent office,
20
TRADEMARK CASES_FULL TEXT
please be informed that no provision in the Tax Code or
revenue regulation that requires an applicant to comply with
the aforementioned condition order that his label approved
will remain valid and existing.
Based on the document you presented, it shows that
registration of this particular label still pending resolution by
the Patent Office. These being so , you may therefore continue
with the production said brand of cigarette until this Office is
officially notified that the question of ownership of "MARK"
brand is finally resolved.(p. 348, Rollo.)
It appears from the testimony of Atty. Enrique Madarang, Chief of the
Trademark Division of the then Philippine Patent Office that Fortune's
application for its trademark is still pending before said office (p.
311, Rollo).
Petitioners thereafter cited supervening events which supposedly
transpired since March 28, 1983, when the trial court first declined
issuing a writ of preliminary injunction, that could alter the results of
the case in that Fortune's application had been rejected, nay, barred by
the Philippine Patent Office, and that the application had been
forfeited by abandonment, but the trial court nonetheless denied the
second motion for issuance of the injunctive writ on April 22, 1987,
thus:
For all the prolixity of their pleadings and testimonial
evidence, the plaintiffs-movants have fallen far short of the
legal requisites that would justify the grant of the writ of
preliminary injunction prayed for. For one, they did not even
bother to establish by competent evidence that the products
supposedly affected adversely by defendant's trademark now
subject of an application for registration with the Philippine
Patents Office, are in actual use in the Philippines. For
another, they concentrated their fire on the alleged
abandonment and forfeiture by defendant of said application
for registration.
The Court cannot help but take note of the fact that in their
complaint plaintiffs included a prayer for issuance preliminary
injunction. The petition was duly heard, and thereafter matter
was assiduously discussed lengthily and resolved against
plaintiffs in a 15-page Order issued by the undersigned's
predecessor on March 28, 1983. Plaintiffs' motion for
reconsideration was denied in another well-argued 8 page
Order issued on April 5, 1984,, and the matter was made to
rest.
However, on the strength of supposed changes in the material
facts of this case, plaintiffs came up with the present motion
citing therein the said changes which are: that defendant's
application had been rejected and barred by the Philippine
Patents Office, and that said application has been deemed
abandoned and forfeited. But defendant has refiled the same.
Plaintiffs' arguments in support of the present motion appear
to be a mere rehash of their stand in the first above-
mentioned petition which has already been ruled upon
adversely against them. Granting that the alleged changes in
the material facts are sufficient grounds for a motion seeking a
favorable grant of what has already been denied, this motion
just the same cannot prosper.
In the first place there is no proof whatsoever that any of
plaintiffs' products which they seek to protect from any
adverse effect of the trademark applied for by defendant, is in
actual use and available for commercial purposes anywhere in
the Philippines. Secondly as shown by plaintiffs' own evidence
furnished by no less than the chief of Trademarks Division of
the Philippine Patent Office, Atty. Enrique Madarang, the
abandonment of an application is of no moment, for the same
can always be refiled. He said there is no specific provision in
the rules prohibiting such refiling (TSN, November 21, 1986,
pp. 60 & 64, Raviera). In fact, according to Madarang, the
refiled application of defendant is now pending before the
Patents Office. Hence, it appears that the motion has no leg to
stand on. (pp. 350-351, Rolloin G. R. No. 91332.)
Confronted with this rebuff, petitioners filed a previous petition
for certiorari before the Court, docketed as G.R. No. 78141, but the
petition was referred to the Court of Appeals.
The Court of Appeals initially issued a resolution which set aside the
court of origin's order dated April 22, 1987, and granted the issuance of
a writ of preliminary injunction enjoining Fortune, its agents,
employees, and representatives, from manufacturing, selling, and
advertising "MARK" cigarettes. The late Justice Cacdac, speaking for the
First Division of the Court of Appeals in CA-G.R. SP No. 13132,
remarked:
There is no dispute that petitioners are the registered owners
of the trademarks for cigarettes "MARK VII", "MARK TEN", and
"LARK".(Annexes B, C and D, petition). As found and reiterated
by the Philippine Patent Office in two (2) official
communications dated April 6, 1983 and January 24, 1984, the
trademark "MARK" is "confusingly similar" to the trademarks
of petitioners, hence registration was barred under Sec. 4 (d)
of Rep. Act. No. 166, as amended (pp. 106, 139, SCA rollo). In a
third official communication dated April 8, 1986, the
trademark application of private respondent for the "MARK"
under Serial No. 44008 filed on February 13, 1981 which was
declared abandoned as of February 16, 1986, is now deemed
forfeited, there being no revival made pursuant to Rule 98 of
the Revised Rules of Practitioners in Trademark Cases." (p.
107, CA rollo). The foregoing documents or communications
mentioned by petitioners as "the changes in material facts
which occurred after March 28, 1983", are not also questioned
by respondents.
Pitted against the petitioners' documentary evidence,
respondents pointed to (1) the letter dated January 30, 1979
(p. 137, CA rollo) of Conrado P. Diaz, then Acting
Commissioner of Internal Revenue, temporarily granting the
request of private respondent for a permit to manufacture
two (2) new brands of cigarettes one of which is brand
"MARK" filter-type blend, and (2) the certification dated
September 26, 1986 of Cesar G. Sandico, Director of Patents
(p. 138, CA rollo) issued upon the written request of private
respondents' counsel dated September 17, 1986 attesting that
the records of his office would show that the "trademark
MARK" for cigarettes is now the subject of a pending
application under Serial No. 59872 filed on September 16,
1986.
Private respondent's documentary evidence provides the
reasons neutralizing or weakening their probative values. The
penultimate paragraph of Commissioner Diaz' letter of
authority reads:
Please be informed further that the authority herein
granted does not give you protection against any person
or entity whose rights may be prejudiced by infringement
or unfair competition in relation to your above-named
brands/trademark.
while Director Sandico's certification contained similar
conditions as follows:
This Certification, however, does not give protection as
against any person or entity whose right may be
prejudiced by infringement or unfair competition in
relation to the aforesaid trademark nor the right to
register if contrary to the provisions of the Trademark
Law, Rep. Act No. 166 as amended and the Revised Rules
of Practice in Trademark Cases.
The temporary permit to manufacture under the trademark
"MARK" for cigarettes and the acceptance of the second
application filed by private respondent in the height of their
dispute in the main case were evidently made subject to the
outcome of the said main case or Civil Case No. 47374 of the
respondent Court. Thus, the Court has not missed to note the
absence of a mention in the Sandico letter of September 26,
1986 of any reference to the pendency of the instant action
filed on August 18, 1982. We believe and hold that petitioners
have shown a prima facie case for the issuance of the writ of
prohibitory injunction for the purposes stated in their
21
TRADEMARK CASES_FULL TEXT
complaint and subsequent motions for the issuance of the
prohibitory writ. (Buayan Cattle Co. vs. Quintillan, 125 SCRA
276)
The requisites for the granting of preliminary injunction are
the existence of the right protected and the facts against
which the injunction is to be directed as violative of said right.
(Buayan Cattle Co. vs. Quintillan, supra; Ortigas & Co. vs. Ruiz,
148 SCRA 326). It is a writ framed according to the
circumstances of the case commanding an act which the Court
regards as essential to justice and restraining an act it deems
contrary to equity and good conscience (Rosauro vs. Cuneta,
151 SCRA 570). If it is not issued, the defendant may, before
final judgment, do or continue the doing of the act which the
plaintiff asks the court to restrain, and thus make ineffectual
the final judgment rendered afterwards granting the relief
sought by the plaintiff (Calo vs. Roldan, 76 Phil. 445).
Generally, its grant or denial rests upon the sound discretion
of the Court except on a clear case of abuse (Belish
Investment & Finance Co. vs. State House, 151 SCRA 636).
Petitioners' right of exclusivity to their registered trademarks
being clear and beyond question, the respondent court's
denial of the prohibitive writ constituted excess of jurisdiction
and grave abuse discretion. If the lower court does not grant
preliminary injunction, the appellate court may grant the
same. (Service Specialists, Inc. vs. Sheriff of Manila, 145 SCRA
139). (pp. 165-167, Rollo in G.R. No. 91332.)
After private respondent Fortune's motion for reconsideration was
rejected, a motion to dissolve the disputed writ of preliminary
injunction with offer to post a counterbond was submitted which was
favorably acted upon by the Court of Appeals, premised on the filing of
a sufficient counterbond to answer for whatever perjuicio petitioners
may suffer as a result thereof, to wit:
The private respondent seeks to dissolve the preliminary
injunction previously granted by this Court with an offer to file
a counterbond. It was pointed out in its supplemental motion
that lots of workers employed will be laid off as a
consequence of the injunction and that the government will
stand to lose the amount of specific taxes being paid by
the private respondent. The specific taxes being paid is the
sum total of P120,120, 295.98 from January to July 1989.
The petitioners argued in their comment that the damages
caused by the infringement of their trademark as well as the
goodwill it generates are incapable of pecuniary estimation
and monetary evaluation and not even the counterbond could
adequately compensate for the damages it will incur as a
result of the dissolution of the bond. In addition, the
petitioner further argued that doing business in the
Philippines is not relevant as the injunction pertains to an
infringement of a trademark right.
After a thorough re-examination of the issues involved and the
arguments advanced by both parties in the offer to file a
counterbond and the opposition thereto, WE believe that
there are sound and cogent reasons for US to grant the
dissolution of the writ of preliminary injunction by the offer of
the private respondent to put up a counterbond to answer for
whatever damages the petitioner may suffer as a consequence
of the dissolution of the preliminary injunction.
The petitioner will not be prejudiced nor stand to suffer
irreparably as a consequence of the lifting of the preliminary
injunction considering that they are not actually engaged in
the manufacture of the cigarettes with the trademark in
question and the filing of the counterbond will amply answer
for such damages.
While the rule is that an offer of a counterbond does not
operate to dissolve an injunction previously granted,
nevertheless, it is equally true that an injunction could be
dissolved only upon good and valid grounds subject to the
sound discretion of the court. As WE have maintained the
view that there are sound and good reasons to lift the
preliminary injunction, the motion to file a counterbond is
granted. (pp. 53-54, Rollo in G.R. No. 91332.)
Petitioners, in turn, filed their own motion for re-examination geared
towards reimposition of the writ of preliminary injunction but to no
avail (p. 55, Rollo in G.R. No. 91332).
Hence, the instant petition casting three aspersions that respondent
court gravely abused its discretion tantamount to excess of jurisdiction
when:
I. . . . it required, contrary to law and jurisprudence, that in
order that petitioners may suffer irreparable injury due to the
lifting of the injunction, petitioners should be using actually
their registered trademarks in commerce in the Philippines;
II. . . . it lifted the injunction in violation of section 6 of Rule 58
of the Rules of Court; and
III. . . . after having found that the trial court had committed
grave abuse of discretion and exceeded its jurisdiction for
having refused to issue the writ of injunction to restrain
private respondent's acts that are contrary to equity and good
conscience, it made a complete about face for legally
insufficient grounds and authorized the private respondent to
continue performing the very same acts that it had considered
contrary to equity and good conscience, thereby ignoring not
only the mandates of the Trademark Law, the international
commitments of the Philippines, the judicial admission of
private respondent that it will have no more right to use the
trademark "MARK" after the Director of Patents shall have
rejected the application to register it, and the admonitions of
the Supreme Court. (pp. 24-25, Petition; pp. 25-26, Rollo.)
To sustain a successful prosecution of their suit for infringement,
petitioners, as foreign corporations not engaged in local commerce,
rely on section 21-A of the Trademark Law reading as follows:
Sec. 21-A. Any foreign corporation or juristic person to which a
mark or trade-name has been registered or assigned under
this act may bring an action hereunder for infringement, for
unfair competition, or false designation of origin and false
description, whether or not it has been licensed to do business
in the Philippines under Act Numbered Fourteen hundred and
fifty-nine, as amended, otherwise known as the Corporation
Law, at the time it brings complaint: Provided, That the
country of which the said foreign corporation or juristic person
is a citizen or in which it is domiciled, by treaty, convention or
law, grants a similar privilege to corporate or juristic persons
of the Philippines. (As inserted by Sec. 7 of Republic Act No.
638.)
to drive home the point that they are not precluded from
initiating a cause of action in the Philippines on account of the
principal perception that another entity is pirating their
symbol without any lawful authority to do so. Judging from a
perusal of the aforequoted Section 21-A, the conclusion
reached by petitioners is certainly correct for the proposition
in support thereof is embedded in the Philippine legal
jurisprudence.
Indeed, it was stressed in General Garments Corporation vs. Director of
Patents (41 SCRA 50 [1971]) by then Justice (later Chief Justice)
Makalintal that:
Parenthetically, it may be stated that the ruling in the
Mentholatum case was subsequently derogated when
Congress, purposely to "counteract the effects" of said case,
enacted Republic Act No. 638, inserting Section 21-A in the
Trademark Law, which allows a foreign corporation or juristic
person to bring an action in Philippine courts for infringement
of a mark or tradename, for unfair competition, or false
designation of origin and false description, "whether or not it
has been licensed to do business in the Philippines under Act
Numbered Fourteen hundred and fifty-nine, as amended,
otherwise known as the Corporation Law, at the time it brings
complaint."
Petitioner argues that Section 21-A militates against
respondent's capacity to maintain a suit for cancellation, since
it requires, before a foreign corporation may bring an action,
22
TRADEMARK CASES_FULL TEXT
that its trademark or tradename has been registered under
the Trademark Law. The argument misses the essential point
in the said provision, which is that the foreign corporation is
allowed thereunder to sue "whether or not it has been
licensed to do business in the Philippines" pursuant to the
Corporation Law (precisely to counteract the effects of the
decision in the Mentholatum case). (at p. 57.)
However, on May, 21, 1984, Section 21-A, the provision under
consideration, was qualified by this Court in La Chemise Lacoste S.A. vs.
Fernandez (129 SCRA 373 [1984]), to the effect that a foreign
corporation not doing business in the Philippines may have the right to
sue before Philippine Courts, but existing adjective axioms require that
qualifying circumstances necessary for the assertion of such right
should first be affirmatively pleaded (2 Agbayani Commercial Laws of
the Philippines, 1991 Ed., p. 598; 4 Martin, Philippine Commercial
Laws, Rev. Ed., 1986, p. 381). Indeed, it is not sufficient for a foreign
corporation suing under Section 21-A to simply allege its alien origin.
Rather, it must additionally allege its personality to sue. Relative to this
condition precedent, it may be observed that petitioners were not
remiss in averring their personality to lodge a complaint for
infringement (p. 75, Rollo in AC-G.R. SP No. 13132) especially so when
they asserted that the main action for infringement is anchored on an
isolated transaction (p. 75, Rollo in AC-G.R. SP No. 13132; Atlantic
Mutual Ins. Co. vs. Cebu Stevedoring Co., Inc., 17 SCRA 1037 (1966), 1
Regalado, Remedial Law Compendium, Fifth Rev. Ed., 1988, p. 103).
Another point which petitioners considered to be of significant
interest, and which they desire to impress upon us is the protection
they enjoy under the Paris Convention of 1965 to which the Philippines
is a signatory. Yet, insofar as this discourse is concerned, there is no
necessity to treat the matter with an extensive response because
adherence of the Philippines to the 1965 international covenant due
to pact sunt servanda had been acknowledged in La Chemise (supra at
page 390).
Given these confluence of existing laws amidst the cases involving
trademarks, there can be no disagreement to the guiding principle in
commercial law that foreign corporations not engaged in business in
the Philippines may maintain a cause of action for infringement
primarily because of Section 21-A of the Trademark Law when the legal
standing to sue is alleged, which petitioners have done in the case at
hand.
In assailing the justification arrived at by respondent court when it
recalled the writ of preliminary injunction, petitioners are of the
impression that actual use of their trademarks in Philippine commercial
dealings is not an indispensable element under Article 2 of the Paris
Convention in that:
(2) . . . . no condition as to the possession of a domicile or
establishment in the country where protection is claimed may
be required of persons entitled to the benefits of the Union for
the enjoyment of any industrial property of any industrial
property rights. (p. 28, Petition; p. 29, Rollo in G.R. No. 91332.)
Yet petitioners' perception along this line is nonetheless resolved by
Sections 2 and 2-A of the Trademark Law which speak loudly, about
necessity of actual commercial use of the trademark in the local forum:
Sec. 2. What are registrable. — Trademarks, tradenames and
service marks owned by persons, corporations, partnerships
or associations domiciled in the Philippines and by persons,
corporations, partnerships or associations domiciled in any
foreign country may be registered in accordance with the
provisions of this Act; Provided, That said trademarks,
tradenames, or service marks are actually in use in
commerce and services not less than two months in the
Philippines before the time the applications for registration
are filed; And provided, further, That the country of which the
applicant for registration is a citizen grants by law substantially
similar privileges to citizens of the Philippines, and such fact is
officially certified, with a certified true copy of the foreign law
translated into the English language, by the government of the
foreign country to the Government of the Republic of the
Philippines. (As amended by R.A. No. 865).
Sec. 2-A. Ownership of trademarks, tradenames and service
marks; how acquired. — Anyone who lawfully produces or
deals in merchandise of any kind or who engages in any lawful
business, or who renders any lawful service in commerce, by
actual use thereof in manufacture or trade, in business,and in
the service rendered, may appropriate to his exclusive use a
trademark, a tradename, or a service mark not so
appropriated by another, to distinguish his merchandise,
business or service from the merchandise, business or service
of others. The ownership or possession of a trademark,
tradename, service mark, heretofore or hereafter
appropriated, as in this section provided, shall be recognized
and protected in the same manner and to the same extent as
are other property rights known to the law. (As amended by
R.A. No. 638). (Kabushi Kaisha Isetan vs. Intermediate
Appellate Court, 203 SCRA 583 [1991], at pp. 589-590;
emphasis supplied.)
Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the Philippines
must subordinate an international agreement inasmuch as the
apparent clash is being decided by a municipal tribunal (Mortensen vs.
Peters, Great Britain, High Court of Judiciary of Scotland, 1906, 8
Sessions 93; Paras, International Law and World Organization, 1971
Ed., p. 20). Withal, the fact that international law has been made part
of the law of the land does not by any means imply the primacy of
international law over national law in the municipal sphere. Under the
doctrine of incorporation as applied in most countries, rules of
international law are given a standing equal, not superior, to national
legislative enactments (Salonga and Yap, Public International Law,
Fourth ed., 1974, p. 16).
The aforequoted basic provisions of our Trademark Law, according to
Justice Gutierrez, Jr., in Kabushi Kaisha Isetan vs. Intermediate
Appellate Court (203 SCRA 583 [1991]), have been construed in this
manner:
A fundamental principle of Philippine Trademark Law is that
actual use in commerce in the Philippines is a pre-requisite to
the acquisition of ownership over a trademark or a
tradename.
xxx xxx xxx
These provisions have been interpreted in Sterling Products
International, Inc. v. Farbenfabriken Bayer
Actiengesellschaft (27 SCRA 1214 [1969]) in this way:
A rule widely accepted and firmly entrenched because it
has come down through the years is that actual use in
commerce or business is a prerequisite to the acquisition
of the right of ownership over a trademark.
xxx xxx xxx
. . . Adoption alone of a trademark would not give
exclusive right thereto. Such right grows out of their
actual use. Adoption is not use. One may make
advertisements, issue circulars, give out price lists on
certain goods; but these alone would not give exclusive
right of use. For trademark is a creation of use. The
underlying reason for all these is that purchasers have
come to understand the mark as indicating the origin of
the wares. Flowing from this is the trader's right to
protection in the trade he has built up and the goodwill he
has accumulated from use of the trademark. . . .
In fact, a prior registrant cannot claim exclusive use of the
trademark unless it uses it in commerce.
We rule[d] in Pagasa Industrial Corporation v. Court of
Appeals (118 SCRA 526 [1982]):
3. The Trademark law is very clear. It requires actual
commercial use of the mark prior to its registration. There is
no dispute that respondent corporation was the first
registrant, yet it failed to fully substantiate its claim that it
used in trade or business in the Philippines the subject mark; it
did not present proof to invest it with exclusive, continuous
adoption of the trademark which should consist among
others, of considerable sales since its first use. The invoices
(Exhibits 7, 7-a, and 8-b) submitted by respondent which were
dated way back in 1957 show that the zippers sent to the
23
TRADEMARK CASES_FULL TEXT
Philippines were to be used as "samples" and "of no
commercial value". The evidence for respondent must be
clear, definite and free from inconsistencies. (Sy Ching v. Gaw
Lui, 44 SCRA 148-149) "Samples" are not for sale and
therefore, the fact of exporting them to the Philippines cannot
be considered to be equivalent to the "use" contemplated by
the law. Respondent did not expect income from such
"samples". There were no receipts to establish sale, and no
proof were presented to show that they were subsequently
sold in the Philippines. (Pagasa Industrial Corp. v. Court of
Appeals, 118 SCRA 526 [1982]; Emphasis Supplied)
The records show that the petitioner has never conducted any
business in the Philippines. It has never promoted its
tradename or trademark in the Philippines. It is unknown to
Filipino except the very few who may have noticed it while
travelling abroad. It has never paid a single centavo of tax to
the Philippine government. Under the law, it has no right to
the remedy it seeks. (at pp. 589-591.)
In other words, petitioners may have the capacity to sue for
infringement irrespective of lack of business activity in the Philippines
on account of Section 21-A of the Trademark Law but the question
whether they have an exclusive right over their symbol as to justify
issuance of the controversial writ will depend on actual use of their
trademarks in the Philippines in line with Sections 2 and 2-A of the
same law. It is thus incongruous for petitioners to claim that when a
foreign corporation not licensed to do business in Philippines files a
complaint for infringement, the entity need not be actually using its
trademark in commerce in the Philippines. Such a foreign corporation
may have the personality to file a suit for infringement but it may not
necessarily be entitled to protection due to absence of actual use of
the emblem in the local market.
Going back to the first assigned error, we can not help but notice the
manner the ascription was framed which carries with it the implied but
unwarranted assumption of the existence of petitioners' right to relief.
It must be emphasized that this aspect of exclusive dominion to the
trademarks, together with the corollary allegation of irreparable injury,
has yet to be established by petitioners by the requisite quantum of
evidence in civil cases. It cannot be denied that our reluctance to issue
a writ of preliminary injunction is due to judicial deference to the lower
courts, involved as there is mere interlocutory order (Villarosa vs.
Teodoro, Sr., 100 Phil. 25 [1956]). In point of adjective law, the petition
has its roots on a remedial measure which is but ancillary to the main
action for infringement still pending factual determination before the
court of origin. It is virtually needless to stress the obvious reality that
critical facts in an infringement case are not before us more so when
even Justice Feliciano's opinion observes that "the evidence is scanty"
and that petitioners "have yet to submit copies or photographs of their
registered marks as used in cigarettes" while private respondent has
not, for its part, "submitted the actual labels or packaging materials
used in selling its "Mark" cigarettes." Petitioners therefore, may not be
permitted to presume a given state of facts on their so called right to
the trademarks which could be subjected to irreparable injury and in
the process, suggest the fact of infringement. Such a ploy would
practically place the cart ahead of the horse. To our mind, what
appears to be the insurmountable barrier to petitioners' portrayal of
whimsical exercise of discretion by the Court of Appeals is the well-
taken remark of said court that:
The petitioner[s] will not be prejudiced nor stand to suffer
irreparably as a consequence of the lifting of the preliminary
injunction considering that they are not actually engaged in
the manufacture of the cigarettes with the trademark in
question and the filing of the counterbond will amply answer
for such damages. (p. 54. Rollo in G.R. No. 91332.)
More telling are the allegations of petitioners in their complaint (p.
319, Rollo G.R. No. 91332) as well as in the very petition filed with this
Court (p. 2, Rollo in G.R. No. 91332) indicating that they are not doing
business in the Philippines, for these frank representations are
inconsistent and incongruent with any pretense of a right which can
breached (Article 1431, New Civil Code; Section 4, Rule 129; Section 3,
Rule 58, Revised Rules of Court). Indeed, to be entitled to an injunctive
writ, petitioner must show that there exists a right to be protected and
that the facts against which injunction is directed are violative of said
right (Searth Commodities Corporation vs. Court of Appeals, 207 SCRA
622 [1992]). It may be added in this connection that albeit petitioners
are holders of certificate of registration in the Philippines of their
symbols as admitted by private respondent, the fact of exclusive
ownership cannot be made to rest solely on these documents since
dominion over trademarks is not acquired by the mere fact of
registration alone and does not perfect a trademark right (Unno
Commercial Enterprises, Inc. vs. General Milling Corporation, 120 SCRA
804 [1983]).
Even if we disregard the candid statements of petitioners anent the
absence of business activity here and rely on the remaining statements
of the complaint below, still, when these averments are juxtaposed
with the denials and propositions of the answer submitted by private
respondent, the supposed right of petitioners to the symbol have
thereby been controverted. This is not to say, however, that the
manner the complaint was traversed by the answer is sufficient to tilt
the scales of justice in favor of private respondent. Far from it. What
we are simply conveying is another basic tenet in remedial law that
before injunctive relief may properly issue, complainant's right or title
must be undisputed and demonstrated on the strength of one's own
title to such a degree as to unquestionably exclude dark clouds of
doubt, rather than on the weakness of the adversary's evidence,
inasmuch as the possibility of irreparable damage, without prior proof
of transgression of an actual existing right, is no ground for injunction
being mere damnum absque injuria (Talisay-Silay Milling Co., Inc. vs.
CFI of Negros Occidental, 42 SCRA 577 [1971]; Francisco, Rules of
Court, Second ed., 1985, p. 225; 3 Martin, Rules of Court, 1986 ed., p.
82).
On the economic repercussion of this case, we are extremely bothered
by the thought of having to participate in throwing into the streets
Filipino workers engaged in the manufacture and sale of private
respondent's "MARK" cigarettes who might be retrenched and forced
to join the ranks of the many unemployed and unproductive as a result
of the issuance of a simple writ of preliminary injunction and this,
during the pendency of the case before the trial court, not to mention
the diminution of tax revenues represented to be close to a quarter
million pesos annually. On the other hand, if the status quo is
maintained, there will be no damage that would be suffered by
petitioners inasmuch as they are not doing business in the Philippines.
With reference to the second and third issues raised by petitioners on
the lifting of the writ of preliminary injunction, it cannot be gainsaid
that respondent court acted well within its prerogatives under Section
6, Rule 58 of the Revised Rules of Court:
Sec. 6. Grounds for objection to, or for motion of dissolution of
injunction. — The injunction may be refused or, if granted ex
parte, may be dissolved, upon the insufficiency of the
complaint as shown by the complaint itself, with or without
notice to the adverse party. It may also be refused or dissolved
on other grounds upon affidavits on the part of the
defendants which may be opposed by the plaintiff also by
affidavits. It may further be refused or, if granted, may be
dissolved, if it appears after hearing that although the plaintiff
is entitled to the injunction, the issuance or continuance
thereof, as the case may be, would cause great damage to the
defendant while the plaintiff can be fully compensated for
such damages as he may suffer, and the defendant files a
bond in an amount fixed by the judge conditioned that he will
pay all damages which the plaintiff may suffer by the refusal
or the dissolution of the injunction. If it appears that the
extent of the preliminary injunction granted is too great, it
must be modified.
Under the foregoing rule, injunction may be refused, or, if granted,
may be dissolved, on the following instances:
(1) If there is insufficiency of the complaint as shown by the
allegations therein. Refusal or dissolution may be granted in
this case with or without notice to the adverse party.
(2) If it appears after hearing that although the plaintiff is
entitled to the injunction, the issuance or continuance thereof
would cause great damage to the defendant, while the
plaintiff can be fully compensated for such damages as he may
suffer. The defendant, in this case, must file a bond in an
amount fixed by the judge conditioned that he will pay all
24
TRADEMARK CASES_FULL TEXT
damages which plaintiff may suffer by the refusal or the
dissolution of the injunction.
(3) On the other grounds upon affidavits on the part of the
defendant which may be opposed by the plaintiff also
affidavits.
Modification of the injunction may also be ordered by the
court if it appears that the extent of the preliminary injunction
granted is too great. (3 Martin, Rules of Court, 1986 ed., p. 99;
Francisco, supra, at p. 268.)
In view of the explicit representation of petitioners in the complaint
that they are not engaged in business in the Philippines, it inevitably
follows that no conceivable damage can be suffered by them not to
mention the foremost consideration heretofore discussed on the
absence of their "right" to be protected. At any rate, and assuming in
gratia argumenti that respondent court erroneously lifted the writ it
previously issued, the same may be cured by appeal and not in the
form of a petition for certiorari (Clark vs. Philippine Ready Mix
Concrete Co., 88 Phil. 460 [1951]). Verily, and mindful of the rule that a
writ of preliminary injunction is an interlocutory order which is always
under the control of the court before final judgment, petitioners'
criticism must fall flat on the ground, so to speak, more so when
extinction of the previously issued writ can even be made without
previous notice to the adverse party and without a hearing (Caluya vs.
Ramos, 79 Phil. 640 [1974]; 3 Moran, Rules of Court, 1970 ed., p. 81).
WHEREFORE, the petition is hereby DISMISSED and the Resolutions of
the Court of Appeals dated September 14, 1989 and November 29,
1989 are hereby AFFIRMED.
SO ORDERED.
G.R. No. 159938 March 31, 2006
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., SHANGRI-
LA PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL & RESORT, INC.,
AND KUOK PHILIPPINES PROPERTIES, INC., Petitioners, vs.
DEVELOPERS GROUP OF COMPANIES, INC., Respondent.
GARCIA, J.:
In this petition for review under Rule 45 of the Rules of Court,
petitioners Shangri-La International Hotel Management, Ltd. (SLIHM),
et al. assail and seek to set aside the Decision dated May 15, 20031 of
the Court of Appeals (CA) in CA-G.R. CV No. 53351 and its
Resolution2 of September 15, 2003 which effectively affirmed with
modification an earlier decision of the Regional Trial Court (RTC) of
Quezon City in Civil Case No. Q-91-8476, an action for infringement and
damages, thereat commenced by respondent Developers Group of
Companies, Inc. (DGCI) against the herein petitioners.
The facts:
At the core of the controversy are the "Shangri-La" mark and "S" logo.
Respondent DGCI claims ownership of said mark and logo in the
Philippines on the strength of its prior use thereof within the country.
As DGCI stresses at every turn, it filed on October 18, 1982 with the
Bureau of Patents, Trademarks and Technology Transfer (BPTTT)
pursuant to Sections 2 and 4 of Republic Act (RA) No. 166,3 as
amended, an application for registration covering the subject mark and
logo. On May 31, 1983, the BPTTT issued in favor of DGCI the
corresponding certificate of registration therefor, i.e., Registration No.
31904. Since then, DGCI started using the "Shangri-La" mark and "S"
logo in its restaurant business.
On the other hand, the Kuok family owns and operates a chain of
hotels with interest in hotels and hotel-related transactions since 1969.
As far back as 1962, it adopted the name "Shangri-La" as part of the
corporate names of all companies organized under the aegis of the
Kuok Group of Companies (the Kuok Group). The Kuok Group has used
the name "Shangri-La" in all Shangri-La hotels and hotel-related
establishments around the world which the Kuok Family owned.
To centralize the operations of all Shangri-la hotels and the ownership
of the "Shangri-La" mark and "S" logo, the Kuok Group had
incorporated in Hong Kong and Singapore, among other places, several
companies that form part of the Shangri-La International Hotel
Management Ltd. Group of Companies. EDSA Shangri-La Hotel and
Resort, Inc., and Makati Shangri-La Hotel and Resort, Inc. were
incorporated in the Philippines beginning 1987 to own and operate the
two (2) hotels put up by the Kuok Group in Mandaluyong and Makati,
Metro Manila.
All hotels owned, operated and managed by the aforesaid SLIHM
Group of Companies adopted and used the distinctive lettering of the
name "Shangri-La" as part of their trade names.
From the records, it appears that Shangri-La Hotel Singapore
commissioned a Singaporean design artist, a certain Mr. William Lee, to
conceptualize and design the logo of the Shangri-La hotels.
During the launching of the stylized "S" Logo in February 1975, Mr. Lee
gave the following explanation for the logo, to wit:
The logo which is shaped like a "S" represents the uniquely Asean
architectural structures as well as keep to the legendary Shangri-la
theme with the mountains on top being reflected on waters below and
the connecting centre [sic] line serving as the horizon. This logo, which
is a bold, striking definitive design, embodies both modernity and
sophistication in balance and thought.
Since 1975 and up to the present, the "Shangri-La" mark and "S" logo
have been used consistently and continuously by all Shangri-La hotels
and companies in their paraphernalia, such as stationeries, envelopes,
business forms, menus, displays and receipts.
The Kuok Group and/or petitioner SLIHM caused the registration of,
and in fact registered, the "Shangri-La" mark and "S" logo in the patent
offices in different countries around the world.
On June 21, 1988, the petitioners filed with the BPTTT a petition,
docketed as Inter Partes Case No. 3145, praying for the cancellation of
the registration of the "Shangri-La" mark and "S" logo issued to
respondent DGCI on the ground that the same were illegally and
fraudulently obtained and appropriated for the latter's restaurant
business. They also filed in the same office Inter Partes Case No. 3529,
praying for the registration of the same mark and logo in their own
names.
Until 1987 or 1988, the petitioners did not operate any establishment
in the Philippines, albeit they advertised their hotels abroad since 1972
in numerous business, news, and/or travel magazines widely circulated
around the world, all readily available in Philippine magazines and
newsstands. They, too, maintained reservations and booking agents in
airline companies, hotel organizations, tour operators, tour promotion
organizations, and in other allied fields in the Philippines.
It is principally upon the foregoing factual backdrop that respondent
DGCI filed a complaint for Infringement and Damages with the RTC of
Quezon City against the herein petitioners SLIHM, Shangri-La
Properties, Inc., Makati Shangri-La Hotel & Resort, Inc., and Kuok
Philippine Properties, Inc., docketed as Civil Case No. Q-91-8476 and
eventually raffled to Branch 99 of said court. The complaint with prayer
for injunctive relief and damages alleged that DGCI has, for the last
eight (8) years, been the prior exclusive user in the Philippines of the
mark and logo in question and the registered owner thereof for its
restaurant and allied services. As DGCI alleged in its complaint, SLIHM,
et al., in promoting and advertising their hotel and other allied projects
then under construction in the country, had been using a mark and
logo confusingly similar, if not identical, with its mark and "S" logo.
Accordingly, DGCI sought to prohibit the petitioners, as defendants a
quo, from using the "Shangri-La" mark and "S" logo in their hotels in
the Philippines.
In their Answer with Counterclaim, the petitioners accused DGCI of
appropriating and illegally using the "Shangri-La" mark and "S" logo,
adding that the legal and beneficial ownership thereof pertained to
SLIHM and that the Kuok Group and its related companies had been
using this mark and logo since March 1962 for all their corporate
names and affairs. In this regard, they point to the Paris Convention for
the Protection of Industrial Property as affording security and
protection to SLIHM's exclusive right to said mark and logo. They
further claimed having used, since late 1975, the internationally-known
and specially-designed "Shangri-La" mark and "S" logo for all the hotels
in their hotel chain.
Pending trial on the merits of Civil Case No. Q-91-8476, the trial court
issued a Writ of Preliminary Injunction enjoining the petitioners from
25
TRADEMARK CASES_FULL TEXT
using the subject mark and logo. The preliminary injunction issue
ultimately reached the Court in G.R. No. 104583 entitled Developers
Group of Companies, Inc. vs. Court of Appeals, et al. In a
decision4 dated March 8, 1993, the Court nullified the writ of
preliminary injunction issued by the trial court and directed it to
proceed with the main case and decide it with deliberate dispatch.
While trial was in progress, the petitioners filed with the court a
motion to suspend proceedings on account of the pendency before the
BPTTT of Inter Partes Case No. 3145 for the cancellation of DGCI's
certificate of registration. For its part, respondent DGCI filed a similar
motion in that case, invoking in this respect the pendency of its
infringement case before the trial court. The parties' respective
motions to suspend proceedings also reached the Court via their
respective petitions in G.R. No. 114802, entitled Developers Group of
Companies, Inc. vs. Court of Appeals, et al. and G.R. No. 111580,
entitled Shangri-La International Hotel Management LTD., et al. vs.
Court of Appeals, et al., which were accordingly consolidated.
In a consolidated decision5 dated June 21, 2001, the Court, limiting
itself to the core issue of whether, despite the petitioners' institution
of Inter Partes Case No. 3145 before the BPTTT, herein respondent
DGCI "can file a subsequent action for infringement with the regular
courts of justice in connection with the same registered mark," ruled in
the affirmative, but nonetheless ordered the BPTTT to suspend further
proceedings in said inter partes case and to await the final outcome of
the main case.
Meanwhile, trial on the merits of the infringement case proceeded.
Presented as DGCI's lone witness was Ramon Syhunliong, President
and Chairman of DGCI's Board of Directors. Among other things, this
witness testified that:
1. He is a businessman, with interest in lumber, hotel, hospital,
trading and restaurant businesses but only the restaurant business
bears the name "Shangri-La" and uses the same and the "S-logo"
as service marks. The restaurant now known as "Shangri-La Finest
Chinese Cuisine" was formerly known as the "Carvajal Restaurant"
until December 1982, when respondent took over said restaurant
business.
2. He had traveled widely around Asia prior to 1982, and admitted
knowing the Shangri-La Hotel in Hong Kong as early as August
1982.
3. The "S-logo" was one of two (2) designs given to him in
December 1982, scribbled on a piece of paper by a jeepney
signboard artist with an office somewhere in Balintawak. The
unnamed artist supposedly produced the two designs after about
two or three days from the time he (Syhunliong) gave the idea of
the design he had in mind.
4. On October 15, 1982, or before the unknown signboard artist
supposedly created the "Shangri-La" and "S" designs, DGCI was
incorporated with the primary purpose of "owning or operating, or
both, of hotels and restaurants".
5. On October 18, 1982, again prior to the alleged creation date of
the mark and logo, DGCI filed an application for trademark
registration of the mark "SHANGRI-LA FINEST CHINESE CUISINE &
S. Logo" with the BPTTT. On said date, respondent DGCI amended
its Articles of Incorporation to reflect the name of its restaurant,
known and operating under the style and name of "SHANGRI-LA
FINEST CHINESE CUISINE." Respondent DGCI obtained Certificate
of Registration No. 31904 for the "Shangri-La" mark and "S" logo.
Eventually, the trial court, on the postulate that petitioners', more
particularly petitioner SLIHM's, use of the mark and logo in dispute
constitutes an infringement of DGCI's right thereto, came out with its
decision6 on March 8, 1996 rendering judgment for DGCI, as follows:
WHEREFORE, judgment is hereby rendered in favor of [respondent
DGCI] and against [SLIHM, et al.] -
a) Upholding the validity of the registration of the service mark
"Shangri-la" and "S-Logo" in the name of [respondent];
b) Declaring [petitioners'] use of said mark and logo as
infringement of [respondent's] right thereto;
c) Ordering [petitioners], their representatives, agents, licensees,
assignees and other persons acting under their authority and with
their permission, to permanently cease and desist from using
and/or continuing to use said mark and logo, or any copy,
reproduction or colorable imitation
thereof, in the promotion, advertisement, rendition of their hotel
and allied projects and services or in any other manner
whatsoever;
d) Ordering [petitioners] to remove said mark and logo from any
premises, objects, materials and paraphernalia used by them
and/or destroy any and all prints, signs, advertisements or other
materials bearing said mark and logo in their possession and/or
under their control; and
e) Ordering [petitioners], jointly and severally, to indemnify
[respondent] in the amounts of P2,000,000.00 as actual and
compensatory damages, P500,000.00 as attorney's fee and
expenses of litigation.
Let a copy of this Decision be certified to the Director, Bureau of
Patents, Trademarks and Technology Transfer for his information and
appropriate action in accordance with the provisions of Section 25,
Republic Act No. 166
Costs against [petitioners].
SO ORDERED. [Words in brackets added.]
Therefrom, the petitioners went on appeal to the CA whereat their
recourse was docketed as CA G.R. SP No. 53351.
As stated at the threshold hereof, the CA, in its assailed Decision of
May 15, 2003,7 affirmed that of the lower court with the modification
of deleting the award of attorney's fees. The appellate court predicated
its affirmatory action on the strength or interplay of the following
premises:
1. Albeit the Kuok Group used the mark and logo since 1962, the
evidence presented shows that the bulk use of the tradename was
abroad and not in the Philippines (until 1987). Since the Kuok
Group does not have proof of actual use in commerce in the
Philippines (in accordance with Section 2 of R.A. No. 166), it cannot
claim ownership of the mark and logo in accordance with the
holding in Kabushi Kaisha Isetan v. IAC8, as reiterated in Philip
Morris, Inc. v. Court of Appeals.9
2. On the other hand, respondent has a right to the mark and logo
by virtue of its prior use in the Philippines and the issuance of
Certificate of Registration No. 31904.
3. The use of the mark or logo in commerce through the bookings
made by travel agencies is unavailing since the Kuok Group did not
establish any branch or regional office in the Philippines. As it
were, the Kuok Group was not engaged in commerce in the
Philippines inasmuch as the bookings were made through travel
agents not owned, controlled or managed by the Kuok Group.
4. While the Paris Convention protects internationally known
marks, R.A. No. 166 still requires use in commerce in the
Philippines. Accordingly, and on the premise that international
agreements, such as Paris Convention, must yield to a municipal
law, the question on the exclusive right over the mark and logo
would still depend on actual use in commerce in the Philippines.
Petitioners then moved for a reconsideration, which motion was
denied by the CA in its equally assailed Resolution of September 15,
2003.10
As formulated by the petitioners, the issues upon which this case
hinges are:
1. Whether the CA erred in finding that respondent had the right
to file an application for registration of the "Shangri-La" mark and
"S" logo although respondent never had any prior actual
commercial use thereof;
26
TRADEMARK CASES_FULL TEXT
2. Whether the CA erred in finding that respondent's supposed use
of the identical "Shangri-La" mark and "S" logo of the petitioners
was not evident bad faith and can actually ripen into ownership,
much less registration;
3. Whether the CA erred in overlooking petitioners' widespread
prior use of the "Shangri-La" mark and "S" logo in their operations;
4. Whether the CA erred in refusing to consider that petitioners
are entitled to protection under both R.A. No. 166, the old
trademark law, and the Paris Convention for the Protection of
Industrial Property;
5. Whether the CA erred in holding that SLIHM did not have the
right to legally own the "Shangri-La" mark and "S" logo by virtue of
and despite their ownership by the Kuok Group;
6. Whether the CA erred in ruling that petitioners' use of the mark
and logo constitutes actionable infringement;
7. Whether the CA erred in awarding damages in favor of
respondent despite the absence of any evidence to support the
same, and in failing to award relief in favor of the petitioners; and
8. Whether petitioners should be prohibited from continuing their
use of the mark and logo in question.
There are two preliminary issues, however, that respondent DGCI calls
our attention to, namely:
1. Whether the certification against forum-shopping submitted on
behalf of the petitioners is sufficient;
2. Whether the issues posed by petitioners are purely factual in
nature hence improper for resolution in the instant petition for
review on certiorari.
DGCI claims that the present petition for review should be dismissed
outright for certain procedural defects, to wit: an insufficient
certification against forum shopping and raising pure questions of fact.
On both counts, we find the instant petition formally and substantially
sound.
In its Comment, respondent alleged that the certification against forum
shopping signed by Atty. Lee Benjamin Z. Lerma on behalf and as
counsel of the petitioners was insufficient, and that he was not duly
authorized to execute such document. Respondent further alleged that
since petitioner SLIHM is a foreign entity based in Hong Kong, the
Director's Certificate executed by Mr. Madhu Rama Chandra Rao,
embodying the board resolution which authorizes Atty. Lerma to act
for SLIHM and execute the certification against forum shopping, should
contain the authentication by a consular officer of the Philippines in
Hong Kong.
In National Steel Corporation v. CA,11 the Court has ruled that the
certification on non-forum shopping may be signed, for and in behalf of
a corporation, by a specifically authorized lawyer who has personal
knowledge of the facts required to be disclosed in such document. The
reason for this is that a corporation can only exercise its powers
through its board of directors and/or its duly authorized officers and
agents. Physical acts, like the signing of documents, can be performed
only by natural persons duly authorized for the purpose.12
Moreover, Rule 7, Section 5 of the Rules of Court concerning the
certification against forum shopping does not require any consular
certification if the petitioner is a foreign entity. Nonetheless, to banish
any lingering doubt, petitioner SLIHM furnished this Court with a
consular certification dated October 29, 2003 authenticating the
Director's Certificate authorizing Atty. Lerma to execute the
certification against forum shopping, together with petitioners'
manifestation of February 9, 2004.
Respondent also attacks the present petition as one that raises pure
questions of fact. It points out that in a petition for review under Rule
45 of the Rules of Court, the questions that may properly be inquired
into are strictly circumscribed by the express limitation that "the
petition shall raise only questions of law which must be distinctly set
forth."13 We do not, however, find that the issues involved in this
petition consist purely of questions of fact. These issues will be dealt
with as we go through the questions raised by the petitioners one by
one.
Petitioners' first argument is that the respondent had no right to file an
application for registration of the "Shangri-La" mark and "S" logo
because it did not have prior actual commercial use thereof. To
respondent, such an argument raises a question of fact that was
already resolved by the RTC and concurred in by the CA.
First off, all that the RTC found was that respondent was the prior user
and registrant of the subject mark and logo in the Philippines. Taken in
proper context, the trial court's finding on "prior use" can only be
interpreted to mean that respondent used the subject mark and logo in
the country before the petitioners did. It cannot be construed as being
a factual finding that there was prior use of the mark and logo before
registration.
Secondly, the question raised is not purely factual in nature. In the
context of this case, it involves resolving whether a certificate of
registration of a mark, and the presumption of regularity in the
performance of official functions in the issuance thereof, are sufficient
to establish prior actual use by the registrant. It further entails
answering the question of whether prior actual use is required before
there may be a valid registration of a mark.
Under the provisions of the former trademark law, R.A. No. 166, as
amended, which was in effect up to December 31, 1997, hence, the
law in force at the time of respondent's application for registration of
trademark, the root of ownership of a trademark is actual use in
commerce. Section 2 of said law requires that before a trademark can
be registered, it must have been actually used in commerce and service
for not less than two months in the Philippines prior to the filing of an
application for its registration.
Registration, without more, does not confer upon the registrant an
absolute right to the registered mark. The certificate of registration is
merely a prima facie proof that the registrant is the owner of the
registered mark or trade name. Evidence of prior and continuous use
of the mark or trade name by another can overcome the presumptive
ownership of the registrant and may very well entitle the former to be
declared owner in an appropriate case.14
Among the effects of registration of a mark, as catalogued by the Court
in Lorenzana v. Macagba,15 are:
1. Registration in the Principal Register gives rise to
a presumption of the validity of the registration, the registrant's
ownership of the mark, and his right to the exclusive use thereof. x
xx
2. Registration in the Principal Register is limited to the actual
owner of the trademark and proceedings therein pass on the issue
of ownership, which may be contested through opposition or
interference proceedings, or, after registration, in a petition for
cancellation. xxx
[Emphasis supplied]
Ownership of a mark or trade name may be acquired not necessarily by
registration but by adoption and use in trade or commerce. As
between actual use of a mark without registration, and registration of
the mark without actual use thereof, the former prevails over the
latter. For a rule widely accepted and firmly entrenched, because it has
come down through the years, is that actual use in commerce or
business is a pre-requisite to the acquisition of the right of ownership.16
While the present law on trademarks17 has dispensed with the
requirement of prior actual use at the time of registration, the law in
force at the time of registration must be applied, and thereunder it was
held that as a condition precedent to registration of trademark, trade
name or service mark, the same must have been in actual use in the
Philippines before the filing of the application for
registration.18 Trademark is a creation of use and therefore actual use
is a pre-requisite to exclusive ownership and its registration with the
Philippine Patent Office is a mere administrative confirmation of the
existence of such right.19
27
TRADEMARK CASES_FULL TEXT
By itself, registration is not a mode of acquiring ownership. When the
applicant is not the owner of the trademark being applied for, he has
no right to apply for registration of the same. Registration merely
creates a prima facie presumption of the validity of the registration, of
the registrant's ownership of the trademark and of the exclusive right
to the use thereof.20 Such presumption, just like the presumptive
regularity in the performance of official functions, is rebuttable and
must give way to evidence to the contrary.
Here, respondent's own witness, Ramon Syhunliong, testified that a
jeepney signboard artist allegedly commissioned to create the mark
and logo submitted his designs only in December 1982.21 This was two-
and-a-half months after the filing of the respondent's trademark
application on October 18, 1982 with the BPTTT. It was also only in
December 1982 when the respondent's restaurant was opened for
business.22 Respondent cannot now claim before the Court that the
certificate of registration itself is proof that the two-month prior use
requirement was complied with, what with the fact that its very own
witness testified otherwise in the trial court. And because at the time
(October 18, 1982) the respondent filed its application for trademark
registration of the "Shangri-La" mark and "S" logo, respondent was not
using these in the Philippines commercially, the registration is void.
Petitioners also argue that the respondent's use of the "Shangri-La"
mark and "S" logo was in evident bad faith and cannot therefore ripen
into ownership, much less registration. While the respondent is correct
in saying that a finding of bad faith is factual, not legal,23 hence beyond
the scope of a petition for review, there are, however, noted
exceptions thereto. Among these exceptions are:
1. When the inference made is manifestly mistaken, absurd or
impossible;24
2. When there is grave abuse of discretion;25
3. When the judgment is based on a misapprehension of facts;26
4. When the findings of fact are conflicting;27 and
5. When the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the
respondent.28
And these are naming but a few of the recognized exceptions to the
rule.
The CA itself, in its Decision of May 15, 2003, found that the
respondent's president and chairman of the board, Ramon Syhunliong,
had been a guest at the petitioners' hotel before he caused the
registration of the mark and logo, and surmised that he must have
copied the idea there:
Did Mr. Ramon Syhunliong, [respondent's] President copy the mark
and devise from one of [petitioners'] hotel (Kowloon Shangri-la)
abroad? The mere fact that he was a visitor of [petitioners'] hotel
abroad at one time (September 27, 1982) establishes [petitioners']
allegation that he got the idea there.29
Yet, in the very next paragraph, despite the preceding admission that
the mark and logo must have been copied, the CA tries to make it
appear that the adoption of the same mark and logo could have been
coincidental:
The word or name "Shangri-la" and the S-logo, are not uncommon. The
word "Shangri-la" refers to a (a) remote beautiful imaginary place
where life approaches perfection or (b) imaginary mountain land
depicted as a utopia in the novel Lost Horizon by James Hilton. The Lost
Horizon was a well-read and popular novel written in 1976. It is not
impossible that the parties, inspired by the novel, both adopted the
mark for their business to conjure [a] place of beauty and pleasure.
The S-logo is, likewise, not unusual. The devise looks like a modified
Old English print.30
To jump from a recognition of the fact that the mark and logo must
have been copied to a rationalization for the possibility that both the
petitioners and the respondent coincidentally chose the same name
and logo is not only contradictory, but also manifestly mistaken or
absurd. Furthermore, the "S" logo appears nothing like the "Old
English" print that the CA makes it out to be, but is obviously a symbol
with oriental or Asian overtones. At any rate, it is ludicrous to believe
that the parties would come up with the exact same lettering for the
word "Shangri-La" and the exact same logo to boot. As correctly
observed by the petitioners, to which we are in full accord:
x x x When a trademark copycat adopts the word portion of another's
trademark as his own, there may still be some doubt that the adoption
is intentional. But if he copies not only the word but also the word's
exact font and lettering style and in addition, he copies also the logo
portion of the trademark, the slightest doubt vanishes. It is then
replaced by the certainty that the adoption was deliberate, malicious
and in bad faith.31
It is truly difficult to understand why, of the millions of terms and
combination of letters and designs available, the respondent had to
choose exactly the same mark and logo as that of the petitioners, if
there was no intent to take advantage of the goodwill of petitioners'
mark and logo.32
One who has imitated the trademark of another cannot bring an action
for infringement, particularly against the true owner of the mark,
because he would be coming to court with unclean hands.33 Priority is
of no avail to the bad faith plaintiff. Good faith is required in order to
ensure that a second user may not merely take advantage of the
goodwill established by the true owner.
This point is further bolstered by the fact that under either Section 17
of R.A. No. 166, or Section 151 of R.A. No. 8293, or Article 6bis(3) of the
Paris Convention, no time limit is fixed for the cancellation of marks
registered or used in bad faith.34 This is precisely why petitioners had
filed an inter partes case before the BPTTT for the cancellation of
respondent's registration, the proceedings on which were suspended
pending resolution of the instant case.
Respondent DGCI also rebukes the next issue raised by the petitioners
as being purely factual in nature, namely, whether the CA erred in
overlooking petitioners' widespread prior use of the "Shangri-La" mark
and "S" logo in their operations. The question, however, is not whether
there had been widespread prior use, which would have been factual,
but whether that prior use entitles the petitioners to use the mark and
logo in the Philippines. This is clearly a question which is legal in
nature.
It has already been established in the two courts below, and admitted
by the respondent's president himself, that petitioners had prior
widespread use of the mark and logo abroad:
There is, to be sure, an impressive mass of proof that petitioner SLIHM
and its related companies abroad used the name and logo for one
purpose or another x x x.35 [Emphasis supplied]
In respondent's own words, "[T]he Court of Appeals did note
petitioners' use of the mark and logo but held that such use did not
confer to them ownership or exclusive right to use them in the
Philippines."36 To petitioners' mind, it was error for the CA to rule that
their worldwide use of the mark and logo in dispute could not have
conferred upon them any right thereto. Again, this is a legal question
which is well worth delving into.
R.A. No. 166, as amended, under which this case was heard and
decided provides:
Section 2. What are registrable. - Trademarks, trade names and service
marks owned by persons, corporations, partnerships or associations
domiciled in the Philippines and by persons, corporations, partnerships
or associations domiciled in any foreign country may be registered in
accordance with the provisions of this Act: Provided, That said
trademarks trade names, or service marks are actually in use in
commerce and services not less than two months in the
Philippines before the time the applications for registration are filed:
And provided, further, That the country of which the applicant for
registration is a citizen grants by law substantially similar privileges to
citizens of the Philippines, and such fact is officially certified, with a
certified true copy of the foreign law translated into the English
language, by the government of the foreign country to the
Government of the Republic of the Philippines.
Section 2-A. Ownership of trademarks, trade names and service marks;
how acquired. - Anyone who lawfully produces or deals in merchandise
of any kind or who engages in any lawful business, or who renders any
lawful service in commerce, by actual use thereof in manufacture or
28
TRADEMARK CASES_FULL TEXT
trade, in business, and in the service rendered, may appropriate to his
exclusive use a trademark, a trade name, or a servicemark not so
appropriated by another, to distinguish his merchandise, business or
service from the merchandise, business or services of others. The
ownership or possession of a trademark, trade name, service mark,
heretofore or hereafter appropriated, as in this section provided, shall
be recognized and protected in the same manner and to the same
extent as are other property rights known to this law. [Emphasis
supplied]
Admittedly, the CA was not amiss in saying that the law requires the
actual use in commerce of the said trade name and "S" logo in the
Philippines. Hence, consistent with its finding that the bulk of the
petitioners' evidence shows that the alleged use of the Shangri-La
trade name was done abroad and not in the Philippines, it is
understandable for that court to rule in respondent's favor.
Unfortunately, however, what the CA failed to perceive is that there is
a crucial difference between the aforequoted Section 2 and Section 2-A
of R.A. No. 166. For, while Section 2 provides for what
is registrable, Section 2-A, on the other hand, sets out
how ownership is acquired. These are two distinct concepts.
Under Section 2, in order to register a trademark, one must be the
owner thereof and must have actually used the mark in commerce in
the Philippines for 2 months prior to the application for registration.
Since "ownership" of the trademark is required for registration, Section
2-A of the same law sets out to define how one goes about acquiring
ownership thereof. Under Section 2-A, it is clear that actual use in
commerce is also the test of ownership but the provision went further
by saying that the mark must not have been so appropriated by
another. Additionally, it is significant to note that Section 2-A does not
require that the actual use of a trademark must be within the
Philippines. Hence, under R.A. No. 166, as amended, one may be an
owner of a mark due to actual use thereof but not yet have the right to
register such ownership here due to failure to use it within the
Philippines for two months.
While the petitioners may not have qualified under Section 2 of R.A.
No. 166 as a registrant, neither did respondent DGCI, since the latter
also failed to fulfill the 2-month actual use requirement. What is worse,
DGCI was not even the owner of the mark. For it to have been the
owner, the mark must not have been already appropriated (i.e., used)
by someone else. At the time of respondent DGCI's registration of the
mark, the same was already being used by the petitioners, albeit
abroad, of which DGCI's president was fully aware.
It is respondent's contention that since the petitioners adopted the
"Shangri-La" mark and "S" logo as a mere corporate name or as the
name of their hotels, instead of using them as a trademark or service
mark, then such name and logo are not trademarks. The two concepts
of corporate name or business name and trademark or service mark,
are not mutually exclusive. It is common, indeed likely, that the name
of a corporation or business is also a trade name, trademark or service
mark. Section 38 of R.A. No. 166 defines the terms as follows:
Sec. 38. Words and terms defined and construed - In the construction
of this Act, unless the contrary is plainly apparent from the context -
The term "trade name" includes individual names and surnames, firm
names, trade names, devices or words used by manufacturers,
industrialists, merchants, agriculturists, and others to identify their
business, vocations or occupations; the names or titles lawfully
adopted and used by natural or juridical persons, unions, and any
manufacturing, industrial, commercial, agricultural or other
organizations engaged in trade or commerce.
The term "trade mark" includes any word, name, symbol, emblem, sign
or device or any combination thereof adopted and used by a
manufacturer or merchant to identify his goods and distinguish them
from those manufactured, sold or dealt in by others.
The term "service mark" means a mark used in the sale or advertising
of services to identify the services of one person and distinguish them
from the services of others and includes without limitation the marks,
names, symbols, titles, designations, slogans, character names, and
distinctive features of radio or other advertising. [Emphasis supplied]
Clearly, from the broad definitions quoted above, the petitioners can
be considered as having used the "Shangri-La" name and "S" logo as a
tradename and service mark.
The new Intellectual Property Code (IPC), Republic Act No. 8293,
undoubtedly shows the firm resolve of the Philippines to observe and
follow the Paris Convention by incorporating the relevant portions of
the Convention such that persons who may question a mark (that is,
oppose registration, petition for the cancellation thereof, sue for unfair
competition) include persons whose internationally well-known
mark, whether or not registered, is
identical with or confusingly similar to or constitutes a translation of a
mark that is sought to be registered or is actually registered.37
However, while the Philippines was already a signatory to the Paris
Convention, the IPC only took effect on January 1, 1988, and in the
absence of a retroactivity clause, R.A. No. 166 still applies.38 Under the
prevailing law and jurisprudence at the time, the CA had not erred in
ruling that:
The Paris Convention mandates that protection should be afforded to
internationally known marks as signatory to the Paris Convention,
without regard as to whether the foreign corporation is registered,
licensed or doing business in the Philippines. It goes without saying
that the same runs afoul to Republic Act No. 166, which requires the
actual use in commerce in the Philippines of the subject mark or
devise. The apparent conflict between the two (2) was settled by the
Supreme Court in this wise –
"Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the Philippines
must subordinate an international agreement inasmuch as the
apparent clash is being decided by a municipal tribunal (Mortensen vs.
Peters, Great Britain, High Court of Judiciary of Scotland, 1906, 8
Sessions 93; Paras, International Law and World Organization, 1971
Ed., p. 20). Withal, the fact that international law has been made part
of the law of the land does not by any means imply the primacy of
international law over national law in the municipal sphere. Under the
doctrine of incorporation as applied in most countries, rules of
international law are given a standing equal, not superior, to national
legislative enactments (Salonga and Yap, Public International Law,
Fourth ed., 1974, p. 16)."39 [Emphasis supplied]
Consequently, the petitioners cannot claim protection under the Paris
Convention. Nevertheless, with the double infirmity of lack of two-
month prior use, as well as bad faith in the respondent's registration of
the mark, it is evident that the petitioners cannot be guilty of
infringement. It would be a great injustice to adjudge the petitioners
guilty of infringing a mark when they are actually the originator and
creator thereof.
Nor can the petitioners' separate personalities from their mother
corporation be an obstacle in the enforcement of their rights as part of
the Kuok Group of Companies and as official repository, manager and
operator of the subject mark and logo. Besides, R.A. No. 166 did not
require the party seeking relief to be the owner of the mark but "any
person who believes that he is or will be damaged by the registration
of a mark or trade name."40
WHEREFORE, the instant petition is GRANTED. The assailed Decision
and Resolution of the Court of Appeals dated May 15, 2003 and
September 15, 2003, respectively, and the Decision of the Regional
Trial Court of Quezon City dated March 8, 1996 are hereby SET ASIDE.
Accordingly, the complaint for infringement in Civil Case No. Q-91-8476
is ordered DISMISSED.
SO ORDERED.
G.R. No. L-19906 April 30, 1969
STERLING PRODUCTS INTERNATIONAL, INCORPORATED, plaintiff-
appellant, vs. FARBENFABRIKEN BAYER AKTIENGESELLSCHAFT, and
ALLIED MANUFACTURING AND TRADING CO., INC., defendant-
appellants.
SANCHEZ, J.:
In this, a case for trademark infringement and unfair competition, each
of the principal suitors, namely, plaintiff Sterling Products
International, Inc.,1 and defendant Farbenfabriken Bayer
Aktiengesellschaft,2 seeks to exclude the other from use in the
Philippines of the trademarks BAYER and BAYER CROSS IN CIRCLE. SPI
asks this Court to strike down FBA's registration of BAYER CROSS IN
29
TRADEMARK CASES_FULL TEXT
CIRCLE covering industrial and agricultural products — insecticides and
other chemicals, not medicines — from the supplemental register. FBA,
for its part, prays for the cancellation from the principal register of SPI's
certificates of registration of the trademarks aforesaid for medicines.
Contending parties are doing business in the Philippines. SPI markets
Bayer Aspirin, Aspirin for Children and Cafiaspirina. The BAYER and
BAYER CROSS IN CIRCLE are being used by SPI in the Philippines only for
said products — Bayer Aspirin, Cafiaspirina and Bayer Aspirin for
Children. On the containers (bottles or printed celophane strips, which,
in turn, are placed in cardboard boxes) of Bayer Aspirin, Aspirin for
Children and Cafiaspirina, SPI features the trademarks BAYER and
BAYER CROSS IN CIRCLE. FBA thru Allied Manufacturing & Trading Co.,
Inc.3 distributes "Folidol" and other industrial and agricultural
chemicals. FBA's "Folidol" (in steel or fiber drums or aluminum
containers) displays a replica of SPI's trademark BAYER CROSS IN
CIRCLE; on the tin cap and label of the container.
The conflict apparent, suit followed.
The trial court declared itself "in favor of the solution that favors
division of the market rather than monopoly." But to avoid confusion,
it directed defendants "to add a distinctive word, or words in their
mark to indicate that their products come from Germany." The
judgment below reads:
IN VIEW WHEREOF, both complaint and counterclaim are dismissed
without costs; the Court sustains plaintiff's right to use the Bayer
trademark for its medicines, and defendants' right to use it for
chemicals, insecticides, and other products not medicines, but the
Court orders defendants to add a distinctive word or words in their
mark to indicate that their products come from Germany.4
Both parties appealed: Plaintiff, insofar as the judgment "dismisses
plaintiff's complaint and sustains defendants' right to use the BAYER
trademark for their chemicals, insecticides, and other products not
medicines";5 and defendants, from the portions of the aforementioned
decision particularly those which dismiss the counterclaim of the
defendants for the cancellation of the registrations by the plaintiff of
the trademarks Bayer and Bayer Cross and which allow the plaintiff "to
continue using the Bayer trademarks for medicines."6
And now to the facts.
The word BAYER was the surname of Friedrich Bayer, a German, who,
on August 1, 1868, organized a drug company bearing his name —
Friedr Bayer et comp. — at Barmen, Germany. The company was at
first engaged in the manufacture and sale of chemicals. At about the
year 1888 it started to manufacture pharmaceutical preparations also.
A change of name from Friedr Bayer to Farbenfabriken vorm. Friedr.
Bayer & Co. (FFB, for short) effective July 1, 1881 was followed in 1912
by a change of principal place of business from Elberfeld to Luverkusen,
Germany.7 Its products came to be known outside Germany. With the
discovery in 1899 of the Bayer Aspirin, the mark BAYER acquired
prestige. The time was ripe to register the trademarks. The record,
however, does not clearly show when the word BAYER was registered
as a trademark in Germany. The BAYER CROSS IN CIRCLE trademark
was registered in Germany on January 6, 1904 — No. 65777.8 It was
intended to be used on "medicines for human beings and animals,
disinfectants preservatives, tar dyestuffs and chemical preparations for
dyes and for photographic purposes."9 This registered trademark
consists of the BAYER CROSS encircled by the company's name
Farbenfabriken vorm. Friedr. Bayer & Co. Elberfeld.
When the company was merged with other German companies in 1925
to form the I.G. Farbenindustrie, the name of the former company was
deleted from the trademark and what remained was the present
BAYER CROSS IN CIRCLE. A new registration was effected on June 17,
1929 in Germany and for which it was issued a certificate with serial
no. 404341. The trademark BAYER CROSS IN CIRCLE was registered by
FFB and its subsidiaries in other parts of the world, viz, in Norway,
England, Denmark, and Argentina in 1904; in Japan and the United
States in 1908; in Spain in 1911; in Peru in 1913.
Sometime in 1895, FFB established a subsidiary in New York, United
States. It was named Farbenfabriken of Elberfeld Co. Its purpose was to
sell FFB's products in the United States and Canada. It was this
subsidiary that registered the trademarks BAYER and BAYER CROSS IN
CIRCLE in the United States between the years 1907-1908.
Sometime in 1913, FFB organized another subsidiary — The Bayer Co.,
Inc. of New York. This new subsidiary was authorized by FFB to
negotiate for and acquire the trademarks, goodwill, assets and
property of Farbenfabriken of Elberfeld Co. By an agreement dated
June 12, 1913 (Exh. 106) Bayer of New York purchased for the sum of
US $750,000.00 Farbenfabriken of Elberfeld Co.'s "right for the sale in
the United States and Canada of the drugs, chemicals, pharmaceuticals
and any and all other products and articles manufactured and (or)
controlled by Leverkusen" (FFB) and its "trademarks, good will and
other assets and property."
On April 6, 1917,10 the United States declared war on Germany.
Pursuant to the provisions of the Trading with the Enemy Act, the Alien
Property Custodian classified The Bayer Co., Inc. of New York as an
enemy-controlled corporation. Hence, the Alien Property Custodian
seized its assets about the early part of 1918. Between December 1918
and January 1919, all the assets of The Bayer Co., Inc. of New York
were sold by the Alien Property Custodian to Sterling Drug, Inc. for the
sum of US $5,310,000.00. The Bayer Co., Inc. of New York then became
a subsidiary of Sterling Drug, Inc. Winthrop Chemical Co., Inc. was later
organized as a new subsidiary of Sterling Drug, Inc. to manufacture and
sell the physicians' drugs which had been acquired" by the purchase of
the Bayer Co., Inc. Winthrop's operation was evidently hampered
because 'the Germans had kept manufacturing processes secret, so
that the manufacture of physicians' drugs on a commercial scale
became an almost insoluble problem.11
Sterling Drug, Inc. secured registrations of the BAYER trademarks in
different countries of the world.12
It would appear that the trademark BAYER for medicines was known in
the Philippines about the close of the 19th century. This appears on
page 88 of the Revista Farmaceutica de Filipinos Año I, Numero 7, 3 de
Julio de 1893. Before World War I, BAYER products entering the
Philippines came from Germany.
In 1922, a worldwide conflict of interests occurred between
Farbenfabriken vorm. Friedrich Bayer & Co. and The Bayer Co., Inc. of
New York, in reference to the trademarks BAYER and BAYER CROSS IN
CIRCLE as they were applied to various products.
Two agreements resolved this conflict, both executed on April 9, 1923
in London, England: one, between FFB and Winthrop Chemical Co., Inc.
(Exh. 66), and the other between FFB and Bayer New York (Exh.
WWW). Under the terms of the agreement with Winthrop Chemical
Co., Inc., FFB stipulated, amongst others: (1) not to contest anymore
Winthrop's right over the trademarks BAYER and BAYER CROSS IN
CIRCLE; (2) to discontinue the use of said trademarks in the United
States which was understood to include the Philippines under par. 16
of said agreement; and (3) to disclose all secrets of other processes
relating to the manufacture of pharmaceuticals.
Paragraph 26 of the FFB — Bayer New York agreement reads —
26. NEW YORK (The Bayer Company, Inc. of New York) agree that they
will not sell or offer for sale any goods other than hereunder or those
they may market for Winthrop as hereinbefore provided and other
than Aspirin and compounds of Aspirin which New York shall continue
to market for their own account in the United States of America,
Puerto Rico, the Philippines and Hawaiian Islands and the Panama
Zone.13
In 1925, Farbenfabriken vorm. Friedrich Bayer & Co. became I.G.
Farbenindustrie, AG. This necessitated a new agreement incorporating
Exh. 66 with modifications. Said new agreement was signed on
November 15, 1926 between I.G. Farbenindustrie and Winthrop.
On September 5, 1941, in the anti-trust suits against Sterling Drug, Inc.,
Winthrop Chemicals Co. and The Bayer Co., of New York, two consent
decrees [Exh. 68 (No. 15-363) and Exh. 69: (No. 15-364)] were
promulgated by the U.S. District Court for Southern New York. Said
consent decrees declared the April 9 1923, cartel agreements violative
of the U.S. anti-trust laws. One reason given is that the German
company, FFB (later I.G. Farbenindustrie) — FBA's predecessors — was
excluded from the U.S. pharmaceutical market. The sentence,
however, contains a saving clause, thus —
30
TRADEMARK CASES_FULL TEXT
The Bayer contract of 1923, the Bayer contract of 1926, and any and all
amendments or supplements thereto are declared and adjudged to be
unlawful under the Anti-Trust Laws of the United States, and the
defendants Bayer and Sterling, and their respective successors an
subsidiaries, or any of them, be and they are hereby enjoined and
restrained from carrying out or enforcing any of the aforesaid
contracts, or any supplements, amendments or modifications thereof,
or from paying to I.G. Farben, its subsidiaries, successors, or assigns,
any royalties or share of profits pursuant to said contracts with respect
to sales following the effective date of this decree.
Provided, however, that nothing herein contained in this Sec. III shall:
xxx xxx xxx
Affect in any way the rights or title of the defendant Bayer, its
successors, subsidiaries or assigns, in or to the name "Bayer" and the
"Bayer Cross" mark or registrations thereof, or
Affect or diminish any right, title or interest of said defendants, their
successor subsidiaries or assigns, in or to or under any heretofore
acquired and presently existing patents, patent applications, patent
licenses, trade-marks, trade-names (such as the name "Bayer" and the
"Bayer Cross" mark and registrations thereof), processes or formulae
relating to the manufacturing, processing, use or sale of aspirin, aspirin
compounds, pharmaceutical or other drug or chemical products, or
impair any rights or remedies of said defendants, their successors,
subsidiaries or assigns, provided by statute or convention, and by suits
for damages, injunction or other remedy with respect to any such
patents, patent applications, patent licenses or trademarks....14
Meanwhile, in 1935, plaintiff Sterling Products International, Inc. (SPI) a
Delaware corporation, a subsidiary of Sterling Drug, Inc. of New York,
was issued a license to do business in the Philippines.15 The trademarks
BAYER and BAYER CROSS IN CIRCLE were then registered in the
Philippines under the old Trademark Law (Act 666) by The Bayer Co.,
Inc.; the BAYER CROSS IN CIRCLE trademark on April 18, 1939 for which
it was issued Certificate of Registration No. 13081; the BAYER
trademark on April 22, 1939 for which it was issued Registration
Certificate No. 13089. These trademark rights were assigned to SPI on
December 30, 1942 and the assignment was recorded in the
Philippines Patent Office on March 5, 1947. With the passage of
Republic Act 166 repealing the old Trademark Law (Act 666), SPI was
issued by the Philippines Patent Office on June 18, 1948 two new
certificates of registration: No. 1260-S for BAYER CROSS IN CIRCLE; No.
1262-S for BAYER. The registration of these trademarks was only for
"Medicines".
Came World War II. I.G. Farbenindustrie AG. was seized by the allied
powers. In 1945, after World War II, I.G. Farbenindustrie AG. was
decartelized by the Allied High Commission. The unit known as
Farbenfabriken Bayer was transferred in 1953 to Farbenfabriken Bayer
Aktiengesellschaft (FBA), one of the defendants in this case, which was
organized in 1951.
Sometime in 1958, defendant Allied Manufacturing & Trading Co., Inc.
(AMATCO) started selling FBA's products especially "Folidol" a chemical
insecticide which bears the BAYER CROSS IN CIRCLE trademark.16
On November 18, 1959, FBA applied for the registration of the BAYER
CROSS IN CIRCLE trademark with the Philippines Patent Office for
animal and plant destroying agents. The examiner's report dated
December 17, 1959 stated that the subject mark appears to be similar
to SPI's registered BAYER trademarks as covered by Certificates of
Registration Nos. 1260-S and 1262-S. He concluded that "[r]egistration
of applicant's mark is proscribed by Section 4-d of the Statute because
it would cause confusion or mistake or [to] deceive purchasers."17 This
action of the Philippines Patent Office drew a reply from FBA. In its
letter dated February 1, 1960 applicant FBA, thru counsel, said that it
"offers no question or objection to the assertion of the Examiner that
the registrant's mark and that of the applicant are similar to each
other. It emphasized the fact that it was seeking registration in the
Supplemental Register. Its concluding statement runs thus:.
Being aware of the duties and obligations of a trademark user in the
Philippines and the penalties provided for in the pertinent law on
tradermarks and being aware also that Supplemental Registration is
not a prima facie evidence of ownership of mark but merely a
recordation of the use as in fact the mark is actually being used by the
applicant in the Philippines, it is respectfully urged that this
[application] be given due course.18
On February 25, 1960, FBA was issued a certificate of registration in the
Supplemental Register, SR-304.
We now grapple with the problems raised in the separate appeals.
1. A rule widely accepted and firmly entrenched because it has come
down through the years is that actual use in commerce or business is a
prerequisite to the acquisition of the right of ownership over a
trademark. This rule is spelled out in our. Trademark Law thus:
SEC. 2-A. Ownership of trade-marks, trademark names and service-
mark; how acquired. — Anyone who lawfully produces or deals in
merchandise of any kind or who engages in any lawful business, or who
renders any lawful service in commerce, by actual use thereof in
manufacture or trade, in business, and in the service rendered, may
appropriate to his, exclusive use a trademark, a trade-name, or a
service-mark not so appropriated by another, to distinguish his
merchandise, business, or service from the merchandise, business or
service of others. The ownership or possession of a trademark, trade-
name, service mark, heretofore or hereafter appropriated, as in this
section provided, shall be recognized and protected in the same
manner and to the same extent as are other property rights known to
the law. (As inserted by Section 1 of Republic Act 638)
It would seem quite clear that adoption alone of a trademark would
not give exclusive right thereto. Such right grows out of their actual
use."19 Adoption is not use. One may make advertisements, issue
circulars, give out price lists on certain goods; but these alone would
not give exclusive right of use. For trademark is a creation of use. The
underlying reason for all these is that Purchasers have come to
understand the mark as indicating the origin of the wares.20 Flowing
from this is the trader's right to protection in the trade he has built up
and the goodwill he has accumulated from use of the trademark.
Registration of a trademark, of course, has value: it is an administrative
act declaratory of a pre-existing right. Registration does not, however,
perfect a trademark right.
The BAYER trademarks registered in the Philippines to which plaintiff
SPI may lay claim, as correctly stated in the decision below, are those
which cover medicines only. For, it was on said goods that the BAYER
trademarks were actually used by it in the Philippines. Therefore, the
certificates of registration for medicines issued by the Director of
Patents upon which the protection is enjoyed are only for medicines.
Nothing in those certificates recited would include chemical or
insecticides.
But plaintiff insists that the statement of the applicant (The Bayer Co.,
Inc.) in its registrations of the BAYER marks states that "the
merchandise for which the trademark is appropriated is d. —
Chemicals, Medicines and Pharmaceutical Preparations." Plaintiff's
position is that such statement determines the goods for which said
marks had been registered. Validity does not attach to this proposition.
First, the statement itself admits that "the particular description of the
articles comprised in said class (d) on which the trademark is used is
Medicines."21 It is not used for chemicals.
Then, Section 11 of the Trademark Law requires that the certificate of
registration state "the particular goods . . . for which it is
registered." This is controlling. Under Section 11 aforesaid, likewise to
be entered in the certificate of registration is "the date of the first
use in commerce or business. SPI may not claim "first use" of the
trademarks prior to the registrations thereof on any product other
than medicines.
Besides, Section 7 of the same Trademark Act directs that upon the
filing of the application and the payment of the required fee, the
"Director [of Patents] shall cause an examination of the application" —
for registration of the trademark — "to be made, and, if on such
examination it shall appear that the applicant is entitled to
registration, the Director . . . shall cause the mark . . . to be published in
the Official Gazette." This examination, it would seem to us, is
necessary in order that the Director of Patents may be satisfied that
the application conforms to the requirement of actual use in
commerce of the trademark in Section 2 and 2-A of the Trademark
Law; and that the statement in said application — as to the "first use"
31
TRADEMARK CASES_FULL TEXT
thereof and "the goods . . . in connection with which the mark . . . is
used" (Section 5) — is true.
Really, if the certificate of registration were to be deemed as including
goods not specified therein, then a situation may arise whereby an
applicant may be tempted to register a trademark on any and all goods
which his mind may conceive even if he had never intended to use the
trademark for the said goods. We believe that such omnibus
registration is not contemplated by our Trademark Law.
Because of this and of the fact that the Bayer trademarks were never
used in the Philippines by plaintiff except for medicines — Aspirin,
Aspirin for Children and Cafiaspirina — we find ourselves unwilling to
draw a hard and fast rule which would absolutely and under all
circumstances give unqualified protection to plaintiff against the use of
said trademarks by all others on goods other than medicines.
2. Neither will the 1927 registration in the United States of the BAYER
trademark for insecticides serve plaintiff any. The United States is not
the Philippines. Registration in the United States is not registration in
the Philippines. At the time of the United States registration in 1927,
we had our own Trademark Law, Act No. 666 aforesaid of the
Philippine Commission, which provided for registration here of
trademarks owned by persons domiciled in the United States.
What is to be secured from unfair competition in a given territory is the
trade which one has in that particular territory. There is where his
business is carried on; where the goodwill symbolized by the
trademark has immediate value; where the infringer may profit by
infringement.
There is nothing new in what we now say. Plaintiff itself
concedes22 that the principle of territoriality of the Trademark Law has
been recognized in the Philippines, citing Ingenohl vs. Walter E. Olsen,
71 L. ed. 762. As Callmann puts it, the law of trademarks "rests upon
the doctrine of nationality or territoriality."23
Accordingly, the 1927 registration in the United States of the BAYER
trademark would not of itself afford plaintiff protection for the use by
defendants in the Philippines of the same trademark for the same or
different products.
3. A question basic in the field of trademarks and unfair competition is
the extent to which a registrant of a trademark covering one product
may invoke the right to protection against the use by other(s) of the
same trademark to identify merchandise different from those for
which the trademark has been appropriated.
Plaintiff's trenchant claim is that it should not be turned away because
its case comes within the protection of the confusion of origin rule.
Callmann notes two types of confusion. The first is the confusion of
goods "in which event the ordinarily prudent purchaser would be
induced to purchase one product in the belief that he was purchasing
the other." In which case, "defendant's goods are then bought as the
plaintiff's, and the poorer quality of the former reflects adversely on
the plaintiff's reputation." The other is the confusion of business: "Here
though the goods of the parties are different, the defendant's product
is such as might reasonably be assumed to originate with the plaintiff,
and the public would then be deceived either into that belief or into
the belief that there is some connection between the plaintiff and
defendant which, in fact, does not exist."24
A judicial test giving the scope of the rule of confusion of origin is Ang
vs. Teodoro (December 14, 1942), 74 Phil. 50. Briefly, the facts of the
just cited case are as follows: Toribio Teodoro, at first in partnership
with Juan Katindig and later as sole proprietor, had continuously used
"Ang Tibay" both as trademark and as tradename in the manufacture
and sale of slippers, shoes and indoor baseballs since 1910. He formally
registered it as a trademark on September 29, 1915 and as a
tradename on January 3, 1933. Ana L. Ang registered the same
trademark "Ang Tibay" for pants and shirts on April 11, 1932 and
established a factory for the manufacture of said articles in 1937. Suit
was lodged by Teodoro against Ang to cancel the latter's registration of
the trademark "Ang Tibay" and to perpetually enjoin her from using
the said trademark on goods manufactured and sold by her. The
judgment of the trial court absolved defendant (Ana L. Ang) from the
complaint with costs against the plaintiff. The Court of Appeals
reversed. On appeal by certiorari, we affirmed the judgment of the
Court of Appeals. We there said:
"In the present state of development of the law on Trade-Marks, Unfair
Competition, and Unfair Trading, the test employed by the courts to
determine whether noncompeting goods are or are not of the same
class is confusion as to the origin of the goods of the second
user. Although two noncompeting articles may be classified under two
different classes by the Patent Office because they are deemed not to
possess the same descriptive properties, they would, nevertheless, be
held by the courts to belong to the same class if the simultaneous use
on them of identical or closely similar trademarks would be likely to
cause confusion as to the origin, or personal source, of the second
user's goods. They would be considered as not falling under the same
class only if they are so dissimilar or so foreign to each other as to
make it unlikely that the purchaser would think the first user made the
second user's goods.
Such construction of the law is induced by cogent reasons of equity
and fair dealing. The courts have come to realize that there can be
unfair competition or unfair trading even if the goods are
noncompeting, and that such unfair trading can cause injury or damage
to the first user of a given trademark, first, by prevention of the natural
expansion of his business and, second, by having his business
reputation confused with and put at the mercy of the second user.
When noncompetitive products are sold under the mark, the gradual
whittling away or dispersion of the identity and hold upon the public
mind of the mark created by its first user, inevitably results. The
original owner is entitled to the preservation of the vauable link
between him and the public that has been created by his ingenuity and
the merit of his wares or services. Experience has demonstrated that
when a well-known trademark is adopted by another even for a totally
different class of goods, it is done to get the benefit of the reputation
and advertisements of the originator of said mark, to convey to the
public a false impression of some supposed connection between the
manufacturer of the article sold under the original mark and the new
articles being tendered to the public under the same or similar mark.
As trade has developed and commercial changes have come about, the
law of unfair competition has expanded to keep pace with the times
and the element of strict competition in itself has ceased to be the
determining factor. The owner of a trademark or trade-name has a
property right in which he is entitled to protection, since there is
damage to him from confusion of reputation or goodwill in the mind of
the public as well as from confusion of goods. The modern trend is to
give emphasis to the unfairness of the acts and to classify and treat the
issue as a fraud.25
The thoughts expressed in Ang Tibay command respect Conduct of
business should conform to ethical business standards. Unfairness is
proscribed. The invocation of equity is bottomed upon the injunction
that no one should "reap where he has not sown."26
Nonetheless, "[i]t has been emphasized that each case presents a
unique problem which must be answered by weighing the conflicting
interests of the litigants."27 With this in mind, we are convinced that
the case before us is not to be analogized with Ang Tibay. The factual
setting is different. His Honor, Judge Magno S. Gatmaitan (now
Associate Justice of the Court of Appeals), the trial judge, so found. He
reached a conclusion likewise different. And the reasons, so well stated
by His Honor, are these:
1st). — It was not plaintiff's predecessor but defendant's namely
Farbenfabriken or Bayer Germany that first introduced the medical
products into the Philippine market and household with the Bayer
mark half a century ago; this is what the Court gathers from the
testimony of Frederick Umbreit and this is the implication even of
Exhs. 48, 49, 66 and as already shown a few pages back;28
2nd). — There is thus reason plausible enough for defendant' plea
that as Sterling was not the "originator" of the Bayer mark, the
rule in Ang vs. Teodoro, supra, is not applicable; and this is correct
notwithstanding Exhs. 106 and 63 and even giving unto these
documents full force and virtue, because purchase of the assets of
Elberfeld, defendants' previous affiliate in New York, by Bayer of
New York, even if that were to be held to include purchase of the
Bayer mark, did not make the purchaser Bayer of New York the
originator of the mark; especially since Bayer of New York was only
another subsidiary of Bayer Germany or Farbenfabriken which was
the real originator;
32
TRADEMARK CASES_FULL TEXT
3rd). — The Court is also impelled to believe that the evidence
establishes that among the common people of the Philippines the
"Bayer" medicines come from Germany; this the Court deduces
from the testimony of witness Florisa Pestano who only
reproduced the belief of her grandmother; the Court might as well
say that plaintiff itself has not discouraged that belief because the
drug and its literature that came from the plaintiff and its affiliate
would show that it represented its medicines to have come from
defendant29 and were manufactured in Germany with that Bayer
mark; thus Exh. 7030 which is the price list of 1928 of Botica de
Sta. Cruz on page 6 indicates that Winthrop Chemical Company of
New York, — plaintiff's subsidiary — was a distributor of I.G.
Farbenindustrie, A.G. Leverkusen Germany; Exh. 8031 which is a
medical diary published by Winthrop for 1934 on page 148
manifested that the journal, "Practical Therapeutics" was
published by I.G. Farbenindustrie Aktiengesellachaft for Winthrop
Chemical Company, Inc.; "with particular reference to the
pharmacological products, sera and vaccines originated and
prepared in the laboratories of the I.G. Farbenindustrie A.G."; and
Exh. 79 a, b, c, d and e which are prospectuses for the medicines,
Mitigal, Afridol, Aspirins, Novalgina and My-Salvarsan32 showed
that these products were manufactured for Winthrop by I.G.
Farbenindustrie; and then Exh. 81 the Revista Boie of 1928 would
show that Winthrop represented itself as the distributor of the
products of Bayer of Germany otherwise known as I.G.
Farbenindustrie, "segun la alta calidad de la marca original";33 the
Court being also impelled to add in this connection that it has to
take judicial notice of a belief of long standing common among the
people in the Philippines that German products are of very high
quality and it is only natural for a distributor or a retailer to take
advantage of that, and as it is not debated that "Bayer" is a
German surname, (see plaintiff's rebuttal Exh. QQQQ, see also p. 7
plaintiff's reply memorandum wherein it is said that this surname
is a "pretty common one among members of the Germany race") it
is all so very easy to associate the Bayer trademark with products
that come from Germany and to believe that they are of high
quality;
4th). — The rationale of the doctrine in Ang vs. Teodoro, supra
being that:
The Courts have come to realize that there can be unfair competition
or unfair trading even if the goods are non-competing, and that such
unfair trading can cause injury or damage to the first user of a given
trade mark, first, by prevention of the natural expansion of his
business, and second, by having his business reputation confused with
and put at the mercy of the second user. 74 Phil. 55-56;
and the Court having found out that the 'first user' was Bayer Germany
and it was this that had built up the Bayer mark and plaintiff apparently
having itself encouraged that belief even after it had acquired the
Bayer mark in America, thru forced sale, of defendant's subsidiary
there in 1918, Exhs. 79, 80, 81, to apply the Ang Tibay rule in the
manner advocated by Sterling would, the Court fears, produce the
reverse result and the consequence would be not equity but injustice.34
It would seem to us that the fact that plaintiff rode on the German
reputation in the Bayer trademark has diluted the rationally of its
exclusionary claim. Not that the free ride in the name of defendant's
German predecessor was sporadic. It is continuing. Proof of this is the
label on the box used by plaintiff (Exhibit U) in the distribution of Bayer
Aspirin. This box bears prominently on the front part the legend
"Genuine" in red color and two arrows: the first pointing to BAYER
CROSS IN CIRCLE, and the second, to BAYER Aspirin. At the back
thereof in big letters are the words "BAYER ASPIRIN", followed in small
letters "Used since 1900" and down below the small words "Mfd. in the
Phil. by Winthrop Stearns, Inc. for STERLING PRODUCTS
INTERNATIONAL, INCORPORATED." In plaintiff's prospectus (Exhibit 1)
found in the box of Bayer Aspirin tablets, children's size, there is the
significant statement: "GENUINE BAYER — Each Children's Size Bayer
Aspirin tablet is stamped with the Bayer Cross, the trademark of the
genuine Bayer product. This means that your child is getting the same
gentle-to-the-system Bayer Aspirin that has been used for over 50
years by millions of normal people without ill effect."
With the background of prior use in the Philippines of the word BAYER
by FBA's German predecessor and the prior representations that
plaintiff's medicines sold in the Philippines were manufactured in
Germany, the facts just recited hammer on the mind of the public that
the Aspirin. Cafiaspirina and Aspirin for Children being marketed for
plaintiff in the Philippines come from the same source — the German
source — and in use since 1900. That this view is far from far-fetched,
is illustrated by the testimony of plaintiff's own witness, Dr. Antonio
Vasquez, viz:
Q. Have you ever heard of a pharmaceutical company of Bayer of
Germany, or a company in Germany named Bayer?
A. Yes, sir.
Q. Since when have you heard of this pharmaceutical company in
Germany with the name Bayer, since when have you heard of
that?
A. I have always taken the name Bayer as associated with
Winthrop & Stearns.
Q. But, you said a while ago....
Witness.
.... Yes .....
xxx xxx xxx
Q. ... that you have heard of a pharmaceutical company with the
name of Bayer in Germany?
A. Yes, sir.
Q. Do you know if this Winthrop & Stearns you mentioned has
ever been connected with Bayer Company of Germany?
A. I have always understood that they were distributing drugs of
Bayer & Company.35
4. The Ang Tibay doctrine, we believe, is not to be read as shunting
aside the time-honored teaching that he who comes into equity must
do so with clean hands.36 Plaintiff cannot now say that the present
worth of its BAYER trademarks it owes solely to its own efforts; it is not
insulated from the charge that as it marketed its medicines it did so
with an eye to the goodwill as to quality that defendants' predecessor
had established.
There is no whittling away of the identity of plaintiff's trademarks.
Plaintiff is not the first user thereof in the Philippines. The trademarks
do not necessarily link plaintiff with the public. Plaintiff must show
injury; it has not. On the contrary, representations as to the place of
manufacture of plaintiff's medicines were untrue, misleading. Plaintiff
could still be tagged with the same deception "which (it) complains of
in the defendant(s)."37 Appropriate it is to recall here our observation
in the Ang Tibay opinion, viz: "On our part may we add, without
meaning to be harsh, that a self-respecting person does not remain in
the shelter of another but builds one of his own."38
Plaintiff, the owner in this country of the trademarks BAYER for
medicines, has thus forfeited its right to protection from the use of the
same trademarks by defendants for products different therefrom —
insecticides and other chemicals.
5. But defendants ask us to delist plaintiff's BAYER trademarks for
medicines from the Principal Register, claiming right thereto for said
use. Said trademarks had been registered since 1939 by plaintiff's
predecessor. The Bayer Co., Inc.
Defendants' claim is stale; it suffers from the defect of non-use.39 While
it is conceded that FBA's predecessors first introduced medical
products with the BAYER trademarks in the Philippine market, it is
equally true that, after World War I, no definite evidence there is that
defendants or their professors traded in the Philippines in medicines
with the BAYER trademarks thereafter. FBA did not seasonably voice its
objection. Lack of protest thereto connoted acquiescence. And this;
notwithstanding the fact that the 1923 and 1926 agreements were set
aside in the anti-trust suits. Defendants did use the marks; but it was
much later, i.e., in 1958 — and on chemicals and insecticides — not on
medicines. FBA only bestirred itself and challenged plaintiff's right to
the trademarks on medicines when this suit was filed. Vigilantibus non
dormientibus equitas subvenit.40
The net result is that, as the trial court aptly observed, plaintiff may
hold on to its BAYER trademarks for medicines. And defendants may
continue using the same trademarks for insecticides and other
chemicals, not medicines.
6. Defendants balk at the ruling below which directs them "to add a
distinctive word or words in their mark to indicate that their products
come from Germany."41
33
TRADEMARK CASES_FULL TEXT
We are left under no doubt as to the reasonableness of the formula
thus fashioned. It avoids the mischief of confusion of origin —
defendant FBA's product would not be mistaken for those of plaintiff. It
reduces friction. We perceive of no prejudice to defendants. The order
does not visit defendant FBA with reprobation or condemnation.
Rather, said defendant would be enhancing the value of and would be
sponsoring its own products. Anyway, a statement that its products
come from Germany is but a statement of fact.
FOR THE REASONS GIVEN, the judgment under review is hereby
affirmed. No costs. So ordered.
G.R. No. L-28554 February 28, 1983
UNNO COMMERCIAL ENTERPRISES, INCORPORATED, petitioner, vs.
GENERAL MILLING CORPORATION and TIBURCIO S. EVALLE, in his
capacity as Director of Patents, respondents.
TEEHANKEE, J.:
The Court affirms respondent Director of Patent's decision declaring
respondent General Milling Corporation as the prior user of the
trademark "All Montana" on wheat flour in the Philippines and
ordering the cancellation of the certificate of registration for the same
trademark previously issued in favor of petitioner Unno Commercial
Enterprises, Incorporated, it appearing that Unno Commercial
Enterprises, Inc. merely acted as exclusive distributor of All Montana
wheat flour in the Philippines. Only the owner of a trademark, trade
name or service mark may applly for its registration and an importer,
broker, indentor or distributor acquires no rights to the trademark of
the goods he is dealing with in the absence of a valid transfer or
assignment of the trade mark.
On December 11, 1962, respondent General Milling Corporation filed
an application for the registration of the trademark "All Montana" to
be used in the sale of wheat flour. In view of the fact that the same
trademark was previously, registered in favor of petitioner Unno
Commercial Enterprises, Inc., the Chief Trademark Examiner of the
Philippines Patent Office declared an interference
proceeding 1 between respondent corporation's application (Serial No.
9732), as Junior - Party-Applicant and petitioner company's registration
(Registration No. 9589), as Senior Party-Applicant, docketed in the
Philippines Patent Office as Inter Partes Case No. 313, to determine
which party has previously adopted and used the trademark "All
Montana".
Respondent General Milling Corporation, in its application for
registration, alleged that it started using the trademark "All Montana"
on August 31, 1955 and subsequently was licensed to use the same by
Centennial Mills, Inc. by virtue of a deed of assignment executed on
September 20, 1962. On the other hand petitioner Unno Commercial
Enterprises, Inc. argued that the same trademark had been registered
in its favor on March 8, 1962 asserting that it started using the
trademark on June 30, 1956, as indentor or broker for S.H. Huang Bros.
& Co., a local firm.
The Director of Patents, after hearing, ruled in favor of respondent
General Milling Corporation and rendered its decision as follows:
However, there is testimony in the record (t.s.n., pp. 11-12,
Jan.17,1967, testimony of Jose Uy) to the effect that,
indispensable, "ALL MONTANA" wheat flour is a premium flour
produced from premium wheat coming from the State of
Montana, U.S.A. It is apparent that the trademark is primarily
geographically descriptive of the goods. It is therefore a matter
overlooked by the Trademark Examiner, and it is incumbent upon
him to determine if the applicant should claim and is qualified to
claim distinctiveness under Section 4(f) of the Trademark Statute.
Otherwise, it is registrable on the Supplemental Register and
should thus be registered therein.
WHEREFORE, the Junior Party-Applicant is adjudged prior -user of
the trademark ALL MONTANA, but 'because it is primarily
geographically descriptive, the application is herein remanded to
the Chief Trademark Examiner for proper proceeding before
issuance of the certificate of registration.
The certificate of registration issued to the Senior Party is ordered
cancelled.
IT IS SO ORDERED.
After its motion for reconsideration was denied, petitioner brought the
instant petition seeking the reversal of the decision and praying that it
be declared the owner and prior user of the trademark "All Montana"
on wheat flour.
Petitioner based its claim of ownership over the trademark in question
by the fact that it acted as an indentor or broker for S. H. Huang Bros.
& Co., a local importer of wheat flour, offering as evidence the various
shipments, documents, invoices and other correspondence of
Centennial Mills, Inc., shipping thousand of bags of wheat flour bearing
the trademark "All Montana" to the Philippines. Petitioner argued that
these documents, invoices and correspondence proved the fact that it
has been using the trademark "All Montana" as early as 1955 in the
concept of an owner and maintained that anyone, whether he is only
an importer, broker or indentor can appropriate, use and own a
particular mark of its own choice although he is not the manufacturer
of the goods he deals with. Relying on the provisions of Section 2-A of
the Trademarks Law 2 (Republic Act 166), petitioner insists that "the
appropriation and ownership of a particular trademark is not merely
confined to producers or manufacturers but likewise to anyone who
lawfully deals in merchandise who renders any lawful service in
commerce, like petitioner in the case at bar. 3
The right to register trademark is based on ownership. 4 When the
applicant is not the owner of the trademark being applied for, he has
no right to apply for the registration of the same. 5 Under the
Trademark Law only the owner of the trademark, trade name or
service mark used to distinguish his goods, business or service from the
goods, business or service of others is entitled to register the same. 6
The term owner does not include the importer of the goods bearing
the trademark, trade name, service mark, or other mark of ownership,
unless such importer is actually the owner thereof in the country from
which the goods are imported. A local importer, however, may make
application for the registration of a foreign trademark, trade name or
service mark if he is duly authorized by the actual owner of the name
or other mark of ownership. 7
Thus, this Court, has on several occasions ruled that where the
applicant's alleged ownership is not shown in any notarial document
and the applicant appears to be merely an importer or distributor of
the merchandise covered by said trademark, its application cannot be
granted. 8
Moreover, the provision relied upon by petitioner (Sec. 2-A, Rep. Act
No. 166) allows one "who lawfully produces or deals in merchandise ...
or who engages in any lawful business or who renders any lawful
service in commerce, by actual use thereof . . . (to) appropriate to his
exclusive use a trademark, or a service mark not so appropriated by
another. " In the case at bar, the evidence showed that the trademark
"All Montana" was owned and registered in the name of Centennial
Mills, Inc. which later transferred it to respondent General Milling
Corporation by way of a deed of assignment. It is undisputed that way
back in March, 1955, Centennial Mills, Inc. under the tradename
Wenatchee Milling Co., exported flour to the Philippines, through its
distributor, herein petitioner Unno Commercial Enterprises, Inc. which
acted as indentor or broker for the firm S. H. Huang Bros. & Co.
However, because of increased taxes and subsidies, Centennial Mills
discontinued shipments of flour in the Philippines and eventually sold
its brands for wheat flour, including "All Montana" brand to
respondent General Milling Corporation in consideration of 1,000
shares of stock of respondent corporation with a par value of P100.00
per share or a total of P100,000.00. Respondent General Milling
Corporation, since the start of the operation in 1961 of its flour mills
located in Lapu-lapu City, Cebu has been manufacturing and selling "All
Montana" flour in the Philippines.
As against petitioner's argument that respondent failed to establish
convincingly the ownership of the trademark "All Montana" by its
assignor Centennial Mills, Inc., the Director of Patents correctly found
that ample evidence was presented that Centennial Mills, Inc. was the
owner and prior user in the Philippines of the trademark "All Montana"
through a local importer and broker. The Deed of Assignment itself
constitutes sufficient proof of its ownership of the trademark "All
Montana," showing that Centennial Mills was a corporation duly
organized and existing under and by virtue of the laws of the State of
34
TRADEMARK CASES_FULL TEXT
Oregon, U.S.A. with principal place and business at Portland, Oregon,
U.S.A. and the absolute and registered owner of several trademarks for
wheat flour, i.e. (Imperial, White Lily, Duck, General, Swan, White
Horse, Vinta, El Paro, Baker's Joy, Choice, Red Bowl All Montana and
Dollar.) all of which were assigned by it to respondent General Milling
Corporation. The deed of assignment was signed by its president,
Dugald MacGregor, duly acknowledged before James Hunt, a notary
public for the State of Oregon, accompanied by a certification issued by
the Secretary of State of the State of Oregon stating that the said
James Hunt is a duly qualified Notary Public with full power and
authority to take acknowledgments of all oaths and that full faith and
credit should be given to his official acts as notary public.
The Director of Patents likewise correctly rejected petitioner's
contention that in a 1954 conference in Manila the ownership and use
by petitioner of the brand "All Montana" was agreed upon, on the
contrary finding that "Details of that meeting were, however, explained
by Mr. Dugald MacGregor, President of Centennial Mills, Inc., as the
Junior Party's rebuttal witness. Mr. MacGregor confirmed holding such
conference in a restaurant in Manila with representatives of the Senior
Party, namely; Messrs. Jose Uy, Francisco Gonzales and S. H. Huang
although he could not remember the name of the restaurant. He
further explained that his company owned the trademark; that it had
been using the mark in the United States; and that ownership of the
mark had never been conferred upon any other company, much less
the Senior Party"; and "Inasmuch as it was not the owner of the
trademark, the Senior Party could not be regarded as having used and
adopted it, and had no right to apply for its registration. It
acknowledged that it was a mere importer of flour, and a mere
importer and distributor acquires no rights in the mark used on the
imported goods by the foreign exporter in the absence of an
assignment of any kind ... Trademarks used and adopted on goods
manufactured or packed in a foreign country in behalf of a domestic
importer, broker, or indentor and distributor are presumed to be
owned by the manufacturer or packer, unless there is a written
agreement clearly showing that ownership vests in the importer,
broker, indentor or distributor.
Thus, petitioner's contention that it is the owner of the mark "All
Montana" because of its certificate of registration issued by the
Director of Patents, must fail, since ownership of a trademark is not
acquired by the mere fact of registration alone. 9 Registration merely
creates a prima facie presumption of the validity of the registration, of
the registrant's ownership of the trademark and of the exclusive right
to the use thereof. 10 Registration does not perfect a trademark
right. 11 As conceded itself by petitioner, evidence may be presented to
overcome the presumption. Prior use by one will controvert a claim of
legal appropriation, by subsequent users. In the case at bar, the
Director of Patents found that "ample evidence was presented in the
record that Centennial Mills, Inc. was the owner and prior user in the
Philippines of the trademark 'All Montana' through a local importer
and broker. Use of a trademark by a mere importer, indentor or
exporter (the Senior Party herein) inures to the benefit of the foreign
manufacturer whose goods are Identified by the trademark. The Junior
Party has hereby established a continuous chain of title and,
consequently, prior adoption and use" and ruled that "based on the
facts established, it is safe to conclude that the Junior Party has
satisfactorily discharged the burden of proving priority of adoption and
use and is entitled to registration." It is well-settled that we are
precluded from making further inquiry, since the findings of fact of the
Director of Patents in the absence of any showing that there was grave
abuse of discretion is binding on us 12 and the findings of facts by the
Director of Patents are deemed conclusive in the Supreme Court
provided that they are supported by substantial evidence. 13 Petitioner
has failed to show that the findings of fact of the Director of Patents
are not substantially supported by evidence nor that any grave abuse
of discretion was committed.
Finally, the Court finds without merit petitioner's argument that the
Director of Patents could not order the cancellation of' its certificate of
registration in an interference proceeding and that the question of
whether or not a certificate of registration is to be cancelled should
have been brought in cancellation proceedings. Under Rule 178 of the
Rules of the Patent Office in Trademark Cases, 14 the Director of
Patents is expressly authorized to order the cancellation of a registered
mark or trade name or name or other mark of ownership in an inter
partes case, such as the interference proceeding at bar. 15
WHEREFORE, the appealed decision is hereby affirmed. No costs.
Melencio-Herrera, Plana, Vasquez, Relova and Gutierrez, Jr., JJ., concur.
G.R. No. L-28499 September 30, 1977
VICTORIAS MILLING COMPANY, INC., petitioner, vs. ONG SU AND THE
HONORABLE TIBURCIO S. EVALLE IN HIS CAPACITY AS DIRECTOR OF
PATENT'S, respondents.
FERNANDEZ, J.:
This is a petition to review the decision of the Director of Patents in
Inter Partes Case No. 304 entitled "Victorias Milling Company, Inc.,
petitioner, verus, Ong Su" dated August 15, 1967 denying the petition
to cancel the certificate of registration issued by the philippines Patent
Office on Jurie 20, 1961 in favor of Ong Su covering the tradenwk
"VALENTINE" and design and used on refined sugar. 1
The petitioner, Victorias Milling Company, Inc., a domestic corporation
and engaged in the manufacture and sale of refined granulated sugar is
the owner of the trademark "VICTORIAS" and d design registered in the
Philippines Patent Office on November 9, 1961.
The respondent Ong Su is engaged in the repacking and sale of refine
sugar and is the owner of the trademark "VALENTINE" and design
registered in the Philippines Patent Office on June 20, 1961.
On October 4, 1963, Victorias Mining Company, Inc. filed with the
Philippine Patent Office a petition to cancel the registration of the Ong
Su trademark "Valentine."
The petitioner allied that its tradermrk "Victorias" and diamond design
has distinctive of its sugar long before the respondent used its
trademark; that the registration of "Valentine" and design has caused
and will cause great damage to petitioner by reason of mistake,
confusion, or deception among the purchasers because it is similar to
its "Victorias" trademark; that registration was fradulently obtained by
Ong Su and that "Valentine" faisely suggests a connection with Saint
Valentine or with an institution or belief connected therewith. 2
In his answer to the petition the respondent averred that he is doing
business under the name and style "Valentine Packaging" and has
registered the trademark "Valentine" with a design for sugar and was
issued Certificate of Registration No. 8891 dated June 20, 1961; that
the trademark "Victorias" with diamond design and the trademark
"Valentine" with a design are two different marks; and that there is
absolutely no likelihood of confusion, mistake or deception to
purchasers through the concurrent use of the petitioner's mark
"Victorias" with a diamond design and the respondents' mark
"Valentine" with a design in connection with sugar. 3
The petitioner's only witness, Pacifica V. Vijandre its vice-president and
stockholder, testified that Victorias Milling Company, Inc. has used
since 1947 the trademark "Victorias" and diamond design with colors
of red and black on sacks of sugar having variable weight and size of 5
lbs., 10 lbs., 25 N., 50 lbs., and 100 lbs.; that the company had
transactions on or sales of sugar with local dealers such as Kim Kee,
Chu Yu & Co., Limouan & Co., Luzon Merchandising Corp. and ARCA
that the average sale from 1958 to 1962 was P30,000,000 and for the
whole year of 1962 the sale was P46,000,000; that he came to know
that the trademark "Valentine" appeared in the market in 1962
through the report of his company's field agents; and that except for
the words "Valentine and Victorias", the design and wordings of the
bags are practically the same. 4
The respondent, Ong Su decWW that he adopted and began using his
trademark "Valentine" and design before and continuously after World
War II in the Philippines, particularly on paper bags used as containers
for starch, coffee and sugar; and that since January 1955 he continued
using said trademark on repacked sugar.
Arturo Chicane a witness for the respondent, testified that he was a
distribution agent of Ong Su that he travelled a lot but he river own
across an instance when the respondent Ong Su product was mistaken
for the petitioner's product; that he found the diamond design to be
quite common in combination with other words used as trademarks as
a background or to enhance their appearance, such as "DIAMOND" and
design (Exhibit "54-A"), "EAGLE" and design (Exhibit "53"), and
"SUNRISE" and design (Exhibit "55"), not belonging to the petitioner,
35
TRADEMARK CASES_FULL TEXT
which are also used on repacked sugar by various sugar dealers; and
that said designs and the color of the lines on which drawn had not
been regarded as trademarks but we ornamentation. 5
The Director of Patents denied the petition to cancel the certificate of
registration of the respondent Ong Su covering the trademark
"Valentine" and design because:
From the facts of record, I find nothing to sustain the petition.
There is no question that as to their respective literal designation
the trademarks are different. One is VALENTINE while the other is
VICTORIAS. Thus, as to sound and connotation there is no dispute
as to their dissimilarity.
However, from the evidence and pleadings, it appears that
petitioner is relying heavily on its diamond design, the color
scheme, and the printing sequence or arrangement of such
legends as weight, contents and manufacturer or packer.
I am of the firm belief that the diamond Portion of petitioner's
trademark hag not bolstered its cause. Common geometric shapes
such as circles, ovals, squares, triangles, diamonds, and the like,
when used as vehicles for display on word marks, ordinarily are
not retarded as indicia of origin for goods to which the marks are
applied, unless of course they have acquired secondary meaning. I
have scoured the records completely to ascertain if the petitioner
has submitted satisfactory evidence in this regard, but I find
absolutely nothing to base a ruling that the triangle (sic) design has
acquired a secondary meaning with respect to its sugar business.
It is the common practice for trademark owners to register designs
forming outline of their distinguishing mark, but when the
registrant of such design relies upon registration in proceeding
based upon likelihood of confusion of purchasers, he assumes the
burden of showing that the design portion of the mark has been so
used that purchasers recognize the design, standing alone, as
indicating goods emanating from the registrant. Bausch & Lomb
Optical Co., v. Overseas Finance & Trading Co., Inc. (ComrPats) 112
USPQ 6.
Considering herein that the petitioner failed to establish that
diamond design component of its mark has acquired a secondary
meaning and that the literal portion of the marks have no
similarity, there is no reasonable likelihood of purchaser confusion
resulting from registrant's use of VALENTINE within a diamond and
petitioner's use of VICTORIAS within a diamond.
As regards the colors black and red used, it is fundamental in
trademark jurisprudence that color alone, unless displayed in a
distinct or arbitrary design, does not function as a trademark,
inasmuch as here, or elsewhere, the colors black and red are not
so displayed by the petitioner, and are primary colors commonly
and freely used in the printing business.
Finally, as regards the printing sequences or arrangement of such
legends as weight, contents, and manufacturer or packer, I regard
it as merely a matter pertaining to the address of the goods' — a
matter involving unfair competition over which the Patent Office
has no jurisdiction. (See: Menzi & Co., Inc, vs. Andres Co Dee. No.
59 dated Oct. 31, 1952, Dir. of Patents.) And in the case of A. E.
Staley Manufacturing Co., Inc. vs. Andres Co. v. Tan Tong, citing,
Gillette Safety Razor Go. v. Triangle Mechanical Laboratories, 31
USPQ 24; Aladdin Mfg. Co. v. Mantle Lamp Co., 21 USPQ 58; and J.
C. Eno (U.S.) Limited v. Deshayas 29 USPQ 179), it was held that
the tribunals of the Philippines Patent Office have no jurisdiction
over questions of unfair competition. At most, the petitioner's
recourse is for it to seek relief in civil courts.
The allegations that the registration of VALENTINE was obtained
fraudulently; that it falsely suggests a connection with St.
Valentine; and that it is merely descriptive or deceptively
misdescriptive of sugar have no basis in law and fact. 6
The petitioner submits that the Director of Patents committed the
following errors:
I THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING
THAT PETITIONER'S REGISTERED DIAMOND DESIGN IS NOT AN
INDEX OF ORIGIN.
II
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING
THAT PETITIONER IS REQUIRED TO ESTABLISH THAT ITS DIAMOND
DESIGN HAS ACQUIRED A SECONDARY MEANING.
III
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING
PETITIONER'S DIAMOND DESIGN HAS NOT ACQUIRED A
SECONDARY MEANING.
IV
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING
THAT THE DETAILS OF PETITIONER'S DESIGN THAT HAVE BEEN
IMITATED BY RESPONDENT ONG SU MERELY PERTAIN TO
THE'DRESS OF THE GOODS.'
V indicia of origin for goods to which the remarks are applied unless they
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN CONFINING
HIS COMPARISON OF PETITIONER'S AND RESPONDENT'S
RESPECTIVE TRADEMARKS TO ONE SOLE ITEM OF THEIR DESIGN,
IGNORING THE COMPLETE LABELS AS ACTUALLY USED IN TRADE
AND SEEN BY CONSUMERS.
VI
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN TAKING THE
POSITION THAT IN CASES OF TRADEMARK CANCELLATION
INVOLVING, AMONG OTHERS, OBVIOUS ACTS OF UNFAIR
COMPETITION, HE NEED NOT TAKE ANY ACTION WHATSOEVER,
SINCE HE SUPPOSEDLY HAS NO JURISDICTION IN THE PREMISES.
VII
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING
THAT PETITIONER'S REGISTERED COLOR DESIGN DOES NOT
FUNCTION AS A TRADEMARK.
VIII
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING
THAT BECAUSE THE LITERAL PORTIONS OF THE RESPECTIVE
TRADEMARKS IN QUESTION, NAMELY, THE RESPECTIVE NAMES
'VICTORIAS' AND 'VALENTINE', HAVE NO SIMILARITY, THERE IS NO
REASONABLE LIKELIHOOD OF PURCHASER CONFUSION.
IX
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN ASSUMING
THAT PETITIONER, OR THE OWNER OF ANY IMITATED OR
INFRINGED TRADEMARK FOR THAT MATTER, MUST ESTABLISH
ACTUAL PURCHASER CONFUSION.
X
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN PREVENTING
THE TESTIMONIES OF RESPONDENT ONG SU AND WITNESS
ERNESTO DURAN AS REBUTTAL WITNESSES FOR PETITIONER, SAID
RULINGS OF RESPONDENT DIRECTOR CONSTITUTING REVERSIBLE
ERROR AND THE DENIAL OF PROCEDURAL DUE PROCESS.
XI
THAT THE REGISTRATION OF THE VALENTINE TRADEMARK BY
RESPONDENT ONG SU WAS NOT PRUDULENTLY OBTAINED.
XII
THE RESPONDENT DIRECTOR OF PATENTS, ACTING TfIROUGH
HEARING OFFICER AMANDO MARQUEZ, ERRED IN ADMITTING
RESPONDENT ONG SU'S EXHIBITS PERTAINING TO ONE 'MARIANO
ANG SAID NAME NOT HAVING BEEN CLEARLY ESTABLISHED AS AN
ALIAS, ALHTHOUGH ADMITTEDLY UNAUTHORIZED, OF
RESPONDENT ONG SU. 7
The contention of petitioner that the diamond design in its trademark
is an index of origin has no merit. The petitioner has not shown that
the design portion of the mark has been so used that purchasers
recognize the design, standing alone, as indicating goods coming from
the registrant. As correctly stated by the Director of Patents, common
geometric shapes such as diamonds ordinarily are not regarded as
have acquired a secondary meaning. And there is no evidence that the
diamond design in the trademark of the petitioner has acquired a
secondary meaning with respect to its sugar business. The word
"Victorias" is what Identifies the sugar contained in the bag as the
product of the petitioner. Indeed, the petitioner has advertised its
sugar in bags marked "Victorias" with oval, hexagor. and other designs.
The evidence is that Ong Su has been using his trademark since prior to
the last World War and he obtained the registration thereof on June
20, 1961. Vijandre declared that the petitioner started to use its
36
TRADEMARK CASES_FULL TEXT
trademark only in 1947. Said trademark was registered on November
9, 1961. It cannot be said, therefore, that the respondent Ong Su
imitated the trademark of the petitioner.
The petitioner avers that purchasers of sugar are likely to confuse
petitioner's "Victorias" trademark and respondent Ong Su's "Valentine"
trademark because of the following similarities:
1. Both trademarks have the same diamond design with the slight
modification that the lines of the "VALENTINE" diamond design are
a little protruding at the ends.
2. The lines forming the diamond design in both trademarks
consist of two lines, namely, the outer portion and the inner
portion.
3. The outer portion of the diamond design of both trademarks has
the color black as shown in the specimens (Exhibits "A" and "B").
The, inner line of the diamond design in both trademarks has the
color red.
4. In both trade marks, the word "PURE" in black print appears
inside of the upper portion of the diamond design.
5. In both trade marks, the word "VICTORIAS" and the word
VALENTINE' placed within the diamond design are conspicuously
colored red.
6. The letter "V" in Victorias and the letter "V" in Valentine are
Identically placed.
7. The word "VICTORIAS" and the word "VALENTINE" are
Identically arranged, the same containing the same number of
letters.
8. Immediately below the words "VICTORIAS" and
"VALENTINE"appears the words "REFINED SUGAR".
9. underneath the diamond design in both trademarks are the
words "FINE GRANULATED" and below said phrase are the words
'CANE SUGAR'with a small diamond design.
10. Both, trade marks are used on refines sugar.
11. The words "PURE," "VALENTINE," "VICTORIAS," "FINE
GRANULATED" and "CANE SUGAR" in both trade marks are same
has arranged and printed.9
The respondent Ong Su maintains that the alleged are minor for the
following reason:
Appellant attempts to show the possibility or likelihood of
purchaser confusion by pointing out alleged similarities in the
packages in question, e.g. "Pure Refined Sugar" appearing in both
marks in question. It should be noted, however, that these words
are merely descriptive commonly applied to the goods, namely,
sugar, and cannot be exclusively appropriated by the petitioner.
The other alleged similarities pointed to by appellant — that the
lines forming the diamond design in both trademarks consist of
two lines, the outer portion and the inner portion; that the
diamond design in both tradeniarks has the color black and the
inner line of both designs has the red color; that the diamond
design as used by the petitioner and by respondent are of the
same size; that the letter 'V' in Victorias and the letter "V" in
"Valentine" are the same size; and that the letter 'V' in VICTORIAS
and the letter "V" in the Valentine package are Identically pIaced in
the diamond; and that — the word "Victorias" and the word
"VALENTINE" are Identically arranged within the diamond — are,
we submit with respect, minor and insignificant for the purpose of
this petition even if the observations of appellant are correct.10
It seems clear that the words "Valentine" and "Victorias" and the
names and places of business of Victorias Milling Company, Inc. and
Ong Su are the dominant features of the trademarks in question. The
petitioner has not established such a substantial similarity between the
two trademarks in question as to warrant the cancellation of the
trademark 'Valentine'of the respondent Su. The Director of Patents
correctly ruled that he has no jurisdiction over the issue of unfair
competition. Under Section 27 of the Trade Mark Law, Republic Act No.
166, after actions for unfair competition shall be brought before the
proper Court of First Instance.
The refusal of the Director of Patents to allow respondent Ong Su and
witness Emesto Duran to testify on rebuttal is not a reversible effort.
The only'purpose of the petitioner in proposing to call Ong Su as a
witness on rebuttal is to ask the latter if he had judicial authority to use
the alias 'Mariano'. Ang It appears, however, that the counsel of
petitioner had already extensively cross-examined Ong Su as to a
citizenship, alien certificate of registration and the other name Mariano
Ang. It seems immaterial whether or not Ong Su has judicial authority
to use Mariano Ang as an alias. There is evidence that even before the
last World War, the trademark 'Valentine' and design had been used
under the name of either Ong Su or Mariano Ang.
The petitioner sought to present Emesto T. Duran as rebuttal witness
to prove that there was a confusion among consumers or buyers of
sugar caused by the alleged sorority of the "Victorias" and "Valentine"
trademarks. The presentation of Emesto T. Duran as rebuttal witness
was objected to by counsel of the respondent on the ground that the
evidence sought to be elicited from Duran did not directly contradict
the testimony of witness Chicane The objection was sustained by the
hearing officer whose ruling was subsequently confer by the Director
of Patents. Counsel for the petitioner made the following formal offer
of proof:
ATTY. GONZALEZ:
Your Honor please, in view of the ruling of the Honorable Director
your Honor please on the admissibility of certain items of
evidence, which resolution dated February 21, 1966 was received
by undersigned counsel for the petitioner on February 22, 1966,
said resolution was setting the hearing of this case for this
morning, I wish to state, I wish to register my exception, my
respectful exception to said resolution. In view of the resolution
not permitting me to present Mr. Ernesto Duran, my proposed
witness whom I attempted to present at the last hearing, I wish to
offer as proof the following items ol' the testimony of witness
Duran. Now as he would go shopping with his parents and that
sometime in the month of February 1963 he went to the Aranque
market, and while he was buying groceries he saw a shelf with five
(5) lbs. bag of sugar with the bag and package he thought was
VICTORIAS. Witness Duran will further testify that he went to the
shelf and pointed to the bag of sugar and hesaid Isang support ng
Victorias Ang. That the sugar was taken by the shopkeeper and
when he went home he found out that the sugar was marked
VALENTINE. lie went on again on another time later and saw that
the shelf was still filled with five (5) pounds (lbs,) bag VALENTINE
sugar. The shelf also has bags of VICTORIAS sugar side by side with
VALENTINE sugar, that the package of VALENTINE looked so much
alike will VICTORIAS sugar that he was misled into pointing to
VALENTINE and asked for VICTORIAS.
HEARING OFFICER:
What is that, is that supposed to be the testimony of witness
Duran?
ATTY. GONZALEZ:
Yes, your Honor, I am offering as proof of what the witness Duran
would have testified. Since this office has ruled that I cannot
present him an offer of proof is being made for purposes of putting
on record what he would have testified to on record in accordance
with the Rules of Evidence. 11
Having made the foregoing formal offer of proof, the petitioner cannot
complain that it was denied procedural due process.
The proposed testimony of Emesto T. Duran that in February 1963 he
went to Arangue market and bought one bag of sugar which he
thought was "Victorias" and when he went home he found out that the
sugar was marked "Valentine" is not sufficient evidence that the two
trademarks are so similar that buyers of sugar are confused. The words
"Victorias" and "Valentine" are not similar in spelling and do not have a
similar sound when pronounced. Even the diamond designs are
different. The diamond design of the trademark "Valentine" has
protruding fines at the comers. Even an illiterate person can see the
difference between the two diamond designs.
There is no evidence that the respondent Ong Su had obtained the
registration of his trademark "Valentine" and design by means of fraud.
The said trademark was registered in the Philippines Patent Office
before the petitioner registered its trademark.
The record and evidence show that Ong Su had also used in his
business the name Mariano Ang. Hence the licenses and permits in the
name of Ong Su and/or Mariano Ang were correctly admitted as
evidence.
37
TRADEMARK CASES_FULL TEXT
WHEREFORE the decision of the Director of Patents sought to be
reviewed is hereby affirmed, without pronouncement as to costs.
SO ORDERED.
G.R. No. L-48226 December 14, 1942
ANA L. ANG, petitioner, vs. TORIBIO TEODORO, respondent.
OZAETA, J.:
Petitioner has appealed to this Court by certiorari to reverse the
judgment of the Court of Appeals reversing that of the Court of First
Instance of Manila and directing the Director of Commerce to cancel
the registration of the trade-mark "Ang Tibay" in favor of said
petitioner, and perpetually enjoining the latter from using said trade-
mark on goods manufactured and sold by her.
Respondent Toribio Teodoro, at first in partnership with Juan Katindig
and later as sole proprietor, has continuously used "Ang Tibay," both as
a trade-mark and as a trade-name, in the manufacture and sale of
slippers, shoes, and indoor baseballs since 1910. He formally registered
it as trade-mark on September 29, 1915, and as trade-name on January
3, 1933. The growth of his business is a thrilling epic of Filipino industry
and business capacity. Starting in an obscure shop in 1910 with a
modest capital of P210 but with tireless industry and unlimited
perseverance, Toribio Teodoro, then an unknown young man making
slippers with his own hands but now a prominent business magnate
and manufacturer with a large factory operated with modern
machinery by a great number of employees, has steadily grown with
his business to which he has dedicated the best years of his life and
which he has expanded to such proportions that his gross sales from
1918 to 1938 aggregated P8,787,025.65. His sales in 1937 amounted to
P1,299,343.10 and in 1938, P1,133,165.77. His expenses for
advertisement from 1919 to 1938 aggregated P210,641.56.
Petitioner (defendant below) registered the same trade-mark "Ang
Tibay" for pants and shirts on April 11, 1932, and established a factory
for the manufacture of said articles in the year 1937. In the following
year (1938) her gross sales amounted to P422,682.09. Neither the
decision of the trial court nor that of the Court of Appeals shows how
much petitioner has spent or advertisement. But respondent in his
brief says that petitioner "was unable to prove that she had spent a
single centavo advertising "Ang Tibay" shirts and pants prior to 1938. In
that year she advertised the factory which she had just built and it was
when this was brought to the attention of the appellee that he
consulted his attorneys and eventually brought the present suit."
The trial court (Judge Quirico Abeto) presiding absolved the defendant
from the complaint, with costs against the plaintiff, on the grounds
that the two trademarks are dissimilar and are used on different and
non-competing goods; that there had been no exclusive use of the
trade-mark by the plaintiff; and that there had been no fraud in the use
of the said trade-mark by the defendant because the goods on which it
is used are essentially different from those of the plaintiff. The second
division of the Court of Appeals, composed of Justices Bengson, Padilla,
Lopez Vito, Tuason, and Alex Reyes, with Justice Padilla as ponente,
reversed that judgment, holding that by uninterrupted an exclusive use
since 191 in the manufacture of slippers and shoes, respondent's
trade-mark has acquired a secondary meaning; that the goods or
articles on which the two trade-marks are used are similar or belong to
the same class; and that the use by petitioner of said trade-mark
constitutes a violation of sections 3 and 7 of Act No. 666. The
defendant Director of Commerce did not appeal from the decision of
the Court of Appeals.
First. Counsel for the petitioner, in a well-written brief, makes a frontal
sledge-hammer attack on the validity of respondent's trade-mark "Ang
Tibay." He contends that the phrase "Ang Tibay" as employed by the
respondent on the articles manufactured by him is a descriptive term
because, "freely translate in English," it means "strong, durable,
lasting." He invokes section 2 of Act No. 666, which provides that
words or devices which related only to the name, quality, or
description of the merchandise cannot be the subject of a trade-mark.
He cites among others the case of Baxter vs. Zuazua (5 Phil., 16), which
involved the trade-mark "Agua de Kananga" used on toilet water, and
in which this Court held that the word "Kananga," which is the name of
a well-known Philippine tree or its flower, could not be appropriated as
a trade-mark any more than could the words "sugar," "tobacco," or
"coffee." On the other hand, counsel for the respondent, in an equally
well-prepared and exhaustive brief, contend that the words "Ang
Tibay" are not descriptive but merely suggestive and may properly be
regarded as fanciful or arbitrary in the legal sense. The cite several
cases in which similar words have been sustained as valid trade-marks,
such as "Holeproof" for hosiery, 1 "ideal for tooth brushes, 2 and
"Fashionknit" for neckties and sweaters. 3
We find it necessary to go into the etymology and meaning of the
Tagalog words "Ang Tibay" to determine whether they are a
descriptive term, i.e., whether they relate to the quality or description
of the merchandise to which respondent has applied them as a trade-
mark. The word "ang" is a definite article meaning "the" in English. It is
also used as an adverb, a contraction of the word "anong" (what or
how). For instance, instead of saying, "Anong ganda!" ("How
beautiful!"), we ordinarily say, "Ang ganda!" Tibay is a root word from
which are derived the verb magpatibay (to strenghten; the nouns
pagkamatibay (strength, durability), katibayan (proof, support,
strength), katibay-tibayan (superior strength); and the adjectives
matibay (strong, durable, lasting), napakatibay (very strong), kasintibay
or magkasintibay (as strong as, or of equal strength). The phrase "Ang
Tibay" is an exclamation denoting administration of strength or
durability. For instance, one who tries hard but fails to break an object
exclaims, "Ang tibay!" (How strong!") It may also be used in a sentence
thus, "Ang tibay ng sapatos mo!" (How durable your shoes are!") The
phrase "ang tibay" is never used adjectively to define or describe an
object. One does not say, "ang tibay sapatos" or "sapatos ang tibay" is
never used adjectively to define or describe an object. One does not
say, "ang tibay sapatos" or "sapatos ang tibay" to mean "durable
shoes," but "matibay na sapatos" or "sapatos na matibay."
From all of this we deduce that "Ang Tibay" is not a descriptive term
within the meaning of the Trade-Mark Law but rather a fanciful or
coined phrase which may properly and legally be appropriated as a
trade-mark or trade-name. In this connection we do not fail to note
that when the petitioner herself took the trouble and expense of
securing the registration of these same words as a trademark of her
products she or her attorney as well as the Director of Commerce was
undoubtedly convinced that said words (Ang Tibay) were not a
descriptive term and hence could be legally used and validly registered
as a trade-mark. It seems stultifying and puerile for her now to contend
otherwise, suggestive of the story of sour grapes. Counsel for the
petitioner says that the function of a trade-mark is to point
distinctively, either by its own meaning or by association, to the origin
or ownership of the wares to which it is applied. That is correct, and we
find that "Ang Tibay," as used by the respondent to designate his
wares, had exactly performed that function for twenty-two years
before the petitioner adopted it as a trade-mark in her own business.
Ang Tibay shoes and slippers are, by association, known throughout
the Philippines as products of the Ang Tibay factory owned and
operated by the respondent Toribio Teodoro.
Second. In her second assignment of error petitioner contends that the
Court of Appeals erred in holding that the words "Ang Tibay" had
acquired a secondary meaning. In view of the conclusion we have
reached upon the first assignment of error, it is unnecessary to apply
here the doctrine of "secondary meaning" in trade-mark parlance. This
doctrine is to the effect that a word or phrase originally incapable of
exclusive appropriation with reference to an article of the market,
because geographically or otherwise descriptive, might nevertheless
have been used so long and so exclusively by one producer with
reference to his article that, in that trade and to that branch of the
purchasing public, the word or phrase has come to mean that the
article was his product. (G. & C. Merriam Co. vs. Salfield, 198 F., 369,
373.) We have said that the phrase "Ang Tibay," being neither
geographic nor descriptive, was originally capable of exclusive
appropriation as a trade-mark. But were it not so, the application of
the doctrine of secondary meaning made by the Court of Appeals could
nevertheless be fully sustained because, in any event, by respondent's
long and exclusive use of said phrase with reference to his products
and his business, it has acquired a proprietary connotation. (Landers,
Frary, and Clark vs. Universal Cooler Corporation, 85 F. [2d], 46.)
Third. Petitioner's third assignment of error is, that the Court of
Appeals erred in holding that pants and shirts are goods similar to
shoes and slippers within the meaning of sections 3 and 7 of Act No.
666. She also contends under her fourth assignment of error (which we
deem convenient to pass upon together with the third) that there can
neither be infringement of trade-mark under section 3 nor unfair
competition under section 7 through her use of the words "Ang Tibay"
38
TRADEMARK CASES_FULL TEXT
in connection with pants and shirts, because those articles do not
belong to the same class of merchandise as shoes and slippers.
The question raised by petitioner involve the scope and application of
sections 3,7, 11, 13, and 20 of the Trade-Mark Law (Act No. 666.)
Section 3 provides that "any person entitled to the exclusive use of a
trade-mark to designate the origin or ownership of goods he has made
or deals in, may recover damages in a civil actions from any person
who has sold goods of a similar kind, bearing such trade-mark . . . The
complaining party . . . may have a preliminary injunction, . . . and such
injunction upon final hearing, if the complainant's property in the
trade-mark and the defendant's violation thereof shall be fully
established, shall be made perpetual, and this injunction shall be part
of the judgment for damages to be rendered in the same cause."
Section 7 provides that any person who, in selling his goods, shall give
them the general appearance of the goods of another either in the
wrapping of the packages, or in the devices or words thereon, or in any
other feature of their appearance, which would be likely to influence
purchasers to believe that the goods offered are those of the
complainant, shall be guilty of unfair competition, and shall be liable to
an action for damages and to an injunction, as in the cases of trade-
mark infringement under section 3. Section 11 requires the applicant
for registration of a trade-mark to state, among others, "the general
class of merchandise to which the trade-mark claimed has been
appropriated." Section 13 provides that no alleged trade-mark or trade
name shall be registered which is identical with a registered or known
trade-mark owned by another and appropriate to the same class of
merchandise, or which to nearly resembles another person's lawful
trade-mark or trade-name as to be likely to cause confusion or mistake
in the mind of the public, or to deceive purchasers. And section 2
authorizes the Director of Commerce to establish classes of
merchandise for the purpose of the registration of trade-marks and to
determine the particular description of articles included in each class; it
also provides that "an application for registration of a trade-mark shall
be registered only for one class of articles and only for the particular
description of articles mentioned in said application."
We have underlined the key words used in the statute: "goods of a
similar kin," "general class of merchandise," "same class of
merchandise," "classes of merchandise," and "class of articles,"
because it is upon their implications that the result of the case hinges.
These phrases, which refer to the same thing, have the same meaning
as the phrase "merchandise of the same descriptive properties" used in
the statutes and jurisprudence of other jurisdictions.
The burden of petitioner's argument is that under sections 11 and 20
the registration by respondent of the trade-mark "Ang Tibay" for shoes
and slippers is no safe-guard against its being used by petitioner for
pants and shirts because the latter do not belong to the same class of
merchandise or articles as the former; that she cannot be held guilty of
infringement of trade-mark under section 3 because respondent's
mark is not a valid trade-mark, nor has it acquired a secondary
meaning; that pants and shirts do not possess the same descriptive
properties as shoes and slippers; that neither can she be held guilty of
unfair competition under section 7 because the use by her of the trade-
mark "Ang Tibay" upon pants and shirts is not likely to mislead the
general public as to their origin or ownership; and that there is now
showing that she in unfairly or fraudulently using that mark "Ang
Tibay" against the respondent. If we were interpreting the statute for
the first time and in the first decade of the twentieth century, when it
was enacted, and were to construe it strictly and literally, we might
uphold petitioner's contentions. But law and jurisprudence must keep
abreast with the progress of mankind, and the courts must breathe life
into the statutes if they are to serve their purpose. Our Trade-mark
Law, enacted nearly forty years ago, has grown in its implications and
practical application, like a constitution, in virtue of the life continually
breathed into it. It is not of merely local application; it has its
counterpart in other jurisdictions of the civilized world from whose
jurisprudence it has also received vitalizing nourishment. We have to
apply this law as it has grown and not as it was born. Its growth or
development abreast with that of sister statutes and jurisprudence in
other jurisdictions is reflected in the following observation of a well-
known author:
This fundamental change in attitude first manifested itself in
the year 1915-1917. Until about then, the courts had
proceeded on the theory that the same trade-mark, used on
un-like goods, could not cause confusion in trade and that,
therefore, there could be no objection to the use and
registration of a well-known mark by a third party for a
different class of goods. Since 1916 however, a growing
sentiment began to arise that in the selection of a famous
mark by a third party, there was generally the hidden
intention to "have a free ride" on the trade-mark owner's
reputation and good will. (Derenberg, Trade-Mark
Protection & Unfair Trading, 1936 edition, p. 409.)
In the present state of development of the law on Trade-Marks, Unfair
Competition, and Unfair Trading, the test employed by the courts to
determine whether noncompeting goods are or are not of the same
class is confusion as to the origin of the goods of the second user.
Although two noncompeting articles may be classified under two
different classes by the Patent Office because they are deemed not to
possess the same descriptive properties, they would, nevertheless, be
held by the courts to belong to the same class if the simultaneous use
on them of identical or closely similar trade-marks would be likely to
cause confusion as to the origin, or personal source, of the second
user's goods. They would be considered as not falling under the same
class only if they are so dissimilar or so foreign to each other as to
make it unlikely that the purchaser would think the first user made the
second user's goods.
Such construction of the law is induced by cogent reasons of equity
and fair dealing. The courts have come to realize that there can be
unfair competition or unfair trading even if the goods are non-
competing, and that such unfair trading can cause injury or damage to
the first user of a given trade-mark, first, by prevention of the natural
expansion of his business and, second, by having his business
reputation confused with and put at the mercy of the second user.
Then noncompetitive products are sold under the same mark, the
gradual whittling away or dispersion of the identity and hold upon the
public mind of the mark created by its first user, inevitably results. The
original owner is entitled to the preservation of the valuable link
between him and the public that has been created by his ingenuity and
the merit of his wares or services. Experience has demonstrated that
when a well-known trade-mark is adopted by another even for a totally
different class of goods, it is done to get the benefit of the reputation
and advertisements of the originator of said mark, to convey to the
public a false impression of some supposed connection between the
manufacturer of the article sold under the original mark and the new
articles being tendered to the public under the same or similar mark.
As trade has developed and commercial changes have come about, the
law of unfair competition has expanded to keep pace with the times
and the element of strict competition in itself has ceased to be the
determining factor. The owner of a trade-mark or trade-name has a
property right in which he is entitled to protection, since there is
damage to him from confusion of reputation or goodwill in the mind of
the public as well as from confusion of goods. The modern trend is to
give emphasis to the unfairness of the acts and to classify and treat the
issue as a fraud.
A few of the numerous cases in which the foregoing doctrines have
been laid down in one form or another will now be cited: (1)
In Teodoro Kalaw Ng Khe vs. Level Brothers Company (G.R. No. 46817),
decided by this Court on April 18, 1941, the respondent company
(plaintiff below) was granted injunctive relief against the use by the
petitioner of the trade-mark "Lux" and "Lifebuoy" for hair pomade,
they having been originally used by the respondent for soap; The Court
held in effect that although said articles are noncompetitive, they are
similar or belong to the same class. (2) In Lincoln Motor Co. vs. Lincoln
Automobile Co. (44 F. [2d], 812), the manufacturer of the well-known
Lincoln automobile was granted injunctive relief against the use of the
word "Lincoln" by another company as part of its firm name. (3) The
case of Aunt Jemima Mills Co. vs. Rigney & Co. (247 F., 407), involved
the trade-mark "Aunt Jemima," originally used on flour, which the
defendant attempted to use on syrup, and there the court held that
the goods, though different, are so related as to fall within the mischief
which equity should prevent. (4) In Tiffany & Co., vs. Tiffany
Productions, Inc. (264 N.Y.S., 459; 23 Trade-mark Reporter, 183), the
plaintiff, a jewelry concern, was granted injunctive relief against the
defendant, a manufacturer of motion pictures, from using the name
"Tiffany." Other famous cases cited on the margin, wherein the courts
granted injunctive relief, involved the following trade-marks or trade-
names: "Kodak," for cameras and photographic supplies, against its use
for bicycles. 4 "Penslar," for medicines and toilet articles, against its use
for cigars; 5 "Rolls-Royce," for automobiles. against its use for radio
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tubes; 6 "Vogue," as the name of a magazine, against its use for mark instead of creating one of your own?" On our part may we add,
hats; 7 "Kotex," for sanitary napkins, against the use of "Rotex" for without meaning to be harsh, that a self-respecting person does not
vaginal syringes; 8 "Sun-Maid," for raisins, against its use for remain in the shelter of another but builds one of his own.
flour; 9 "Yale," for locks and keys, against its use for electric
flashlights; 10 and "Waterman," for fountain pens, against its use for The judgment of the Court of Appeals is affirmed, with costs against
razor blades. the petitioner in the three instances. So ordered.
Yulo, C.J., Moran, Paras and Bocobo, JJ., concur.
Against this array of famous cases, the industry of counsel for the
petitioner has enabled him to cite on this point only the following
cases: (1) Mohawk Milk Products vs. General Distilleries
Corporation (95 F. [2d], 334), wherein the court held that gin and
canned milk and cream do not belong to the same class; (2) Fawcett
Publications, Inc. vs. Popular Mechanics Co. (80 F. [2d], 194), wherein
the court held that the words "Popular Mechanics" used as the title of
a magazine and duly registered as a trade-mark were not infringed by
defendant's use of the words "Modern Mechanics and Inventions" on a
competitive magazine, because the word "mechanics" is merely a
descriptive name; and (3) Oxford Book Co. vs. College Entrance Book
Co. (98 F. [2d], 688), wherein the plaintiff unsuccessfully attempted to
enjoin the defendant from using the word "Visualized" in connection
with history books, the court holding that said word is merely
descriptive. These cases cites and relied upon by petitioner are
obviously of no decisive application to the case at bar.

We think reasonable men may not disagree that shoes and shirts are
not as unrelated as fountain pens and razor blades, for instance. The
mere relation or association of the articles is not controlling. As may
readily be noted from what we have heretofore said, the proprietary
connotation that a trade-mark or trade-name has acquired is of more
paramount consideration. The Court of Appeals found in this case that
by uninterrupted and exclusive use since 1910 of respondent's
registered trade-mark on slippers and shoes manufactured by him, it
has come to indicate the origin and ownership of said goods. It is
certainly not farfetched to surmise that the selection by petitioner of
the same trade-mark for pants and shirts was motivated by a desire to
get a free ride on the reputation and selling power it has acquired at
the hands of the respondent. As observed in another case, 12 the field
from which a person may select a trade-mark is practically unlimited,
and hence there is no excuse for impinging upon or even closely
approaching the mark of a business rival. In the unlimited field of
choice, what could have been petitioner's purpose in selecting "Ang
Tibay" if not for its fame?

Lastly, in her fifth assignment of error petitioner seems to make a

frantic effort to retain the use of the mark "Ang Tibay." Her counsel
suggests that instead of enjoining her from using it, she may be
required to state in her labels affixed to her products the inscription:
"Not manufactured by Toribio Teodoro." We think such practice would
be unethical and unworthy of a reputable businessman. To the
suggestion of petitioner, respondent may say, not without justice
though with a tinge of bitterness: "Why offer a perpetual apology or
explanation as to the origin of your products in order to use my trade-

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