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224 SCRA 437 Mercatile Law Intellectual Property Law Law on Trademarks, ServiceMarks

and Trade Names Unfair Competition


FACTS:
In September 1988, San Miguel Corporation (SMC) sued Asia Brewery Inc. for allegedly infringing upon
their trademark on their beer product popularly known as San Miguel Pale Pilsen; that Asia Brewerys
Beer na Beer product, by infringing upon SMCs trademark has committed unfair competition as Beer na
Beer creates confusion between the two products. The RTC ruled in favor of Asia Brewery but the Court
of Appeals reversed the RTC.
ISSUE: Whether or not Asia Brewery infringed upon the trademark of SMC.
HELD: No. Both products are manufactured using amber colored steinie bottles of 320 ml. Both were
labeled in a rectangular fashion using white color paint. But other than these similarities, there are salient
differences between the two. As found by the Supreme Court, among others they are the following:
1. The dominant feature of SMCs trademark are the words San Miguel Pale Pilsen while that of Asia
Brewerys trademark is the word Beer. Nowhere in SMCs product can be seen the word Beer nor in
Asia Brewerys product can be seen the words San Miguel Pale Pilsen. Surely, someone buying Beer na
Beer cannot mistake it as San Miguel Pale Pilsen beer.
2. The bottle designs are different. SMCs bottles have slender tapered neck while that of Beer na Beer
are fat. Though both beer products use steinie bottles, SMC cannot claim that Asia Brewery copied the idea
from SMC. SMC did not invent but merely borrowed the steinie bottle from abroad and SMC does not have
any patent or trademark to protect the steinie bottle shape and design.
3. In SMC bottles, the words pale pilsen are written diagonally while in Beer na Beer, the words pale
pilsen are written horizontally. Further, the words pale pilsen cannot be said to be copied from SMC for
pale pilsen are generic words which originated from Pilsen, Czechoslovakia. Pilsen is a geographically
descriptive word and is non-registrable.
4. SMC bottles have no slogans written on them while Asia Brewerys bottles have a copyrighted slogan
written on them that is Beer na Beer.
5. In SMC bottles, it is expressly labeled as manufactured by SMC. In Asia Brewery beer products, it is
likewise expressly labeled as manufactured by Asia Brewery. Surely, there is no intention on the part of
Asia Brewery to confuse the public and make it appear that Beer na Beer is a product of SMC, a longestablished and more popular brand.

Justice Cruz Dissenting:


A number of courts have held 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. The court therefore should be guided by its first impression, for a
buyer acts quickly and is governed by a casual glance, the value of which may be dissipated as soon as
the court assumes to analyze carefully the respective features of the mark. (Del Monte vs CA & Sunshine
Sauce)

Philippine Jurisprudence: The Skechers Trademark Case (2011)


Skechers, USA, Inc. v. Inter Pacific Industrial Trading Corp.
G.R. No. 164321 (2011)
Skechers, USA Inc. is the owner of the registered trademarks Skechers and S within an oval logo.
Skechers filed a criminal case for trademark infringement against several store-owners that were selling
shoes branded as Strong and bearing a similar S logo. The Regional Trial Court (RTC) issued search
warrants, allowing the National Bureau of Investigation (NBI) to raid the stores and confiscate 6,000 pairs
of shoes.
The accused moved to quash the warrants, saying that there was no confusing similarity between the
Skechers and the Strong brands.
The RTC granted the motion to quash and ordered the NBI to return the seized goods. The court said that
the two brands had glaring differences and that an ordinary prudent consumer would not mistake one for
the other.
On certiorari, the Court of Appeals (CA) affirmed the RTC ruling.
The matter was elevated to the Supreme Court (SC).

Issue: Did the accused commit trademark infringement?


Yes, the accused is guilty of trademark infringement.
Under the IP Code (RA No. 8293), trademark infringement is committed when:
Remedies; Infringement. Any person who shall, without the consent of the owner of the registered
mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or
the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution,
advertising of any goods or services including other preparatory steps necessary to carry out the sale of
any goods or services on or in connection with which such use is likely to cause confusion, or to cause
mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature
thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in
connection with the sale, offering for sale, distribution, or advertising of goods or services on or in
connection with whichsuch use is likely to cause confusion, or to cause mistake, or to deceive, shall be
liable in a civil action for infringement by the registrant for the remedies hereinafter set forth: Provided,
That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this
subsection are committed regardless of whether there is actual sale of goods or services using the
infringing material. (emphasis supplied)
There is trademark infringement when the second mark used is likely to cause confusion. There are two
tests to determine this:
1. Dominancy Test the court focuses on the similarity of the dominant features of the marks that might
cause confusion in the mind of the consumer. Duplication or imitation is not necessary. Even accidental
confusion may be cause for trademark infringement. More consideration is given to the aural and visual
impressions created by the marks on the buyers and less weight is given to factors like price, quality, sales
outlets and market segments.
Applied to this case: The SC found that the use of the S symbol by Strong rubber shoes infringes on
the registered Skechers trademark. It is the most dominant feature of the mark -- one that catches the
buyers eye first. Even if the accused claims that there was a difference because the S used
by Skechers is found inside an oval, the fact that the accused used the dominant S symbol already
constitutes trademark infringement.
The SC disagreed with the CA reasoning that the S symbol is already used for many things, including the
Superman symbol. Even if this is true, the fact that Strong used same stylized S symbol as that of
theSkechers brand makes this a case of trademark infringement. The same font and style was used in this
case. The Superman S symbol is clearly different from the S in this case.
2. Holistic or Totality Test the court looks at the entirety of the marks as applied to the products,
including the labels and packaging. You must not only look at the dominant features but all other features
appearing on both marks.
Applied to this case: Both RTC and CA used the Holistic Test to rule that there was no infringement. Both
courts argued the following differences:

The mark S found in Strong Shoes is not enclosed in an oval design.

The word Strong is conspicuously placed at the backside and insoles.


The hang tags and labels attached to the shoes bears the word Strong for respondent and
Skechers U.S.A. for private complainant;

Strong shoes are modestly priced compared to the costs of Skechers Shoes.

Also using the Holistic Test, the SC corrected the lower courts and ruled that the striking similarities
between the products outweigh the differences argued by the respondents:

Same color scheme of blue, white and gray;

Same wave-like pattern on the midsole and the outer sole;

Same elongated designs at the side of the midsole near the heel;

Same number of ridges on the outer soles (five at the back and six in front);

Same location of the stylized S symbol;

The words "Skechers Sport Trail" at the back of the Skechers shoes and "Strong Sport Trail" at the
back of the Strong shoes, using the same font, color, size, direction and orientation;

Same two grayish-white semi-transparent circles on top of the heel collars.


The features and overall design of the two products are so similar that there is a high likelihood of
confusion.
Two products do not need to be identical, they just need to be similar enough to confuse the ordinary
buyer in order to constitute trademark infringement (Converse Rubber Corporation v. Jacinto Rubber &
Plastic Co., 186 Phil. 85 [1980]). Also, the difference in price cannot be a defense in a case for trademark
infringement (McDonalds Corporation v. L.C. Big Mak Burger, Inc., 480 Phil. 402, 434 [2004]).
There are two types of confusion:
1.
Product Confusion where the ordinary prudent purchaser would be induced to purchase on
product in the belief that he was buying another.
2.
Source or Origin Confusion although the goods are different, the use of the mark causes the
consumer to assume that both products originate from the same source.
Trademark law protects the owner not only from product confusion but also from source confusion.
Protection is not limited to the same or similar products but extends to all cases where:

The consumer is misled into thinking that the trademark owner extended his business into a new
field;

The consumer is misled into thinking that the trademark owner is in any way connected to the
infringers activities; or

The infringement forestalls the normal potential expansion of the trademark owners business.
Trademark law does not only protect the owners reputation and goodwill, it also protects the consumers
from fraud and confusion.
In this case, it is clear that there was an attempt to copy the trademark owners mark and product design.
In trademark infringement cases, you do not need to copy another's mark or product exactly. Colorable
imitation is enough.

Fredco Manufacturing Corporation v. President and Fellows of Harvard College


G.R. No. 185917, 1 June 2011
By: Erwin V. Zamora
Fredco Manufacturing Corporation (Fredco) filed before the Bureau of Legal Affairs of the Philippine
Intellectual Property Office a Petition for Cancellation of Registration No. 56561 issued to President and
Fellows of Harvard College (Harvard University) for the mark Harvard Veritas Shield Symbol under
classes 16, 18, 21, 25 and 28.
Fredco claimed that Harvard University had no right to register the mark in class 25, since its Philippine
registration was based on a foreign registration. Thus, Harvard University could not have been considered
as a prior adopter and user of the mark in the Philippines.
Fredco explained that the mark was first used in the Philippines by its predecessor-in-interest New York
Garments as early as 1982, and a certificate of registration was issued in 1988 for goods under class 25.
Although the registration was cancelled for the non-filing of an affidavit of use, the fact remained that the
registration preceded Harvard Universitys use of the subject mark in the Philippines.
Harvard University, on the other hand claimed that the name and mark Harvard was adopted in 1639 as
the name of Harvard College of Cambridge, Massachusetts, USA. The marks Harvard and Harvard

Veritas Shield Symbol, had been used in commerce since 1872, and was registered in more than 50
countries.
The Bureau of Legal Affairs ruled in favor of Fredco and ordered the cancellation of Registration No. 56561.
It found Fredco to be the prior user and adopter of the mark Harvard in the Philippines. On appeal, the
Office of the Director General of the Intellectual Property Office reversed the BLA ruling on the ground that
more than the use of the trademark in the Philippines, the applicant must be the owner of the mark sought
to be registered. Fredco, not being the owner of the mark, had no right to register it.
The Court Appeals affirmed the decision of the Office of the Director General. Fredco appealed the decision
with the Supreme Court. In its appeal, Fredco insisted that the date of actual use in the Philippines should
prevail on the issue of who had a better right to the mark.
The Supreme Court ruled:
The petition has no merit.
Under Section 2 of Republic Act No. 166, as amended (R.A. No. 166), before a trademark can be registered,
it must have been actually used in commerce for not less than two months in the Philippines prior to the
filing of an application for its registration. While Harvard University had actual prior use of its marks abroad
for a long time, it did not have actual prior use in the Philippines of the mark "Harvard Veritas Shield
Symbol" before its application for registration of the mark "Harvard" with the then Philippine Patents Office.
However, Harvard University's registration of the name "Harvard" is based on home registration which is
allowed under Section 37 of R.A. No. 166. As pointed out by Harvard University in its Comment:
Although Section 2 of the Trademark law (R.A. 166) requires for the registration of trademark that the
applicant thereof must prove that the same has been actually in use in commerce or services for not less
than two (2) months in the Philippines before the application for registration is filed, where the trademark
sought to be registered has already been registered in a foreign country that is a member of the Paris
Convention, the requirement of proof of use in the commerce in the Philippines for the said period is not
necessary. An applicant for registration based on home certificate of registration need not even have used
the mark or trade name in this country.
In any event, under Section 239.2 of Republic Act No. 8293 (R.A. No. 8293), "[m]arks registered under
Republic Act No. 166 shall remain in force but shall be deemed to have been granted under this Act x x x,"
which does not require actual prior use of the mark in the Philippines. Since the mark "Harvard Veritas
Shield Symbol" is now deemed granted under R.A. No. 8293, any alleged defect arising from the absence
of actual prior use in the Philippines has been cured by Section 239.2.
The Supreme Court further ruled that Harvard University is entitled to protection in the Philippines of its
trade name Harvard even without registration of such trade name in the Philippines. It explained:
There is no question then, and this Court so declares, that "Harvard" is a well-known name and mark not
only in the United States but also internationally, including the Philippines. The mark "Harvard" is rated as
one of the most famous marks in the world. It has been registered in at least 50 countries. It has been
used and promoted extensively in numerous publications worldwide. It has established a considerable
goodwill worldwide since the founding of Harvard University more than 350 years ago. It is easily
recognizable as the trade name and mark of Harvard University of Cambridge, Massachusetts, U.S.A.,
internationally known as one of the leading educational institutions in the world. As such, even before
Harvard University applied for registration of the mark "Harvard" in the Philippines, the mark was already
protected under Article 6bis and Article 8 of the Paris Convention.

Mc Donalds Corp vs LC Big Mak Burger Inc.


(GR No 143993, Aug 18, 2004)
The SC held that the respondent is liable for infringement because it violated Sec 155.1 of the IPC which
stated that any person who shall, without the consent of the owner of the registered mark use in
commerce any reproduction, counterfeit, copy or colorable imitation of a registered mark or the same
container or a dominant feature thereof in connection with the sale, offering for sale, distribution,
advertising of any goods or services on or in connection with which such use is likely to cause confusion, or
to cause mistake, or to deceive.
Addendum:
TEST OF TRADEMARK INFRINGEMENT
1) Dominancy Test consists in seeking out the main, essential or dominant features of a mark.
2) Holistic Test takes stock of the other features of a mark, taking into consideration the entirety of the
marks.

DIFFERENTIATED FROM UNFAIR COMPETITION


1) Cause of action: in infringement, the cause of action is the unauthorized use of a registered trademark;
in unfair competition, it is the passing off of ones goods as those of another merchant.
2) Fraudulent intent is not necessary in infringement, but necessary in UC.
3) Registration of trademarks: in infringement, it is a pre-requisite; in UC, it is not required.
4) Class of goods involved: in infringement, the goods must be of similar class; in UC, the goods need not
be of the same class.
v infringement is a form of unfair competition

REMEDIES AVAILABLE IN CASE OF INFRINGEMENT OF A REGISTERED MARK


a) Sue for damages (Sec. 156.1);
b) Have the infringing goods impounded (Sec. 156.2);
c) Ask for double damages (Sec. 156.3)
d) Ask for injunction (156.4)
e) Have the infringing goods disposed of outside the channels of commerce (Sec. 157.1)
f) Have the infringing goods destroyed (Sec. 157.1)
g) File criminal action (Sec. 170);
h) Administrative Sanctions