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1. Kho v. CA, G .R. No. 115758, March 11, 2002
[G.R. No. 115758. March 19, 2002.]
ELIDAD C. KHO, doing business under the name and style of KEC
COSMETICS LABORATORY,petitioner, vs. HON. COURT OF APPEALS,
SUMMERVILLE GENERAL MERCHANDISING and COMPANY, and
ANG TIAM CHAY, respondents.
Petitioner complaint alleges:
*that petitioner, doing business under the name and style of KEC Cosmetics Laboratory, is the
registered owner of the copyrights Chin Chun Su and Oval Facial Cream Container/Case, as shown by
Certificates of Copyright Registration No. 0-1358 and No. 0-3678;
*that she also has patent rights on Chin Chun Su & Device and Chin Chun Su for medicated cream after
purchasing the same from Quintin Cheng, the registered owner thereof in the Supplemental Register of
the Philippine Patent Office on February 7, 1980 under Registration Certificate No. 4529;
*that respondent Summerville advertised and sold petitioners cream products under the brand name
Chin Chun Su, in similar containers that petitioner uses, thereby misleading the public, and resulting in
the decline in the petitioners business sales and income; and, that the respondents should be enjoined
from allegedly infringing on the copyrights and patents of the petitioner.
Respondents allege:
*Summerville is the exclusive and authorized importer, re-packer and distributor of Chin Chun Su
products manufactured by Shun Yi Factory of Taiwan;
*that the said Taiwanese manufacturing company authorized Summerville to register its trade name
Chin Chun Su Medicated Cream with the Philippine Patent Office and other appropriate governmental
agencies; that KEC Cosmetics Laboratory of the petitioner obtained the copyrights through
misrepresentation and falsification; and, that the authority of Quintin Cheng, assignee of the patent
registration certificate, to distribute and market Chin Chun Su products in the Philippines had already
been terminated by the said Taiwanese Manufacturing Company.
ISSUE: WON KHO is protected under the law.
Held: NO. Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and shall include a stamped or marked container
of goods. In relation thereto, a trade name means the name or designation identifying or distinguishing
an enterprise. Meanwhile, the scope of a copyright is confined to literary and artistic works which are
original intellectual creations in the literary and artistic domain protected from the moment of their
creation. Patentable inventions, on the other hand, refer to any technical solution of a problem in any
field of human activity which is new, involves an inventive step and is industrially applicable.
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Petitioner has no right to support her claim for the exclusive use of the subject trade name and its
container. The name and container of a beauty cream product are proper subjects of a trademark
inasmuch as the same falls squarely within its definition. In order to be entitled to exclusively use the
same in the sale of the beauty cream product, the user must sufficiently prove that she registered or used
it before anybody else did. The petitioners copyright and patent registration of the name and container
would not guarantee her the right to the exclusive use of the same for the reason that they are not
appropriate subjects of the said intellectual rights. Consequently, a preliminary injunction order cannot
be issued for the reason that the petitioner has not proven that she has a clear right over the said name
and container to the exclusion of others, not having proven that she has registered a trademark thereto or
used the same before anyone did.
SYNOPSIS
Petitioner Kho filed a complaint for injunction and damages against the respondents, alleging that she
has copyright and patent rights on Chin Chun Su cream products, but the respondent advertised and sold
petitioner's cream products under brand name Chin Chun Sun, in similar containers that petitioner uses,
thereby misleading the public. The trial court granted a writ of preliminary injunction. Pending appeal,
the trial court rendered a final decision ruling that petitioner does not have trademark rights on the name
and container of the beauty cream product. The CA nullified the writ of preliminary injunction issued
and denied petitioner's motion for reconsideration.
On appeal, petitioner claimed that the CA erred in not dismissing the petition for certiorari for non-
compliance with the rule on forum shopping. Petitioner also claimed that the CA unduly delayed the
resolution of her motion for reconsideration.
The Supreme Court affirmed the CA decision and held: that a preliminary injunction order cannot be
issued for the reason that petitioner has not proven that she has a clear right over the subject trade name
and its container to the exclusion of others, not having proven that she has a registered trademark
thereto or she used it before anyone else did. The name and container of a beauty cream product are
proper subject of a trademark, not of petitioner's copyright and patent registration thereof. Thus, she has
no right to the exclusive use of the same for the reason that they are not appropriate subject of the said
intellectual rights. The Supreme Court also held that petitioner should have filed a comment on, not a
motion to dismiss, the petition for certiorari before the Court of Appeal; and that non-observance of the
period for deciding cases or their incidents did not render the CA judgment ineffective or
void. DACTSa
COMMERCIAL LAW REVIEW (Law on Intellectual Property)
SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; WRIT
THEREOF MAY BE ISSUED ONLY WHEN COMPLAINANT HAS A CLEAR RIGHT
THERETO; CASE AT BAR. Pursuant to Section 1, Rule 58 of the Revised Rules of Civil
Procedure, one of the grounds for the issuance of a writ of preliminary injunction is a proof that
the applicant is entitled to the relief demanded, and the whole or part of such relief consists in
restraining the commission or continuance of the act or acts complained of, either for a limited
period or perpetually. Thus, a preliminary injunction order may be granted only when the
application for the issuance of the same shows facts entitling the applicant to the relief demanded.
This is the reason why we have ruled that it must be shown that the invasion of the right sought to
be protected is material and substantial, that the right of complainant is clear and unmistakable,
and, that there is an urgent and paramount necessity for the writ to prevent serious damage. In the
case at bar, the petitioner applied for the issuance of a preliminary injunctive order on the ground
that she is entitled to the use of the trademark on Chin Chun Su and its container based on her
copyright and patent over the same. . . . Petitioner has no right to support her claim for the
exclusive use of the subject trade name and its container. The name and container of a beauty
cream product are proper subjects of a trademark inasmuch as the same falls squarely within its
definition. In order to be entitled to exclusively use the same in the sale of the beauty cream
product, the user must sufficiently prove that she registered or used it before anybody else did.
The petitioner's copyright and patent registration of the name and container would not guarantee
her the right to the exclusive use of the same for the reason that they are not appropriate subjects
of the said intellectual rights. Consequently, a preliminary injunction order cannot be issued for
the reason that the petitioner has not proven that she has a clear right over the said name and
container to the exclusion of others, not having proven that she has registered a trademark thereto
or used the same before anyone did.
2. COMMERCIAL LAW; INTELLECTUAL PROPERTY LAW; SUBJECTS OF
TRADEMARK, COPYRIGHT AND PATENTS, DISTINGUISHED; NAME AND
CONTAINER OF A BEAUTY CREAM PRODUCT ARE PROPER SUBJECTS OF A
TRADEMARK. Trademark, copyright and patents are different intellectual property rights
that cannot be interchanged with one another. A trademark is any visible sign capable of
distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include
a stamped or marked container of goods. In relation thereto, a trade name means the name or
designation identifying or distinguishing an enterprise. Meanwhile, the scope of a copyright is
confined to literary and artistic works which are original intellectual creations in the literary and
artistic domain protected from the moment of their creation. Patentable inventions, on the other
hand, refer to any technical solution of a problem in any field of human activity which is new,
involves an inventive step and is industrially applicable.
3. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION;
DECISION GRANTING FINAL INJUNCTION RENDERS MOOT AND ACADEMIC AN
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APPEAL FROM THE PRELIMINARY INJUNCTIVE ORDER; CASE AT BAR. We cannot
likewise overlook the decision of the trial court in the case for final injunction and damages. The
dispositive portion of said decision held that the petitioner does not have trademark rights on the
name and container of the beauty cream product. The said decision on the merits of the trial court
rendered the issuance of the writ of a preliminary injunction moot and academic notwithstanding
the fact that the same has been appealed in the Court of Appeals. This is supported by our ruling
in La Vista Association, Inc. v. Court of Appeals. . . . La Vista categorically pronounced that the
issuance of a final injunction renders any question on the preliminary injunctive order moot and
academic despite the fact that the decision granting a final injunction is pending appeal.
Conversely, a decision denying the applicant-plaintiff's right to a final injunction, although
appealed, renders moot and academic any objection to the prior dissolution of a writ of
preliminary injunction.
4. ID.; SPECIAL CIVIL ACTIONS; CERTIORARI; A MOTION TO DISMISS IS A
PROHIBITED PLEADING IN PETITIONS FORCERTIORARI BEFORE THE SUPREME
COURT AND THE COURT OF APPEALS; CASE AT BAR. The petitioner argues that the
appellate court erred in not dismissing the petition for certiorari for non-compliance with the rule
on forum shopping. We disagree. First, the petitioner improperly raised the technical objection of
non-compliance with Supreme Court Circular No. 28-91 by filing a motion to dismiss the petition
for certiorari filed in the appellate court. This is prohibited by Section 6, Rule 66 of the Revised
Rules of Civil Procedure which provides that "(I)n petitions for certioraribefore the Supreme
Court and the Court of Appeals, the provisions of Section 2, Rule 56, shall be observed. Before
giving due course thereto, the court may require the respondents to file their comment to, and not
a motion to dismiss, the petition . . . (italics supplied)." Secondly, the issue was raised one month
after petitioner had filed her answer/comment and after private respondent had replied thereto.
Under Section 1, Rule 16 of the Revised Rules of Civil Procedure, a motion to dismiss shall be
filed within the time for but before filing the answer to the complaint or pleading asserting a
claim. She therefore could no longer submit a motion to dismiss nor raise defenses and objections
not included in the answer/comment she had earlier tendered. Thirdly, substantial justice and
equity require this Court not to revive a dissolved writ of injunction in favor of a party without
any legal right thereto merely on a technical infirmity. The granting of an injunctive writ based on
a technical ground rather than compliance with the requisites for the issuance of the same is
contrary to the primary objective of legal procedure which is to serve as a means to dispense
justice to the deserving party. aTADcH
5. ID.; ACTIONS; JUDGMENT; NON-OBSERVANCE OF THE PERIOD FOR DECIDING
CASES; EFFECT THEREOF. The petitioner likewise contends that the appellate court unduly
delayed the resolution of her motion for reconsideration. But we find that petitioner contributed to
this delay when she filed successive contentious motions in the same proceeding, the last of
which was on October 27, 1993, necessitating counter-manifestations from private respondents
with the last one being filed on November 9, 1993. Nonetheless, it is well-settled that non-
observance of the period for deciding cases or their incidents does not render such judgments
ineffective or void. With respect to the purported damages she suffered due to the alleged delay in
resolving her motion for reconsideration, we find that the said issue has likewise been rendered
COMMERCIAL LAW REVIEW (Law on Intellectual Property) Atty. Busmente

moot and academic by our ruling that she has no right over the trademark and, consequently, to (P500,000.00) to the effect that plaintiff will pay to defendants all damages which
the issuance of a writ of preliminary injunction. defendants may sustain by reason of the injunction if the Court should finally
decide that plaintiff is not entitled thereto.
SO ORDERED. 3
Before us is a petition for review on certiorari of the Decision 1 dated May 24, 1993 of the Court of
The respondents moved for reconsideration but their motion for reconsideration was denied by the trial
Appeals setting aside and declaring as null and void the Orders 2 dated February 10, 1992 and March 19,
court in an Order dated March 19, 1992. 4
1992 of the Regional Trial Court, Branch 90, of Quezon City granting the issuance of a writ of
preliminary injunction. On April 24, 1992, the respondents filed a petition for certiorari with the Court of Appeals, docketed as
CA-G.R. SP No. 27803, praying for the nullification of the said writ of preliminary injunction issued by
The facts of the case are as follows:
the trial court. After the respondents filed their reply and almost a month after petitioner submitted her
On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and damages with a comment, or on August 14, 1992, the latter moved to dismiss the petition for violation of Supreme Court
prayer for the issuance of a writ of preliminary injunction, docketed as Civil Case No. Q-91-10926, Circular No. 28-91, a circular prohibiting forum shopping. According to the petitioner, the respondents
against the respondents Summerville General Merchandising and Company (Summerville, for brevity) did not state the docket number of the civil case in the caption of their petition and, more significantly,
and Ang Tiam Chay. they did not include therein a certificate of non-forum shopping. The respondents opposed the petition
and submitted to the appellate court a certificate of non-forum shopping for their petition.
On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No. 27803 ruling in favor of
The petitioner's complaint alleges that petitioner, doing business under the name and style of KEC the respondents, the dispositive portion of which reads:
Cosmetics Laboratory, is the registered owner of the copyrights Chin Chun Su and Oval Facial Cream
Container/Case, as shown by Certificates of Copyright Registration No. 0-1358 and No. 0-3678; that she WHEREFORE, the petition is hereby given due course and the orders of
also has patent rights on Chin Chun Su & Device and Chin Chun Su for medicated cream after purchasing respondent court dated February 10, 1992 and March 19, 1992 granting the writ of
the same from Quintin Cheng, the registered owner thereof in the Supplemental Register of the preliminary injunction and denying petitioners' motion for reconsideration are
Philippine Patent Office on February 7, 1980 under Registration Certificate No. 4529; that respondent hereby set aside and declared null and void. Respondent court is directed to
Summerville advertised and sold petitioner's cream products under the brand name Chin Chun Su, in forthwith proceed with the trial of Civil Case No. Q-91-10926 and resolve the
similar containers that petitioner uses, thereby misleading the public, and resulting in the decline in the issue raised by the parties on the merits.
petitioner's business sales and income; and, that the respondents should be enjoined from allegedly
SO ORDERED. 5
infringing on the copyrights and patents of the petitioner.
The respondents, on the other hand, alleged as their defense that Summerville is the exclusive and In granting the petition, the appellate court ruled that:
authorized importer, re-packer and distributor of Chin Chun Su products manufactured by Shun Yi The registration of the trademark or brandname "Chin Chun Su" by KEC with the
Factory of Taiwan; that the said Taiwanese manufacturing company authorized Summerville to register supplemental register of the Bureau of Patents, Trademarks and Technology
its trade name Chin Chun Su Medicated Creamwith the Philippine Patent Office and other appropriate Transfer cannot be equated with registration in the principal register, which is duly
governmental agencies; that KEC Cosmetics Laboratory of the petitioner obtained the copyrights through protected by the Trademark Law.
misrepresentation and falsification; and, that the authority of Quintin Cheng, assignee of the patent
registration certificate, to distribute and market Chin Chun Su products in the Philippines had already xxx xxx xxx
been terminated by the said Taiwanese Manufacturing Company.
As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373, 393:
After due hearing on the application for preliminary injunction, the trial court granted the same in an
Order dated February 10, 1992, the dispositive portion of which reads: "Registration in the Supplemental Register, therefore, serves as notice
that the registrant is using or has appropriated the trademark. By the very
ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under fact that the trademark cannot as yet be on guard and there are certain
the style of KEC Cosmetic Laboratory, for preliminary injunction, is hereby defects, some obstacles which the use must still overcome before he can
granted. Consequentially, plaintiff is required to file with the Court a bond claim legal ownership of the mark or ask the courts to vindicate his
executed to defendants in the amount of five hundred thousand pesos claims of an exclusive right to the use of the same. It would be deceptive

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for a party with nothing more than a registration in the Supplemental RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
Register to posture before courts of justice as if the registration is in the DISCRETION AMOUNTING TO LACK OF JURISDICTION IN REFUSING TO PROMPTLY
Principal Register. RESOLVE PETITIONER'S MOTION FOR RECONSIDERATION.
The reliance of the private respondent on the last sentence of the Patent III
office action on application Serial No. 30954 that 'registrants is
presumed to be the owner of the mark until after the registration is IN DELAYING THE RESOLUTION OF PETITIONER'S MOTION FOR RECONSIDERATION, THE
declared cancelled' is, therefore, misplaced and grounded on shaky HONORABLE COURT OF APPEALS DENIED PETITIONER'S RIGHT TO SEEK TIMELY
foundation. The supposed presumption not only runs counter to the APPELLATE RELIEF AND VIOLATED PETITIONER'S RIGHT TO DUE PROCESS.
precept embodied in Rule 124 of the Revised Rules of Practice before
IV
the Philippine Patent Office in Trademark Cases but considering all the
facts ventilated before us in the four interrelated petitions involving the RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
petitioner and the respondent, it is devoid of factual basis. As even in DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO CITE THE PRIVATE
cases where presumption and precept may factually be reconciled, we RESPONDENTS IN CONTEMPT. 9
have held that the presumption is rebuttable, not conclusive, (People v.
Lim Hoa, G.R. No. L-10612, May 30, 1958, Unreported). One may be The petitioner faults the appellate court for not dismissing the petition on the ground of violation
declared an unfair competitor even if his competing trademark is of Supreme Court Circular No. 28-91. Also, the petitioner contends that the appellate court
registered (Parke, Davis & Co. v. Kiu Foo & Co., et al., 60 Phil 928; La violated Section 6, Rule 9 of the Revised Internal Rules of the Court of Appeals when it failed to rule on
Yebana Co. v. Chua Seco & Co., 14 Phil 534)." 6 her motion for reconsideration within ninety (90) days from the time it is submitted for resolution. The
appellate court ruled only after the lapse of three hundred fifty-four (354) days, or on June 3, 1994. In
The petitioner filed a motion for reconsideration. This she followed with several motions to declare delaying the resolution thereof, the appellate court denied the petitioner's right to seek the timely
respondents in contempt of court for publishing advertisements notifying the public of the promulgation appellate relief. Finally, petitioner describes as arbitrary the denial of her motions for contempt of court
of the assailed decision of the appellate court and stating that genuine Chin Chun Su products could be against the respondents.
obtained only from Summerville General Merchandising and Co.
We rule in favor of the respondents.
In the meantime, the trial court went on to hear petitioner's complaint for final injunction and damages.
On October 22, 1993, the trial court rendered a Decision 7 barring the petitioner from using the Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of the grounds for the
trademark Chin Chun Su and upholding the right of the respondents to use the same, but recognizing the issuance of a writ of preliminary injunction is a proof that the applicant is entitled to the relief demanded,
copyright of the petitioner over the oval shaped container of her beauty cream. The trial court did not and the whole or part of such relief consists in restraining the commission or continuance of the act or
award damages and costs to any of the parties but to their respective counsels were awarded Seventy-Five acts complained of, either for a limited period or perpetually. Thus, a preliminary injunction order may be
Thousand Pesos (P75,000.00) each as attorney's fees. The petitioner duly appealed the said decision to granted only when the application for the issuance of the same shows facts entitling the applicant to the
the Court of Appeals. relief demanded. 10 This is the reason why we have ruled that it must be shown that the invasion of the
right sought to be protected is material and substantial, that the right of complainant is clear and
On June 3, 1994, the Court of Appeals promulgated a Resolution 8 denying the petitioner's motions for unmistakable, and, that there is an urgent and paramount necessity for the writ to prevent serious
reconsideration and for contempt of court in CA-G.R. SP No. 27803. damage. 11
Hence, this petition anchored on the following assignment of errors: In the case at bar, the petitioner applied for the issuance of a preliminary injunctive order on the ground
that she is entitled to the use of the trademark on Chin Chun Su and its container based on her copyright
I
and patent over the same. We first find it appropriate to rule on whether the copyright and patent over the
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF name and container of a beauty cream product would entitle the registrant to the use and ownership over
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE ON the same to the exclusion of others.
PETITIONER'S MOTION TO DISMISS.
II
Trademark, copyright and patents are different intellectual property rights that cannot be interchanged
with one another. A trademark is any visible sign capable of distinguishing the goods (trademark) or

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services (service mark) of an enterprise and shall include a stamped or marked container of goods. 12 In injunction, although appealed, renders moot and academic any objection to the prior dissolution of a
relation thereto, a trade name means the name or designation identifying or distinguishing an writ of preliminary injunction.
enterprise. 13 Meanwhile, the scope of a copyright is confined to literary and artistic works which are
The petitioner argues that the appellate court erred in not dismissing the petition for certiorari for non-
original intellectual creations in the literary and artistic domain protected from the moment of their
compliance with the rule on forum shopping. We disagree. First, the petitioner improperly raised the
creation. 14 Patentable inventions, on the other hand, refer to any technical solution of a problem in any
technical objection of non-compliance with Supreme Court Circular No. 28-91 by filing a motion to
field of human activity which is new, involves an inventive step and is industrially applicable. 15
dismiss the petition for certiorari filed in the appellate court. This is prohibited by Section 6, Rule 66 of
Petitioner has no right to support her claim for the exclusive use of the subject trade name and its the Revised Rules of Civil Procedure which provides that "(I)n petitions for certiorari before the
container. The name and container of a beauty cream product are proper subjects of a trademark Supreme Court and the Court of Appeals, the provisions of Section 2, Rule 56, shall be observed. Before
inasmuch as the same falls squarely within its definition. In order to be entitled to exclusively use the giving due course thereto, the court may require the respondents to file their comment to, and not a
same in the sale of the beauty cream product, the user must sufficiently prove that she registered or used motion to dismiss, the petition . . . (emphasis supplied)." Secondly, the issue was raised one month after
it before anybody else did. The petitioner's copyright and patent registration of the name and container petitioner had filed her answer/comment and after private respondent had replied thereto. Under Section
would not guarantee her the right to the exclusive use of the same for the reason that they are not 1, Rule 16 of the Revised Rules of Civil Procedure, a motion to dismiss shall be filed within the time for
appropriate subjects of the said intellectual rights. Consequently, a preliminary injunction order cannot be but before filing the answer to the complaint or pleading asserting a claim. She therefore could no longer
issued for the reason that the petitioner has not proven that she has a clear right over the said name and submit a motion to dismiss nor raise defenses and objections not included in the answer/comment she had
container to the exclusion of others, not having proven that she has registered a trademark thereto or used earlier tendered. Thirdly, substantial justice and equity require this Court not to revive a dissolved writ of
the same before anyone did. injunction in favor of a party without any legal right thereto merely on a technical infirmity. The granting
of an injunctive writ based on a technical ground rather than compliance with the requisites for the
We cannot likewise overlook the decision of the trial court in the case for final injunction and damages. issuance of the same is contrary to the primary objective of legal procedure which is to serve as a means
The dispositive portion of said decision held that the petitioner does not have trademark rights on the to dispense justice to the deserving party.
name and container of the beauty cream product. The said decision on the merits of the trial court
rendered the issuance of the writ of a preliminary injunction moot and academic notwithstanding the fact The petitioner likewise contends that the appellate court unduly delayed the resolution of her motion for
that the same has been appealed in the Court of Appeals. This is supported by our ruling in La Vista reconsideration. But we find that petitioner contributed to this delay when she filed successive
Association, Inc. v. Court of Appeals, 16 to wit: contentious motions in the same proceeding, the last of which was on October 27, 1993, necessitating
counter-manifestations from private respondents with the last one being filed on November 9, 1993.
Considering that preliminary injunction is a provisional remedy which may be Nonetheless, it is well-settled that non-observance of the period for deciding cases or their incidents does
granted at any time after the commencement of the action and before judgment not render such judgments ineffective or void. 17 With respect to the purported damages she suffered due
when it is established that the plaintiff is entitled to the relief demanded and only to the alleged delay in resolving her motion for reconsideration, we find that the said issue has likewise
when his complaint shows facts entitling such reliefs . . . and it appearing that the been rendered moot and academic by our ruling that she has no right over the trademark and,
trial court had already granted the issuance of a final injunction in favor of consequently, to the issuance of a writ of preliminary injunction.
petitioner in its decision rendered after trial on the merits . . . the Court resolved to
Dismiss the instant petition having been rendered moot and academic. An Finally, we rule that the Court of Appeals correctly denied the petitioner's several motions for contempt
injunction issued by the trial court after it has already made a clear of court. There is nothing contemptuous about the advertisements complained of which, as regards the
pronouncement as to the plaintiff's right thereto, that is, after the same issue has proceedings in CA-G.R. SP No. 27803 merely announced in plain and straightforward language the
been decided on the merits, the trial court having appreciated the evidence promulgation of the assailed Decision of the appellate court. Moreover, pursuant to Section 4 of Rule 39
presented, is proper, notwithstanding the fact that the decision rendered is not yet of the Revised Rules of Civil Procedure, the said decision nullifying the injunctive writ was immediately
final . . . . Being an ancillary remedy, the proceedings for preliminary injunction executory.
cannot stand separately or proceed independently of the decision rendered on the
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals dated May
merit of the main case for injunction. The merit of the main case having been
24, 1993 and June 3, 1994, respectively, are hereby AFFIRMED. With costs against the
already determined in favor of the applicant, the preliminary determination of its
petitioner. HcaDTE
non-existence ceases to have any force and effect. (emphasis supplied)
SO ORDERED.
La Vista categorically pronounced that the issuance of a final injunction renders any question on the
preliminary injunctive order moot and academic despite the fact that the decision granting a final
injunction is pending appeal. Conversely, a decision denying the applicant-plaintiff's right to a final 2. Pearl & Dean {Phil.} v. Shoemart, Inc. et. al., G.R. No. 148222, Aug. 15, 2003

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COMMERCIAL LAW REVIEW (Law on Intellectual Property)
Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display
units simply referred to as light boxes. These units utilize specially printed posters sandwiched
between plastic sheets and illuminated with back lights. Pearl and Dean was able to secure a
Certificate of Copyright Registration over these illuminated display units. The advertising light
boxes were marketed under the trademark Poster Ads. From 1981 to about 1988, Pearl and
Dean employed the services of Metro Industrial Services to manufacture its advertising displays.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to
fabricate its display units, offered to construct light boxes for Shoemarts chain of stores. SMI
approved the proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial
for SMI. After, Pearl and Dean, received reports that exact copies of its light boxes were installed
at SM malls.
In the light of its discoveries, Pearl and Dean sent a letter to both SMI and NEMI enjoining them
to cease using the subject light boxes and to remove the same from SMIs establishments. It also
demanded the discontinued use of the trademark Poster Ads, and the payment to Pearl and Dean
of compensatory damages in the amount of P20million.
Upon receipt of the demand letter, SMI suspended the leasing of light boxes and NEMI took
down its advertisements for Poster Ads from the lighted display units in SMIs stores. Claiming
that both SMI and NEMI failed to meet all its demands, Pearl and Dean filed this instant case for
infringement of trademark and copyright, unfair competition and damages.
ISSUE: Whether the engineering or technical drawings of an advertising display unit (light box)
are granted copyright protection (copyright certificate of registration), is the light box depicted in
such engineering drawings ipso facto also protected by such copyright?
HELD: NO. Petitioner P & Ds complaint was that SMI infringed on its copyright over the light boxes
when SMI had the units manufactured by Metro and EYD Rainbow Advertising for its own account.
Obviously, petitioners position was premised on its belief that its copyright over the engineering
drawings extended ipso facto to the light boxes depicted or illustrated in said drawings
First, petitioners application for a copyright certificate clearly stated that it was for a class O
work under Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the statute then
prevailing. Said Section 2 expressly enumerated the works subject to copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist
with respect to any of the following works:
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xxx xxx xxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
xxx xxx xxx
Although petitioners copyright certificate was entitled Advertising Display Units (which
depicted the box-type electrical devices), its claim of copyright infringement cannot be sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant,
the rights are limited to what the statute confers. It may be obtained and enjoyed only with respect to
the subjects and by the persons, and on terms and conditions specified in the statute. Accordingly, it can
cover only the works falling within the statutory enumeration or description.
P & D secured its copyright under the classification class O work. This being so, petitioners
copyright protection extended only to the technical drawings and not to the light box itself because the
latter was not at all in the category of prints, pictorial illustrations, advertising copies, labels, tags and
box wraps. Stated otherwise, even as we find that P & D indeed owned a valid copyright, the same
could have referred only to the technical drawings within the category of pictorial illustrations. It
could not have possibly stretched out to include the underlying light box. The strict application 1[9] of the
laws enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is, even if its
copyright certificate was entitled Advertising Display Units. What the law does not include, it
excludes, and for the good reason: the light box was not a literary or artistic piece which could be
copyrighted under the copyright law. And no less clearly, neither could the lack of statutory authority to
make the light box copyrightable be remedied by the simplistic act of entitling the copyright certificate
issued by the National Library as Advertising Display Units.
In fine, if SMI and NEMI reprinted P & Ds technical drawings for sale to the public without
license from P & D, then no doubt they would have been guilty of copyright infringement. But this was
not the case. SMIs and NEMIs acts complained of by P & D were to have units similar or identical to
the light box illustrated in the technical drawings manufactured by Metro and EYD Rainbow
Advertising, for leasing out to different advertisers. Was this an infringement of petitioners copyright
over the technical drawings? We do not think so.
PEARL & DEAN (PHIL.), INCORPORATED, petitioner, vs. SHOEMART,
INCORPORATED, and NORTH EDSA MARKETING, INCORPORATED, respondents.
COMMERCIAL LAW REVIEW (Law on Intellectual Property)
SYNOPSIS
Petitioner Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising
display units simply referred to as light boxes. Pearl and Dean was able to secure a Certificate of
Copyright Registration over the illuminated display units. Sometime in 1985, Pearl and Dean negotiated
with respondent Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM City North
Edsa. Since SM City North Edsa was under construction at that time, SMI offered as an alternative, SM
Makati and SM Cubao, to which Pearl and Dean agreed. Only the contract for SM Makati, however,
was returned signed. However, in 1986, SMI rescinded the contract for SM Makati due to non-
performance of the terms thereof. Sometime in 1989, Pearl and Dean received reports that exact copies
of its light boxes were installed at SM City and in the fastfood section of SM Cubao. It further
discovered that respondent North Edsa Marketing Inc. (NEMI) is a sister company of SMI and was set
up primarily to sell advertising space in lighted display units located in SMI's different branches. In the
light of its discoveries, Pearl and Dean, sent a letter to both SMI and NEMI enjoining them to cease
using the subject light boxes and to remove the same from SMI's establishments and the payment to
Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos (P20,000,000.00).
Claiming that both SMI and NEMI failed to meet all its demands, Pearl and Dean filed a case for
infringement of trademark and copyright, unfair competition and damages. The Regional Trial Court of
Makati ruled in favor of Pearl and Dean. On appeal, however, the Court of Appeals reversed the trial
court. The appellate court upheld SMI when it posited that what was copyrighted were the technical
drawings only, and not the light boxes themselves, and since the light boxes cannot, by any stretch of
the imagination, be considered as either prints, pictorial illustrations, advertising copies, labels, tags or
box wraps, to be properly classified as copyrightable under the law. Hence, the present petition.
The Supreme Court affirmed the decision of the Court of Appeals and denied the petition. According to
the Court, petitioner Pearl & Dean secured its copyright under the classification class "O" work or
under Section 2 (O) of P.D. 49. As such, petitioner's copyright protection extended only to the technical
drawings and not to the light box itself because the latter was not at all in the category of "prints,
pictorial illustrations, advertising copies, labels, tags and box wraps." While P & D indeed owned a
valid copyright, the same could have referred only to the technical drawings within the category of
"pictorial illustrations." It could not have possibly stretched out to include the underlying light box The
strict application of the law's enumeration in Section 2 of PD 49prevented the Court from giving
petitioner even a little leeway, that is, even if its copyright certificate was entitled "Advertising Display
Units." What the law does not include, it excludes, and for the good reason: the light box was not a
literary or artistic piece which could be copyrighted under the copyright law. The Court also ruled that
petitioner could not legally prevent anyone from manufacturing or commercially using its invention for
the main reason that it never secured a patent for it. The Court emphasized that to be able to effectively
and legally preclude others from copying and profiting from an invention, a patent is a primordial
requirement. No patent, no protection. The ultimate goal of a patent system is to bring new designs and
technologies into the public domain through disclosure. Ideas, once disclosed to the public without the
protection of a valid patent, are subject to appropriation without significant restraint.
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SYLLABUS
1. MERCANTILE LAW; INTELLECTUAL PROPERTY LAW (P.D. 49); PETITIONER'S
COPYRIGHT PROTECTION EXTENDED ONLY TO THE TECHNICAL DRAWINGS AND
NOT TO THE LIGHT BOX ITSELF BECAUSE THE LATTER WAS NOT AT ALL IN THE
CATEGORY OF "PRINTS, PICTORIALS ILLUSTRATIONS, ADVERTISING COPIES,
LABELS, TAGS AND BOX WRAPS" UNDER SECTION 2, (O) OF THE LAW. Petitioner's
application for a copyright certificate as well as Copyright Certificate No. PD-R2588 issued by
the National Library on January 20, 1981 clearly stated that it was for a class "O" work under
Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the statute then prevailing.
Said Section 2 expressly enumerated the works subject to copyright: SEC. 2. The rights granted
by this Decree shall, from the moment of creation, subsist with respect to any of the following
works: . . . (O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps; . . .
Although petitioner's copyright certificate was entitled "Advertising Display Units" (which
depicted the box-type electrical devices), its claim of copyright infringement cannot be sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant,
the rights are limited to what the statute confers. It may be obtained and enjoyed only with
respect to the subjects and by the-persons, and on terms and conditions specified in the
statute. Accordingly, it can cover only the works falling within the statutory enumeration or
description. P & D secured its copyright under the classification class "O" work. This being so,
petitioner's copyright protection extended only to the technical drawings and not to the light box
itself because the latter was not at all in the category of "prints, pictorial illustrations, advertising
copies, labels, tags and box wraps." Stated otherwise, even as we find that P & D indeed owned a
valid copyright, the same could have referred only to the technical drawings within the category
of "pictorial illustrations." It could not have possibly stretched out to include the underlying light
box. The strict application of the law's enumeration in Section 2 prevents us from giving
petitioner even a little leeway, that is, even if its copyright certificate was entitled "Advertising
Display Units." What the law does not include, it excludes, and for the good reason: the light box
was not a literary or artistic piece which could be copyrighted under the copyright law. And no
less clearly, neither could the lack of statutory authority to make the light box copyrightable be
remedied by the simplistic act of entitling the copyright certificate issued by the National Library
as "Advertising Display Units."
2. ID.; ID.; SINCE PETITIONER NEVER SECURED A PATENT OVER THE LIGHT BOXES,
IT THEREFORE ACQUIRED NO PATENT RIGHTS WHICH COULD HAVE PROTECTED
ITS INVENTION; NO PATENT, NO PROTECTION; CASE AT BAR. For some reason or
another, petitioner never secured a patent for the light boxes. It therefore acquired no patent rights
which could have protected its invention, if in fact it really was. And because it had no patent,
petitioner could not legally prevent anyone from manufacturing or commercially using the
contraption. In Creser Precision Systems, Inc. vs. Court of Appeals, we held that "there can be no
infringement of a patent until a patent has been issued, since whatever right one has to the
COMMERCIAL LAW REVIEW (Law on Intellectual Property)
invention covered by the patent arises alone from the grant of patent. . . . (A)n inventor has no
common law right to a monopoly of his invention. He has the right to make use of and vend his
invention, but if he voluntarily discloses it, such as by offering it for sale, the world is free to
copy and use it with impunity. A patent, however, gives the inventor the right to exclude all
others. As a patentee, he has the exclusive right of making, selling or using the invention. On the
assumption that petitioner's advertising units were patentable inventions, petitioner revealed them
fully to the public by submitting the engineering drawings thereof to the National Library. To be
able to effectively and legally preclude others from copying and profiting from the invention, a
patent is a primordial requirement. No patent, no protection. The ultimate goal of a patent system
is to bring new designs and technologies into the public domain through disclosure. Ideas, once
disclosed to the public without the protection of a valid patent, are subject to appropriation
without significant restraint.
3. ID.; ID.; NOT HAVING UNDERGONE THE STRINGENT REQUIREMENTS AND
EXHAUSTIVE EXAMINATION FOR PATENTS, PETITIONER CANNOT EXCLUDE
OTHERS FROM THE MANUFACTURE, SALE OR COMMERCIAL USE OF THE LIGHT
BOXES ON THE SOLE BASIS OF ITS COPYRIGHT CERTIFICATE OVER THE
TECHNICAL DRAWINGS. The patent law has a three-fold purpose: "first, patent law seeks
to foster and reward invention; second, it promotes disclosures of inventions to stimulate further
innovation and to permit the public to practice the invention once the patent expires; third, the
stringent requirements for patent protection seek to ensure that ideas in the public domain remain
there for the free use of the public." It is only after an exhaustive examination by the patent office
that a patent is issued. Such an in-depth investigation is required because "in rewarding a useful
invention, the rights and welfare of the community must be fairly dealt with and effectively
guarded. To that end, the prerequisites to obtaining a patent are strictly observed and when a
patent is issued, the limitations on its exercise are equally strictly enforced. To begin with, a
genuine invention or discovery must be demonstrated lest in the constant demand for new
appliances, the heavy hand of tribute be laid on each slight technological advance in art." There is
no such scrutiny in the case of copyrights nor any notice published before its grant to the effect
that a person is claiming the creation of a work. The law confers the copyright from the moment
of creation and the copyright certificate is issued upon registration with the National Library of a
sworn ex parte claim of creation. Therefore, not having gone through the arduous examination for
patents, the petitioner cannot exclude others from the manufacture, sale or commercial use of the
light boxes on the sole basis of its copyright certificate over the technical drawings.
4. ID.; ID.; PETITIONER'S FAILURE TO SECURE A TRADEMARK REGISTRATION FOR
SPECIFIC USE ON THE LIGHT BOXES MEANT THAT THERE COULD NOT HAVE BEEN
ANY TRADEMARK INFRINGEMENT SINCE REGISTRATION WAS AN ESSENTIAL
ELEMENT THEREOF. The Court of Appeals correctly cited Faberge Inc. vs. Intermediate
Appellate Court, where we, invoking Section 20 of the old Trademark Law, ruled that "the
certificate of registration issued by the Director of Patents can confer (upon petitioner) the
exclusive right to use its own symbol only to those goods specified in the certificate, subject to
any conditions and limitations specified in the certificate . . . One who has adopted and used a
8 2013400035 - Diato
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trademark on his goods does not prevent the adoption and use of the same trademark by others or
products which are of a different description. " Faberge, Inc.was correct and was in fact recently
reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.Assuming arguendo that "Poster Ads"
could validly qualify as a trademark, the failure of P & D to secure a trademark registration for
specific use on the light boxes meant that there could not have been any trademark infringement
since registration was an essential element thereof.
5. ID.; ID.; NO UNFAIR COMPETITION UNDER THE LAW ON COPYRIGHTS. If at all,
the cause of action should have been for unfair competition, a situation which was possible even
if P & D had no registration. However, while the petitioner's complaint in the RTC also cited
unfair competition, the trial court did not find private respondents liable therefor. Petitioner did
not appeal this particular point; hence, it cannot now revive its claim of unfair competition. But
even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair
competition. By the nature of things, there can be no unfair competition under the law on
copyrights although it is applicable to disputes over the use of trademarks. Even a name or phrase
incapable of appropriation as a trademark or tradename may, by long and exclusive use by a
business (such that the name or phrase becomes associated with the business or product in the
mind of the purchasing public), be entitled to protection against unfair competition. In this case,
there was no evidence, that P & D's use of "Poster Ads" was distinctive or well-known. As noted
by the Court of Appeals, petitioner's expert witnesses himself had testified that "'Poster Ads' was
too generic a name. So it was difficult to identify it with any company, honestly speaking." This
crucial admission by its own expert witness that "Poster Ads" could not be associated with P & D
showed that, in the mind of the public, the goods and services carrying the trademark "Poster
Ads" could not be distinguished from the goods and services of other entities.
6. ID.; ID.; DOCTRINE OF SECONDARY MEANING; NOT APPLICABLE IN CASE AT
BAR. This fact also prevented the application of the doctrine of secondary meaning. "Poster
Ads" was generic and incapable of being used as a trademark because it was used in the field of
poster advertising, the very business engaged in by petitioner. "Secondary meaning" means that a
word or phrase originally incapable of exclusive appropriation with reference to an article in the
market (because it is geographically or otherwise descriptive) might nevertheless have been used
for so long and so exclusively by one producer with reference to his article that, in the trade and
to that branch of the purchasing public, the word or phrase has come to mean that the article was
his property. The admission by petitioner's own expert witness that he himself could not associate
"Poster Ads" with petitioner P & D because it was "too generic" definitely precluded the
application of this exception.
In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Pearl &
Dean (Phil.) Inc. (P & D) assails the May 22, 2001 decision 1 of the Court of Appeals reversing the
October 31, 1996 decision 2 of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92-516
which declared private respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable
for infringement of trademark and copyright, and unfair competition.
COMMERCIAL LAW REVIEW (Law on Intellectual Property)
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals 3 contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the
manufacture of advertising display units simply referred to as light boxes. These
units utilize specially printed posters sandwiched between plastic sheets and
illuminated with back lights. Pearl and Dean was able to secure a Certificate of
Copyright Registration dated January 20, 1981 over these illuminated display
units. The advertising light boxes were marketed under the trademark "Poster
Ads." The application for registration of the trademark was filed with the Bureau
of Patents, Trademarks and Technology Transfer on June 20, 1983, but was
approved only on September 12, 1988, per Registration No. 41165. From 1981 to
about 1988, Pearl and Dean employed the services of Metro Industrial Services to
manufacture its advertising displays.
Sometime in 1985, Pearl, and Dean negotiated with defendant-appellant Shoemart,
Inc. (SMI) for the lease and installation of the light boxes in SM City North Edsa.
Since SM City North Edsa was under construction at that time, SMI offered as an
alternative, SM Makati and SM Cubao, to which Pearl and Dean agreed. On
September 11, 1985, Pearl and Dean's General Manager, Rodolfo Vergara,
submitted for signature the contacts covering SM Cubao and SM Makati to SMI's
Advertising Promotions and Publicity Division Manager, Ramonlito Abano. Only
the contract for SM Makati, however, was returned signed. On October 4, 1985,
Vergara wrote Abano inquiring about the other contract and reminding him that
their agreement for installation of light boxes was not only for its SM Makati
branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMI's house counsel informed Pearl and
Dean that it was rescinding the contract for SM Makati due to non-performance of
the terms thereof. In his reply dated February 17, 1986, Vergara protested the
unilateral action of SMI, saying it was without basis. In the same letter, he pushed
for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by
Pearl and Dean to fabricate its display units, offered to construct light boxes for
Shoemart's chain of stores. SMI approved the proposal and ten (10) light boxes
were subsequently fabricated by Metro Industrial for SMI. After its contract with
Metro Industrial was terminated, SMI engaged the services of EYD Rainbow
Advertising Corporation to make the light boxes. Some 300 units were fabricated
in 1991. These were delivered on a staggered basis and installed at SM Megamall
and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light
boxes were installed at SM City and in the fastfood section of SM Cubao. Upon
investigation, Pearl and Dean found out that aside from the two (2) reported SM
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branches, light boxes similar to those it manufactures were also installed in two (2)
other SM stores. It further discovered that defendant-appellant North Edsa
Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing
Services, was set up primarily to sell advertising space in lighted display units
located in SMI's different branches. Pearl and Dean noted that NEMI is a sister
company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991
to both SMI and NEMI enjoining them to cease using the subject light boxes and
to remove the same from SMI's establishments. It also demanded the discontinued
use of the trademark "Poster Ads," and the payment to Pearl and Dean of
compensatory damages in the amount of Twenty Million Pesos (P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred
twenty-four (224) light boxes and NEMI took down its advertisements for "Poster
Ads" from the lighted display units in SMI's stores. Claiming that both SMI and
NEMI failed to meet all its demands, Pearl and Dean filed this instant case for
infringement of trademark and copyright, unfair competition and damages.
In denying the charges hurled against it, SMI maintained that it independently
developed its poster panels using commonly known techniques and available
technology, without notice of or reference to Pearl and Dean's copyright. SMI
noted that the registration of the mark "Poster Ads" was only for stationeries such
as letterheads, envelopes, and the like. Besides, according to SMI, the word "Poster
Ads" is a generic term which cannot be appropriated as a trademark, and, as such,
registration of such mark is invalid. It also stressed that Pearl and Dean is not
entitled to the reliefs prayed for in its complaint since its advertising display units
contained no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged
that Pearl and Dean had no cause of action against it and that the suit was purely
intended to malign SMI's good name. On this basis, SMI, aside from praying for
the dismissal of the case, also counterclaimed for moral, actual and exemplary
damages and for the cancellation of Pearl and Dean's Certification of Copyright
Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark
Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising
display units, nor having engaged in the business of advertising. It repleaded SMI's
averments, admissions and denials and prayed for similar reliefs and counterclaims
as SMI."
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for
infringement of copyright under Section 2 of PD 49, as amended, and infringement
of trademark under Section 22 of RA No. 166, as amended, and are hereby
COMMERCIAL LAW REVIEW (Law on Intellectual Property)
penalized under Section 28 of PD 49, as amended, and Sections 23 and 24 of RA
166, as amended. Accordingly, defendants are hereby directed:
(1) to pay plaintiff the following damages:
(a) actual damages P16,600,000.00,
representing profits
derived by defendants
as a result of infringement
of plaintiff's copyright
from 1991 to 1992
(b) moral damages P1,000.000.00
(c) exemplary damages P1,000,000.00
(d) attorney's fees P1,000,000.00
plus
(e) costs of suit;
(2) to deliver, under oath, for impounding in the National Library,
all light boxes of SMI which were fabricated by Metro Industrial
Services and EYD Rainbow Advertising Corporation;
(3) to deliver, under oath, to the National Library, all filler-posters
using the trademark "Poster Ads," for destruction; and
(4) to permanently refrain from infringing the copyright on
plaintiff's light boxes and its trademark "Poster Ads."
Defendants' counterclaims are hereby ordered dismissed for lack of merit.
SO ORDERED. 4
On appeal, however, the Court of Appeals reversed the trial court:
Since the light boxes cannot, by any stretch of the imagination, be considered as
either prints, pictorial illustrations, advertising copies, labels, tags or box wraps, to
be properly classified as a copyrightable class "O" work, we have to agree with
SMI when it posited that what was copyrighted were the technical drawings only,
and not the light boxes themselves, thus:
42. When a drawing is technical and depicts a utilitarian object, a
copyright over the drawings like plaintiff-appellant's will not
extend to the actual object. It has so been held under
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jurisprudence, of which the leading case is Baker vs. Selden (101
U.S. 841 [1879]. In that case, Selden had obtained a copyright
protection for a book entitled "Selden's Condensed Ledger or
Bookkeeping Simplified" which purported to explain a new
system of bookkeeping. Included as part of the book were blank
forms and illustrations consisting of ruled lines and headings,
specially designed for use in connection with the system explained
in the work. These forms showed the entire operation of a day or a
week or a month on a single page, or on two pages following each
other. The defendant Baker then produced forms which were
similar to the forms illustrated in Selden's copyrighted books. The
Court held that exclusivity to the actual forms is not extended by a
copyright. The reason was that "to grant a monopoly in the
underlying art when no examination of its novelty has ever been
made would be a surprise and a fraud upon the public; that is the
province of letters patent, not of copyright." And that is precisely
the point. No doubt aware that its alleged original design would
never pass the rigorous examination of a patent application,
plaintiff-appellant fought to foist a fraudulent monopoly on the
public by conveniently resorting to a copyright registration which
merely employs a recordal system without the benefit of an in-
depth examination of novelty.
The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough
Bridge Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had
obtained a copyright over an unpublished drawing entitled "Bridge Approach
the drawing showed a novel bridge approach to unsnarl traffic congestion." The
defendant constructed a bridge approach which was alleged to be an infringement
of the new design illustrated in plaintiff's drawings. In this case it was held that
protection of the drawing does not extend to the unauthorized duplication of the
object drawn because copyright extends only to the description or expression of
the object and not to the object itself. It does not prevent one from using the
drawings to construct the object portrayed in the drawing.
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz
Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is no copyright
infringement when one who, without being authorized, uses a copyrighted
architectural plan to construct a structure. This is because the copyright does not
extend to the structures themselves.
In fine, we cannot find SMI liable for infringing Pearl and Dean's copyright over
the technical drawings of the latter's advertising display units.
xxx xxx xxx
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The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate xxx xxx xxx
Appellate Court that the protective mantle of the Trademark Law extends only to
the goods used by the first user as specified in the certificate of registration, We are constrained to adopt the view of defendants-appellants that the words
following the clear mandate conveyed by Section 20 of Republic Act 166, as "Poster Ads" are a simple contraction of the generic term poster advertising. In the
amended, otherwise known as the Trademark Law, which reads: absence of any convincing proof that "Poster Ads" has acquired a secondary
meaning in this jurisdiction, we find that Pearl and Dean's exclusive right to the
SEC. 20. Certification of registration prima facie evidence of use of "Poster Ads" is limited to what is written in its certificate of registration,
validity. A certificate of registration of a mark or trade-name namely, stationeries.
shall be prima facie evidence of the validity of the registration, the
registrant's ownership of the mark or trade-name, and of the Defendants-appellants cannot thus be held liable for infringement of the trademark
registrant's exclusive right to use the same in connection with the "Poster Ads."
goods, business or services specified in the certificate, subject to
There being no finding of either copyright or trademark infringement on the part of
any conditions and limitations stated therein." (italics supplied)
SMI and NEMI, the monetary award granted by the lower court to Pearl and Dean
The records show that on June 20, 1983, Pearl and Dean applied for the has no leg to stand on.
registration of the trademark "Poster Ads" with the Bureau of Patents, Trademarks,
xxx xxx xxx
and Technology Transfer. Said trademark was recorded in the Principal Register on
September 12, 1988 under Registration No. 41165 covering the following WHEREFORE, premises considered, the assailed decision is REVERSED and
products: stationeries such as letterheads, envelopes and calling cards and SET ASIDE, and another is rendered DISMISSING the complaint and
newsletters. counterclaims in the above-entitled case for lack of merit. 5
With this as factual backdrop, we see no legal basis to the finding of liability on the Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the following
part of the defendants-appellants for their use of the words "Poster Ads," in the errors for the Court's consideration:
advertising display units in suit. Jurisprudence has interpreted Section 20 of the
Trademark Law as "an implicit permission to a manufacturer to venture into the A. THE HONORABLE COURT OF APPEALS ERRED IN
production of goods and allow that producer to appropriate the brand name of the RULING THAT NO COPYRIGHT INFRINGEMENT WAS
senior registrant on goods other than those stated in the certificate of registration." COMMITTED BY RESPONDENTS SM AND NEMI;
The Supreme Court further emphasized the restrictive meaning of Section 20 when
it stated, through Justice Conrado V. Sanchez, that: B. THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT NO INFRINGEMENT OF PEARL & DEAN'S
Really, if the certificate of registration were to be deemed as including TRADEMARK "POSTER ADS" WAS COMMITTED BY
goods not specified therein, then a situation may arise whereby an RESPONDENTS SM AND NEMI;
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 C. THE HONORABLE COURT OF APPEALS ERRED IN
trademark for the said goods. We believe that such omnibus registration DISMISSING THE AWARD OF THE TRIAL COURT, DESPITE
is not contemplated by our Trademark Law. THE LATTER'S FINDING, NOT DISPUTED BY THE
HONORABLE COURT OF APPEALS, THAT SM WAS GUILTY
While we do not discount the striking similarity between Pearl and Dean's OF BAD FAITH IN ITS NEGOTIATION OF ADVERTISING
registered trademark and defendants-appellants' "Poster Ads" design, as well as the CONTRACTS WITH PEARL & DEAN.
parallel use by which said words were used in the parties' respective advertising
copies, we cannot find defendants-appellants liable for infringement of trademark. D. THE HONORABLE COURT OF APPEALS ERRED IN NOT
"Poster Ads" was registered by Pearl and Dean for specific use in its stationeries, HOLDING RESPONDENTS SM AND NEMI LIABLE TO
in contrast to defendants-appellants who used the same words in their advertising PEARL & DEAN FOR ACTUAL, MORAL & EXEMPLARY
display units. Why Pearl and Dean limited the use of its trademark to stationeries is DAMAGES, ATTORNEY'S FEES AND COSTS OF SUIT. 6
simply beyond us. But, having already done so, it must stand by the consequence
of the registration which it had caused. ISSUES

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In resolving this very interesting case, we are challenged once again to put into proper perspective four Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant, the
main concerns of intellectual property law patents, copyrights, trademarks and unfair competition rights are limited to what the statute confers. It may be obtained and enjoyed only with respect to the
arising from infringement of any of the first three. We shall focus then on the following issues: subjects and by the persons, and on terms and conditions specified in the statute. 7Accordingly, it can
cover only the works falling within the statutory enumeration or description. 8
(1) if the engineering or technical drawings of an advertising display unit
(light box) are granted copyright protection (copyright certificate of P & D secured its copyright under the classification class "O" work. This being so, petitioner's copyright
registration) by the National Library, is the light box depicted in such protection extended only to the technical drawings and not to the light box itself because the latter was
engineering drawings ipso facto also protected by such copyright? not at all in the category of "prints, pictorial illustrations, advertising copies, labels, tags and box wraps."
Stated otherwise, even as we find that P & D indeed owned a valid copyright, the same could have
(2) or should the light box be registered separately and protected by a patent referred only to the technical drawings within the category of "pictorial illustrations." It could not have
issued by the Bureau of Patents Trademarks and Technology Transfer (now possibly stretched out to include the underlying light box. The strict application 9 of the law's
Intellectual Property Office) in addition to the copyright of the enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is, even if its
engineering drawings? copyright certificate was entitled "Advertising Display Units." What the law does not include, it excludes,
and for the good reason: the light box was not a literary or artistic piece which could be copyrighted
(3) can the owner of a registered trademark legally prevent others from using
under the copyright law. And no less clearly, neither could the lack of statutory authority to make the light
such trademark if it is a mere abbreviation of a term descriptive of his goods,
box copyrightable be remedied by the simplistic act of entitling the copyright certificate issued by the
services or business?
National Library as "Advertising Display Units."
In fine, if SMI and NEMI reprinted P & D's technical drawings for sale to the public without license from
P & D, then no doubt they would have been guilty of copyright infringement. But this was not the case.
ON THE ISSUE OF COPYRIGHT INFRINGEMENT SMI's and NEMI's acts complained of by P & D were to have units similar or identical to the light box
Petitioner P & D's complaint was that SMI infringed on its copyright over the light boxes when SMI had illustrated in the technical drawings manufactured by Metro and EYD Rainbow Advertising, for leasing
the units manufactured by Metro and EYD Rainbow Advertising for its own account. Obviously, out to different advertisers. Was this an infringement of petitioner's copyright over the technical
petitioner's position was premised on its belief that its copyright over the engineering drawings drawings? We do not think so.
extended ipso facto to the light boxes depicted or illustrated in said drawings. In ruling that there was no
copyright infringement, the Court of Appeals held that the copyright was limited to the drawings alone During the trial, the president of P & D himself admitted that the light box was neither a literary nor an
and not to the light box itself. We agree with the appellate court. artistic work but an "engineering or marketing invention." 10 Obviously, there appeared to be some
confusion regarding what ought or ought not to be the proper subjects of copyrights, patents and
First, petitioner's application for a copyright certificate as well as Copyright Certificate No. PD-R2588 trademarks. In the leading case of Kho vs. Court of Appeals, 11 we ruled that these three legal rights are
issued by the National Library on January 20, 1981 clearly stated that it was for a class "O" work completely distinct and separate from one another, and the protection afforded by one cannot be used
under Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the statute then prevailing. interchangeably to cover items or works that exclusively pertain to the others:
Said Section 2 expressly enumerated the works subject to copyright:
Trademark, copyright and patents are different intellectual property rights that
SEC. 2. The rights granted by this Decree shall, from the moment of cannot be interchanged with one another. A trademark is any visible sign capable
creation, subsist with respect to any of the following works: of distinguishing the goods (trademark) or services (service mark) of an enterprise
and shall include a stamped or marked container of goods. In relation thereto, a
xxx xxx xxx trade name means the name or designation identifying or distinguishing an
enterprise. Meanwhile, the scope of a copyright is confined to literary and artistic
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box works which are original intellectual creations in the literary and artistic domain
wraps; protected from the moment of their creation. Patentable inventions, on the other
xxx xxx xxx hand, refer to any technical solution of a problem in any field of human
activity which is new, involves an inventive step and is industrially applicable.
Although petitioner's copyright certificate was entitled "Advertising Display Units" (which depicted the
box-type electrical devices), its claim of copyright infringement cannot be sustained. ON THE ISSUE OF PATENT INFRINGEMENT

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This brings us to the next point: if, despite its manufacture and commercial use of the light boxeswithout invention once the patent expires; third, the stringent requirements for patent protection seek to ensure
license from petitioner, private respondents cannot be held legally liable for infringement of P & D's that ideas in the public domain remain there for the free use of the public." 18
copyright over its technical drawings of the said light boxes, should they be liable instead for
infringement of patent? We do not think so either. It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-depth
investigation is required because "in rewarding a useful invention, the rights and welfare of the
For some reason or another, petitioner never secured a patent for the light boxes. It therefore acquired no community must be fairly dealt with and effectively guarded. To that end, the prerequisites to obtaining a
patent rights which could have protected its invention, if in fact it really was. And because it had no patent are strictly observed and when a patent is issued, the limitations on its exercise are equally strictly
patent, petitioner could not legally prevent anyone from manufacturing or commercially using the enforced. To begin with, a genuine invention or discovery must be demonstrated lest in the constant
contraption. In Creser Precision Systems, Inc. vs. Court of Appeals, 12 we held that "there can be no demand for new appliances, the heavy hand of tribute be laid on each slight technological advance in
infringement of a patent until a patent has been issued, since whatever right one has to the invention art." 19
covered by the patent arises alone from the grant of patent. . . . (A)n inventor has no common law right to
a monopoly of his invention. He has the right to make use of and vend his invention, but if he voluntarily There is no such scrutiny in the case of copyrights nor any notice published before its grant to the effect
discloses it, such as by offering it for sale, the world is free to copy and use it with impunity. A patent, that a person is claiming the creation of a work. The law confers the copyright from the moment of
however, gives the inventor the right to exclude all others. As a patentee, he has the exclusive right of creation 20 and the copyright certificate is issued upon registration with the National Library of a
making, selling or using the invention. 13 On the assumption that petitioner's advertising units were sworn ex-parte claim of creation.
patentable inventions, petitioner revealed them fully to the public by submitting the engineering drawings
Therefore, not having gone through the arduous examination for patents, the petitioner cannot exclude
thereof to the National Library.
others from the manufacture, sale or commercial use of the light boxes on the sole basis of its copyright
To be able to effectively and legally preclude others from copying and profiting from the invention, a certificate over the technical drawings.
patent is a primordial requirement. No patent, no protection. The ultimate goal of a patent system is to
bring new designs and technologies into the public domain through disclosure. 14 Ideas, once disclosed
to the public without the protection of a valid patent, are subject to appropriation without significant Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office (IPO)
restraint. 15 to scrutinize the light box's eligibility as a patentable invention. The irony here is that, had petitioner
secured a patent instead, its exclusivity would have been for 17 years only. But through the simplified
On one side of the coin is the public which will benefit from new ideas; on the other are the inventors
procedure of copyright-registration with the National Library without undergoing the rigor of
who must be protected. As held in Bauer & Cie vs. O'Donnell, 16 "The act secured to the inventor the
defending the patentability of its invention before the IPO and the public the petitioner would be
exclusive right to make use, and vend the thing patented, and consequently to prevent others from
protected for 50 years. This situation could not have been the intention of the law.
exercising like privileges without the consent of the patentee. It was passed for the purpose of
encouraging useful invention and promoting new and useful inventions by the protection and stimulation In the oft-cited case of Baker vs. Selden, 21 the United States Supreme Court held that only the
new and useful inventions by the protection and stimulation given to inventive genius, and was intended expression of an idea is protected by copyright, not the idea itself. In that case, the plaintiff held the
to secure to the public, after the lapse of the exclusive privileges granted the benefit of such inventions copyright of a book which expounded on a new accounting system he had developed. The publication
and improvements." illustrated blank forms of ledgers utilized in such a system. The defendant reproduced forms similar to
those illustrated in the plaintiffs copyrighted book. The US Supreme Court ruled that:
The law attempts to strike an ideal balance between the two interests:
"There is no doubt that a work on the subject of book-keeping, though only
"(The p)atent system thus embodies a carefully crafted bargain for encouraging the
explanatory of well known systems, may be the subject of a copyright; but, then, it
creation and disclosure of new useful and non-obvious advances in technology and
is claimed only as a book. . . . But there is a clear distinction between the books, as
design, in return for the exclusive right to practice the invention for a number of
such, and the art, which it is, intended to illustrate. The mere statement of the
years. The inventor may keep his invention secret and reap its fruits indefinitely. In
proposition is so evident that it requires hardly any argument to support it. The
consideration of its disclosure and the consequent benefit to the community, the
same distinction may be predicated of every other art as well as that of
patent is granted. An exclusive enjoyment is guaranteed him for 17 years, but upon
bookkeeping. A treatise on the composition and use of medicines, be they old or
the expiration of that period, the knowledge of the invention inures to the people,
new; on the construction and use of ploughs or watches or churns; or on the
who are thus enabled to practice it and profit by its use." 17
mixture and application of colors for painting or dyeing; or on the mode of
The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention; second, it drawing lines to produce the effect of perspective, would be the subject of
promotes disclosures of inventions to stimulate further innovation and to permit the public to practice the copyright; but no one would contend that the copyright of the treatise would give

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the exclusive right to the art or manufacture described therein. The copyright of the
book, if not pirated from other works, would be valid without regard to the novelty
or want of novelty of its subject matter. The novelty of the art or thing described or
explained has nothing to do with the validity of the copyright. To give to the
author of the book an exclusive property in the art described therein, when no
examination of its novelty has ever been officially made, would be a surprise and a
fraud upon the public. That is the province of letters patent, not of copyright. The
claim to an invention of discovery of an art or manufacture must be subjected to
the examination of the Patent Office before an exclusive right therein can be
obtained; and a patent from the government can only secure it.
The difference between the two things, letters patent and copyright, may be
illustrated by reference to the subjects just enumerated. Take the case of medicines.
Certain mixtures are found to be of great value in the healing art. If the discoverer
writes and publishes a book on the subject (as regular physicians generally do), he
gains no exclusive right to the manufacture and sale of the medicine; he gives that
to the public. If he desires to acquire such exclusive right, he must obtain a patent
for the mixture as a new art, manufacture or composition of matter. He may
copyright his book, if he pleases; but that only secures to him the exclusive right of
printing and publishing his book. So of all other inventions or discoveries.
The copyright of a book on perspective, no matter how many drawings and
illustrations it may contain, gives no exclusive right to the modes of drawing
described, though they may never have been known or used before. By publishing
the book without getting a patent for the art, the latter is given to the public.
xxx xxx xxx
Now, whilst no one has a right to print or publish his book, or any material part
thereof, as a book intended to convey instruction in the art, any person may
practice and use the art itself which he has described and illustrated therein. The
use of the art is a totally different thing from a publication of the book explaining
it. The copyright of a book on bookkeeping cannot secure the exclusive right to
make, sell and use account books prepared upon the plan set forth in such book.
Whether the art might or might not have been patented, is a question, which is not
before us. It was not patented, and is open and free to the use of the public. And, of
course, in using the art, the ruled lines and headings of accounts must necessarily
be used as incident to it.
The plausibility of the claim put forward by the complainant in this case arises
from a confusion of ideas produced by the peculiar nature of the art described in
the books, which have been made the subject of copyright. In describing the art,
the illustrations and diagrams employed happened to correspond more closely than
usual with the actual work performed by the operator who uses the art. . . . The
description of the art in a book, though entitled to the benefit of copyright, lays no
foundation for an exclusive claim to the art itself. The object of the one is
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Atty. Busmente
explanation; the object of the other is use. The former may be secured by
copyright. The latter can only be secured, if it can be secured at all, by letters
patent." (italics supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark "Poster Ads" which petitioner's president said was
a contraction of "poster advertising." P & D was able to secure a trademark certificate for it, but one
where the goods specified were "stationeries such as letterheads, envelopes, calling cards and
newsletters." 22 Petitioner admitted it did not commercially engage in or market these goods. On the
contrary, it dealt in electrically operated backlit advertising units and the sale of advertising spaces
thereon, which, however, were not at all specified in the trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate
Court, 23 where we, invoking Section 20 of the old Trademark Law, ruled that "the certificate of
registration issued by the Director of Patents can confer (upon petitioner) the exclusive right to use its
own symbol only to those goods specified in the certificate, subject to any conditions and limitations
specified in the certificate. . . . . One who has adopted and used a trademark on his goods does not
prevent the adoption and use of the same trademark by others for products which are of a different
description." 24 Faberge, Inc. was correct and was in fact recently reiterated in Canon Kabushiki Kaisha
vs. Court of Appeals. 25
Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D to secure
a trademark registration for specific use on the light boxes meant that there could not have been any
trademark infringement since registration was an essential element thereof.
ON THE ISSUE OF UNFAIR COMPETITION
If at all, the cause of action should have been for unfair competition, a situation which was possible even
if P & D had no registration. 26 However, while the petitioner's complaint in the RTC also cited unfair
competition, the trial court did not find private respondents liable therefor. Petitioner did not appeal this
particular point; hence, it cannot now revive its claim of unfair competition.
But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair
competition.
By the nature of things, there can be no unfair competition under the law on copyrights although it is
applicable to disputes over the use of trademarks. Even a name or phrase incapable of appropriation as a
trademark or tradename may, by long and exclusive use by a business (such that the name or phrase
becomes associated with the business or product in the mind of the purchasing public), be entitled to
protection against unfair competition. 27 In this case, there was no evidence that P & D's use of "Poster
Ads" was distinctive or well-known. As noted by the Court of Appeals, petitioner's expert witnesses
himself had testified that "'Poster Ads' was too generic a name. So it was difficult to identify it with any
company, honestly speaking." 28 This crucial admission by its own expert witness that "Poster Ads"
could not be associated with P & D showed that, in the mind of the public, the goods and services
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carrying the trademark "Poster Ads" could not be distinguished from the goods and services of other
entities.
This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was generic
and incapable of being used as a trademark because it was used in the field of poster advertising, the very
business engaged in by petitioner. "Secondary meaning" means that a word or phrase originally incapable
of exclusive appropriation with reference to an article in the market (because it is geographically or
otherwise descriptive) might nevertheless have been used for so long and so exclusively by one producer
with reference to his article that, in the trade and to that branch of the purchasing public, the word or
phrase has come to mean that the article was his property. 29 The admission by petitioner's own expert
witness that he himself could not associate "Poster Ads" with petitioner P & D because it was "too
generic" definitely precluded the application of this exception.
Having discussed the most important and critical issues, we see no need to belabor the rest.
All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the
Regional Trial Court of Makati City. ITSaHC
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May 22,
2001 is AFFIRMED in toto.
SO ORDERED.
3. ABC-CBN v. PMMSI, Jan. 19, 2009 [G.R. Nos. 175769-70. January 19, 2009.]
Facts:
Philippine Multi-Media System, Inc. (PMSI), operator of Dream Broadcsating System, delivers a digital
direct-to-home (DTH) television satellite to its subscribers all over the Philippines, was granted a
legislative franchise under Republic Act 8630 and was given a Provisional Authority by the National
Telecommunications Commission (NTC) to install, operate and maintain a nationwide DTH satellite
service. When it commenced operations, it offered as part of its program line-up, together with other
paid premium program channels, ABS-CBN Channels 2 and 23, NBN, Channel 4, ABC, Channel 5,
GMA, Channel 7, RPN, Channel 9, and IBC, Channel 13, pursuant to Memorandum Circular 4-08-88
which mandated all cable television system operators, operating within the Grade A and B
CONTOURS to carry out the television signals of the authorized television broadcast stations.
ABS-CBN Broadcasting Corporation (ABS-CBN), a licensed television and radio broadcasting
network, demanded PMSI to cease and desist from rebroadcasting Channels 2 and 23. In its reply,
PMSI contended that the rebroadcasting was in accordance with the authority granted by NTC under
its obligations under NTC MC 4-08-88.
Negotiations were ensued between the parties in an effort to reach a settlement; however, the same was
terminated by ABS-CBN allegedly due to PMSIs inability to ensure the prevention of illegal
retransmission and further rebroadcast of its signals, as well as the adverse effect of the
rebroadcasts on the business operations of its regional television stations.
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ABS-CBN filed with the Intellectual Property Rights Office (IPO) a complaint for Violation of Laws
Involving Property Rights, with Prayer for the Issuance of a Temporary Restraining Order and/or Writ
of Preliminary Injunction alleging that PMSIs unauthorized rebroadcasting of Channels 2 and 23
infringed on its broadcasting rights and copyright. The TRO was granted by the Bureau of Legal Affairs
(BLA) of IPO. PMSI, pursuant to the TRO, suspended the retransmission of PMSI of Channels 2 and 23
and likewise filed a petition for certiorari with the Court of Appeals. The Court of Appeals granted the
petition of PMSI and reversed the decision of the BLA. ABS-CBN filed its appeal however it was
dismissed by the Court of Appeals. Furthermore, ABS-CBNs motion for reconsideration was denied.
Issue:
1. Whether or not PMSI violated the Laws on Property Rights.
2. Whether or not the issuance MC 4-08-88 by the NTC is a valid exercise of the police power of the
State.
Held:
1. NO. PMSI did not violate the Laws on Property Rights because it is not engaged in rebroadcasting
Channels 2 and 23. Rebroadcasting has been defined as the simultaneous broadcasting by one
broadcasting organization of the broadcast of another broadcasting organization. It is also the
transmission by wireless means for the public reception of sounds or of images or of representations
thereof; such transmission by satellite is also broadcasting where the means for decrypting are
provided to the public by the broadcasting organization or with its consent. PMSI is only engaged in
the carrying of signals of ABS-CBN coming from ABS-CBN and transmitting signals. PMSI is not the
origin nor does it claim to be the origin of the programs broadcasted by the ABS-CBN. PMSI did not
make and transmit on its own but merely carried the existing signals of the ABS-CBN. When PMSI
subscribers view ABS-CBNs programs in Channels 2 and 23, they know that the origin thereof was the
ABS-CBN.
The nature of broadcasting is to scatter the signals in its widest area of coverage as possible. On this
score, it may be said that making public means that accessibility is undiscriminating as long as it is
within the range of the transmitter and equipment of the broadcaster. That the medium through which
the PMSI carries the ABS-CBNs signal, that is via satellite, does not diminish the fact that it operates
and functions as a cable television. It remains that the PMSIs transmission of signals via its DTH
satellite television service cannot be considered within the purview of broadcasting.
Furthermore, there is no rebroadcasting on the part of the PMSI of the ABS-CBMs programs on
Channels 2 and 23, as defined under the Rome Convention, which defines rebroadcasting as the
simultaneous broadcasting by one broadcasting organization of the broadcast of another broadcasting
organization. ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which
the viewers receive in its unaltered form. PMSI does not produce, select, or determine the programs to
be shown in Channels 2 and 23. Likewise, it does not pass itself off as the origin or author of such
programs. Insofar as Channels 2 and 23 are concerned, PMSI merely retransmits the same in
accordance with Memorandum Circular 04-08-88. With regard to its premium channels, it buys the
channels from content providers and transmits on an as-is basis to its viewers. Clearly, PMSI does not
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perform the functions of a broadcasting organization; thus, it cannot be said that it is engaged in
rebroadcasting Channels 2 and 23.
Therefore, the retransmission of ABS-CBNs signals by PMSI which functions essentially as a cable
television does not constitute rebroadcasting in violation of the formers intellectual property rights
under the IP Code.
2. YES. The law on copyright is not absolute. The carriage of ABS-CBNs signals by virtue of the must-
carry rule in Memorandum Circular No. 04-08-88 is under the direction and control of the government
though the NTC which is vested with exclusive jurisdiction to supervise, regulate and control
telecommunications and broadcast services/facilities in the Philippines. The imposition of the must-
carry rule is within the NTCs power to promulgate rules and regulations, as public safety and interest
may require, to encourage a larger and more effective use of communications, radio and television
broadcasting facilities, and to maintain effective competition among private entities in these activities
whenever the Commission finds it reasonably feasible.
The Must-Carry Rule is in consonance with the principles and objectives underlying Executive Order
No. 436, to wit:
The Filipino people must be given wider access to more sources of news, information, education, sports
event and entertainment programs other than those provided for by mass media and afforded television
programs to attain a well informed, well-versed and culturally refined citizenry and enhance their socio-
economic growth.
Moreover, radio and television waves are mere franchised which may be reasonably burdened with
some form of public service. It is a privilege subject, among other things, to amendment by Congress in
accordance with the constitutional provision that any such franchise or right granted . . . shall be
subject to amendment, alteration or repeal by the Congress when the common good so requires.
The must carry rule is a valid exercise of the police power of the State. It favors both broadcasting
organizations and the public. It prevents cable television companies from excluding broadcasting
organization especially in those places not reached by signal. Also, the rule prevents cable television
companies from depriving viewers in far-flung areas the enjoyment of programs available to city
viewers. In fact, this Office finds the rule more burdensome on the part of the cable television
companies. The latter carries the television signals and shoulders the costs without any recourse of
charging. On the other hand, the signals that are carried by cable television companies are dispersed and
scattered by the television stations and anybody with a television set is free to pick them up.
ABS-CBN BROADCASTING CORPORATION, petitioner, vs. PHILIPPINE
MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA
(ANG BIAO), MANUEL F. ABELLADA, RAUL B. DE MESA, AND
ALOYSIUS M. COLAYCO, respondents.
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This petition for review on certiorari 1 assails the July 12, 2006 Decision 2 of the Court of Appeals
in CA-G.R. SP Nos. 88092 and 90762, which affirmed the December 20, 2004 Decision of the
Director-General of the Intellectual Property Office (IPO) in Appeal No. 10-2004-0002. Also
assailed is the December 11, 2006 Resolution 3 denying the motion for reconsideration.
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is licensed under the laws of the
Republic of the Philippines to engage in television and radio broadcasting. 4 It broadcasts television
programs by wireless means to Metro Manila and nearby provinces, and by satellite to provincial
stations through Channel 2 on Very High Frequency (VHF) and Channel 23 on Ultra High
Frequency (UHF). The programs aired over Channels 2 and 23 are either produced by ABS-CBN or
purchased from or licensed by other producers.
ABS-CBN also owns regional television stations which pattern their programming in accordance
with perceived demands of the region. Thus, television programs shown in Metro Manila and nearby
provinces are not necessarily shown in other provinces. cDIHES
Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of Dream Broadcasting
System. It delivers digital direct-to-home (DTH) television via satellite to its subscribers all over the
Philippines. Herein individual respondents, Cesar G. Reyes, Francis Chua, Manuel F. Abellada, Raul
B. De Mesa, and Aloysius M. Colayco, are members of PMSI's Board of Directors.
PMSI was granted a legislative franchise under Republic Act No. 8630 5 on May 7, 1998 and was
given a Provisional Authority by the National Telecommunications Commission (NTC) on February
1, 2000 to install, operate and maintain a nationwide DTH satellite service. When it commenced
operations, it offered as part of its program line-up ABS-CBN Channels 2 and 23, NBN, Channel 4,
ABC Channel 5, GMA Channel 7, RPN Channel 9, and IBC Channel 13, together with other paid
premium program channels.
However, on April 25, 2001, 6 ABS-CBN demanded for PMSI to cease and desist from
rebroadcasting Channels 2 and 23. On April 27, 2001, 7 PMSI replied that the rebroadcasting was in
accordance with the authority granted it by NTC and its obligation under NTC Memorandum
Circular No. 4-08-88, 8 Section 6.2 of which requires all cable television system operators operating
in a community within Grade "A" or "B" contours to carry the television signals of the authorized
television broadcast stations. 9 HDAaIc
Thereafter, negotiations ensued between the parties in an effort to reach a settlement; however, the
negotiations were terminated on April 4, 2002 by ABS-CBN allegedly due to PMSI's inability to
ensure the prevention of illegal retransmission and further rebroadcast of its signals, as well as the
adverse effect of the rebroadcasts on the business operations of its regional television stations. 10
On May 13, 2002, ABS-CBN filed with the IPO a complaint for "Violation of Laws Involving
Property Rights, with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction", which was docketed as IPV No. 10-2002-0004. It alleged that PMSI's
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unauthorized rebroadcasting of Channels 2 and 23 infringed on its broadcasting rights and
copyright. EACIcH
On July 2, 2002, the Bureau of Legal Affairs (BLA) of the IPO granted ABS-CBN's application for a
temporary restraining order. On July 12, 2002, PMSI suspended its retransmission of Channels 2 and
23 and likewise filed a petition for certiorari with the Court of Appeals, which was docketed as CA-
G.R. SP No. 71597.
Subsequently, PMSI filed with the BLA a Manifestation reiterating that it is subject to the must-
carry rule under Memorandum Circular No. 04-08-88. It also submitted a letter dated December 20,
2002 of then NTC Commissioner Armi Jane R. Borje to PMSI stating as follows:
This refers to your letter dated December 16, 2002 requesting for regulatory
guidance from this Commission in connection with the application and coverage of
NTC Memorandum Circular No. 4-08-88, particularly Section 6 thereof, on
mandatory carriage of television broadcast signals, to the direct-to-home (DTH)
pay television services of Philippine Multi-Media System, Inc. (PMSI). IcESaA
Preliminarily, both DTH pay television and cable television services are broadcast
services, the only difference being the medium of delivering such services (i.e., the
former by satellite and the latter by cable). Both can carry broadcast signals to the
remote areas, thus enriching the lives of the residents thereof through the
dissemination of social, economic, educational information and cultural programs.
The DTH pay television services of PMSI is equipped to provide nationwide DTH
satellite services. Concededly, PMSI's DTH pay television services covers very
much wider areas in terms of carriage of broadcast signals, including areas not
reachable by cable television services thereby providing a better medium of
dissemination of information to the public.
In view of the foregoing and the spirit and intent of NTC memorandum
Circular No. 4-08-88, particularly section 6 thereof, on mandatory carriage of
television broadcast signals, DTH pay television services should be deemed
covered by such NTC Memorandum Circular. ACaTIc
For your guidance. (Emphasis added) 11
On August 26, 2003, PMSI filed another Manifestation with the BLA that it received a letter dated
July 24, 2003 from the NTC enjoining strict and immediate compliance with the must-carry rule
under Memorandum Circular No. 04-08-88, to wit:
Dear Mr. Abellada:
Last July 22, 2003, the National Telecommunications Commission (NTC) received
a letter dated July 17, 2003 from President/COO Rene Q. Bello of the International
Broadcasting Corporation (IBC-Channel 13) complaining that your company,
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Atty. Busmente
Dream Broadcasting System, Inc., has cut-off, without any notice or explanation
whatsoever, to air the programs of IBC-13, a free-to-air television, to the detriment
of the public.
We were told that, until now, this has been going on.
Please be advised that as a direct broadcast satellite operator, operating a
direct-to-home (DTH) broadcasting system, with a provisional authority (PA)
from the NTC, your company, along with cable television operators, are
mandated to strictly comply with the existing policy of NTC on mandatory
carriage of television broadcast signals as provided under Memorandum
Circular No. 04-08-88, also known as the Revised Rules and Regulations
Governing Cable Television System in the Philippines.
This mandatory coverage provision under Section 6.2 of said Memorandum
Circular, requires all cable television system operators, operating in a
community within the Grade "A" or "B" contours to "must-carry" the
television signals of the authorized television broadcast stations, one of which
is IBC-13. Said directive equally applies to your company as the circular was
issued to give consumers and the public a wider access to more sources of
news, information, entertainment and other programs/contents.
This Commission, as the governing agency vested by laws with the jurisdiction,
supervision and control over all public services, which includes direct broadcast
satellite operators, and taking into consideration the paramount interest of the
public in general, hereby directs you to immediately restore the signal of IBC-13 in
your network programs, pursuant to existing circulars and regulations of the
Commission. CcSTHI
For strict compliance. (Emphasis added) 12
Meanwhile, on October 10, 2003, the NTC issued Memorandum Circular No. 10-10-2003, entitled
"Implementing Rules and Regulations Governing Community Antenna/Cable Television (CATV)
and Direct Broadcast Satellite (DBS) Services to Promote Competition in the Sector". Article 6,
Section 8 thereof states:
As a general rule, the reception, distribution and/or transmission by any
CATV/DBS operator of any television signals without any agreement with or
authorization from program/content providers are prohibited.
On whether Memorandum Circular No. 10-10-2003 amended Memorandum Circular No. 04-08-88,
the NTC explained to PMSI in a letter dated November 3, 2003 that:
To address your query on whether or not the provisions of MC 10-10-2003 would
have the effect of amending the provisions of MC 4-08-88 on mandatory carriage
of television signals, the answer is in the negative. ATEHDc
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xxx xxx xxx
The Commission maintains that, MC 4-08-88 remains valid, subsisting and
enforceable.
Please be advised, therefore, that as duly licensed direct-to-home satellite
television service provider authorized by this Commission, your company
continues to be bound by the guidelines provided for under MC 04-08-88,
specifically your obligation under its mandatory carriage provisions, in
addition to your obligations under MC 10-10-2003. (Emphasis added)
Please be guided accordingly. 13
On December 22, 2003, the BLA rendered a decision 14 finding that PMSI infringed the
broadcasting rights and copyright of ABS-CBN and ordering it to permanently cease and desist from
rebroadcasting Channels 2 and 23.
On February 6, 2004, PMSI filed an appeal with the Office of the Director-General of the IPO which
was docketed as Appeal No. 10-2004-0002. On December 23, 2004, it also filed with the Court of
Appeals a "Motion to Withdraw Petition; Alternatively, Memorandum of the Petition for Certiorari "
in CA-G.R. SP No. 71597, which was granted in a resolution dated February 17, 2005. CITaSA
On December 20, 2004, the Director-General of the IPO rendered a decision 15 in favor of PMSI,
the dispositive portion of which states:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED.
Accordingly, Decision No. 2003-01 dated 22 December 2003 of the Director of
Bureau of Legal Affairs is hereby REVERSED and SET ASIDE.
Let a copy of this Decision be furnished the Director of the Bureau of Legal
Affairs for appropriate action, and the records be returned to her for proper
disposition. The Documentation, Information and Technology Transfer Bureau is
also given a copy for library and reference purposes.
SO ORDERED. 16
Thus, ABS-CBN filed a petition for review with prayer for issuance of a temporary restraining order
and writ of preliminary injunction with the Court of Appeals, which was docketed as CA-G.R. SP
No. 88092.
On July 18, 2005, the Court of Appeals issued a temporary restraining order. Thereafter, ABS-CBN
filed a petition for contempt against PMSI for continuing to rebroadcast Channels 2 and 23 despite
the restraining order. The case was docketed as CA- G.R. SP No. 90762.
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On November 14, 2005, the Court of Appeals ordered the consolidation of CA-G.R. SP Nos. 88092
and 90762.
In the assailed Decision dated July 12, 2006, the Court of Appeals sustained the findings of the
Director-General of the IPO and dismissed both petitions filed by ABS-CBN. 17
ABS-CBN's motion for reconsideration was denied, hence, this petition.
ABS-CBN contends that PMSI's unauthorized rebroadcasting of Channels 2 and 23 is an
infringement of its broadcasting rights and copyright under the Intellectual Property Code (IP
Code); 18 that Memorandum Circular No. 04-08-88 excludes DTH satellite television operators; that
the Court of Appeals' interpretation of the must-carry rule violates Section 9 of Article III 19of the
Constitution because it allows the taking of property for public use without payment of just
compensation; that the Court of Appeals erred in dismissing the petition for contempt docketed as
CA-G.R. SP No. 90762 without requiring respondents to file comment.
Respondents, on the other hand, argue that PMSI's rebroadcasting of Channels 2 and 23 is
sanctioned by Memorandum Circular No. 04-08-88; that the must-carry rule under the
Memorandum Circular is a valid exercise of police power; and that the Court of Appeals correctly
dismissed CA-G.R. SP No. 90762 since it found no need to exercise its power of contempt.
After a careful review of the facts and records of this case, we affirm the findings of the Director-
General of the IPO and the Court of Appeals.
There is no merit in ABS-CBN's contention that PMSI violated its broadcaster's rights under Section
211 of the IP Code which provides in part:
Chapter XIV
BROADCASTING ORGANIZATIONS
Sec. 211. Scope of Right. Subject to the provisions of Section 212,
broadcasting organizations shall enjoy the exclusive right to carry out,
authorize or prevent any of the following acts: AcIaST
211.1. The rebroadcasting of their broadcasts;
xxx xxx xxx
Neither is PMSI guilty of infringement of ABS-CBN's copyright under Section 177 of the IP Code
which states that copyright or economic rights shall consist of the exclusive right to carry out,
authorize or prevent the public performance of the work (Section 177.6), and other communication
to the public of the work (Section 177.7). 20
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Section 202.7 of the IP Code defines broadcasting as "the transmission by wireless means for the
public reception of sounds or of images or of representations thereof; such transmission by satellite
is also 'broadcasting' where the means for decrypting are provided to the public by the broadcasting
organization or with its consent".
On the other hand, rebroadcasting as defined in Article 3 (g) of the International Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting Organizations, otherwise
known as the 1961 Rome Convention, of which the Republic of the Philippines is a signatory, 21 is
"the simultaneous broadcasting by one broadcasting organization of the broadcast of another
broadcasting organization".
The Director-General of the IPO correctly found that PMSI is not engaged in rebroadcasting and
thus cannot be considered to have infringed ABS-CBN's broadcasting rights and copyright, thus:
That the Appellant's [herein respondent PMSI] subscribers are able to view
Appellee's [herein petitioner ABS-CBN] programs (Channels 2 and 23) at the same
time that the latter is broadcasting the same is undisputed. The question however
is, would the Appellant in doing so be considered engaged in broadcasting. Section
202.7 of the IP Code states that broadcasting means
"the transmission by wireless means for the public reception of sounds or
of images or of representations thereof; such transmission by satellite is
also 'broadcasting' where the means for decrypting are provided to the
public by the broadcasting organization or with its consent." ETDAaC
Section 202.7 of the IP Code, thus, provides two instances wherein there is
broadcasting, to wit:
1. The transmission by wireless means for the public reception of
sounds or of images or of representations thereof; and
2. The transmission by satellite for the public reception of sounds
or of images or of representations thereof where the means for
decrypting are provided to the public by the broadcasting
organization or with its consent.
It is under the second category that Appellant's DTH satellite television service
must be examined since it is satellite-based. The elements of such category are as
follows: HIETAc
1. There is transmission of sounds or images or of representations
thereof;
2. The transmission is through satellite;
3. The transmission is for public reception; and
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4. The means for decrypting are provided to the public by the
broadcasting organization or with its consent.
It is only the presence of all the above elements can a determination that the DTH
is broadcasting and consequently, rebroadcasting Appellee's signals in violation of
Sections 211 and 177 of the IP Code, may be arrived at.
Accordingly, this Office is of the view that the transmission contemplated under
Section 202.7 of the IP Code presupposes that the origin of the signals is the
broadcaster. Hence, a program that is broadcasted is attributed to the broadcaster.
In the same manner, the rebroadcasted program is attributed to the rebroadcaster.
In the case at hand, Appellant is not the origin nor does it claim to be the origin of
the programs broadcasted by the Appellee. Appellant did not make and transmit on
its own but merely carried the existing signals of the Appellee. When Appellant's
subscribers view Appellee's programs in Channels 2 and 23, they know that the
origin thereof was the Appellee.
Aptly, it is imperative to discern the nature of broadcasting. When a broadcaster
transmits, the signals are scattered or dispersed in the air. Anybody may pick-up
these signals. There is no restriction as to its number, type or class of recipients. To
receive the signals, one is not required to subscribe or to pay any fee. One only has
to have a receiver, and in case of television signals, a television set, and to tune-in
to the right channel/frequency. The definition of broadcasting, wherein it is
required that the transmission is wireless, all the more supports this discussion.
Apparently, the undiscriminating dispersal of signals in the air is possible only
through wireless means. The use of wire in transmitting signals, such as cable
television, limits the recipients to those who are connected. Unlike wireless
transmissions, in wire-based transmissions, it is not enough that one wants to be
connected and possesses the equipment. The service provider, such as cable
television companies may choose its subscribers. TcDIaA
The only limitation to such dispersal of signals in the air is the technical capacity
of the transmitters and other equipment employed by the broadcaster. While the
broadcaster may use a less powerful transmitter to limit its coverage, this is merely
a business strategy or decision and not an inherent limitation when transmission is
through cable.
Accordingly, the nature of broadcasting is to scatter the signals in its widest area of
coverage as possible. On this score, it may be said that making public means that
accessibility is undiscriminating as long as it [is] within the range of the transmitter
and equipment of the broadcaster. That the medium through which the Appellant
carries the Appellee's signal, that is via satellite, does not diminish the fact that it
operates and functions as a cable television. It remains that the Appellant's
transmission of signals via its DTH satellite television service cannot be
considered within the purview of broadcasting. . . .
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xxx xxx xxx
This Office also finds no evidence on record showing that the Appellant has
provided decrypting means to the public indiscriminately. Considering the nature
of this case, which is punitive in fact, the burden of proving the existence of the
elements constituting the acts punishable rests on the shoulder of the complainant.
Accordingly, this Office finds that there is no rebroadcasting on the part of the
Appellant of the Appellee's programs on Channels 2 and 23, as defined under the
Rome Convention. 22
Under the Rome Convention, rebroadcasting is "the simultaneous broadcasting by one broadcasting
organization of the broadcast of another broadcasting organization." The Working Paper 23 prepared
by the Secretariat of the Standing Committee on Copyright and Related Rights defines broadcasting
organizations as "entities that take the financial and editorial responsibility for the selection and
arrangement of, and investment in, the transmitted content". 24 Evidently, PMSI would not qualify
as a broadcasting organization because it does not have the aforementioned responsibilities imposed
upon broadcasting organizations, such as ABS-CBN.
ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which the
viewers receive in its unaltered form. PMSI does not produce, select, or determine the programs to
be shown in Channels 2 and 23. Likewise, it does not pass itself off as the origin or author of such
programs. Insofar as Channels 2 and 23 are concerned, PMSI merely retransmits the same in
accordance with Memorandum Circular 04-08-88. With regard to its premium channels, it buys the
channels from content providers and transmits on an as-is basis to its viewers. Clearly, PMSI does
not perform the functions of a broadcasting organization; thus, it cannot be said that it is engaged in
rebroadcasting Channels 2 and 23.
The Director-General of the IPO and the Court of Appeals also correctly found that PMSI's services
are similar to a cable television system because the services it renders fall under cable
"retransmission", as described in the Working Paper, to wit: cDIHES
(G) Cable Retransmission
47. When a radio or television program is being broadcast, it can be
retransmitted to new audiences by means of cable or wire. In the early days
of cable television, it was mainly used to improve signal reception,
particularly in so-called "shadow zones", or to distribute the signals in large
buildings or building complexes. With improvements in technology, cable
operators now often receive signals from satellites before retransmitting
them in an unaltered form to their subscribers through cable.
48. In principle, cable retransmission can be either simultaneous with the
broadcast over-the-air or delayed (deferred transmission) on the basis of a
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fixation or a reproduction of a fixation. Furthermore, they might be unaltered
or altered, for example through replacement of commercials, etc. In general,
however, the term "retransmission" seems to be reserved for such
transmissions which are both simultaneous and unaltered.
49. The Rome Convention does not grant rights against unauthorized
cable retransmission. Without such a right, cable operators can
retransmit both domestic and foreign over the air broadcasts
simultaneously to their subscribers without permission from the
broadcasting organizations or other rightholders and without obligation
to pay remuneration. 25 (Emphasis added)
Thus, while the Rome Convention gives broadcasting organizations the right to authorize or prohibit the
rebroadcasting of its broadcast, however, this protection does not extend to cable retransmission. The
retransmission of ABS-CBN's signals by PMSI which functions essentially as a cable television
does not therefore constitute rebroadcasting in violation of the former's intellectual property rights under
the IP Code. ISAcHD
It must be emphasized that the law on copyright is not absolute. The IP Code provides that:
Sec. 184. Limitations on Copyright.
184.1. Notwithstanding the provisions of Chapter V, the following acts shall
not constitute infringement of copyright:
xxx xxx xxx
(h) The use made of a work by or under the direction or control of the
Government, by the National Library or by educational, scientific or
professional institutions where such use is in the public interest and is
compatible with fair use;
The carriage of ABS-CBN's signals by virtue of the must-carry rule in Memorandum Circular No.
04-08-88 is under the direction and control of the government through the NTC which is vested with
exclusive jurisdiction to supervise, regulate and control telecommunications and broadcast
services/facilities in the Philippines. 26 The imposition of the must-carry rule is within the NTC's
power to promulgate rules and regulations, as public safety and interest may require, to encourage a
larger and more effective use of communications, radio and television broadcasting facilities, and to
maintain effective competition among private entities in these activities whenever the Commission
finds it reasonably feasible. 27 As correctly observed by the Director-General of the IPO: IHCacT
Accordingly, the "Must-Carry Rule" under NTC Circular No. 4-08-88 falls under
the foregoing category of limitations on copyright. This Office agrees with the
Appellant [herein respondent PMSI] that the "Must-Carry Rule" is in consonance
with the principles and objectives underlying Executive Order No. 436, 28 to wit:
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The Filipino people must be given wider access to more sources of news,
information, education, sports event and entertainment programs other
than those provided for by mass media and afforded television programs
to attain a well informed, well-versed and culturally refined citizenry and
enhance their socio-economic growth:
WHEREAS, cable television (CATV) systems could support or
supplement the services provided by television broadcast facilities, local
and overseas, as the national information highway to the countryside. 29
The Court of Appeals likewise correctly observed that:
[T]he very intent and spirit of the NTC Circular will prevent a situation whereby
station owners and a few networks would have unfettered power to make time
available only to the highest bidders, to communicate only their own views on
public issues, people, and to permit on the air only those with whom they agreed
contrary to the state policy that the (franchise) grantee like the petitioner,
private respondent and other TV station owners, shall provide at all times sound
and balanced programming and assist in the functions of public information and
education. AEHTIC
This is for the first time that we have a structure that works to accomplish explicit
state policy goals. 30
Indeed, intellectual property protection is merely a means towards the end of making society benefit
from the creation of its men and women of talent and genius. This is the essence of intellectual
property laws, and it explains why certain products of ingenuity that are concealed from the public
are outside the pale of protection afforded by the law. It also explains why the author or the creator
enjoys no more rights than are consistent with public welfare. 31
Further, as correctly observed by the Court of Appeals, the must-carry rule as well as the legislative
franchises granted to both ABS-CBN and PMSI are in consonance with state policies enshrined in
the Constitution, specifically Sections 9, 32 17, 33 and 24 34 of Article II on the Declaration of
Principles and State Policies. 35
ABS-CBN was granted a legislative franchise under Republic Act No. 7966, Section 1 of which
authorizes it "to construct, operate and maintain, for commercial purposes and in the public interest,
television and radio broadcasting in and throughout the Philippines . . . ." Section 4 thereof mandates
that it "shall provide adequate public service time to enable the government, through the said
broadcasting stations, to reach the population on important public issues; provide at all times sound
and balanced programming; promote public participation such as in community programming; assist
in the functions of public information and education . . . ."
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PMSI was likewise granted a legislative franchise under Republic Act No. 8630, Section 4 of which
similarly states that it "shall provide adequate public service time to enable the government, through
the said broadcasting stations, to reach the population on important public issues; provide at all
times sound and balanced programming; promote public participation such as in community
programming; assist in the functions of public information and education . . . ." Section 5, paragraph
2 of the same law provides that "the radio spectrum is a finite resource that is a part of the national
patrimony and the use thereof is a privilege conferred upon the grantee by the State and may be
withdrawn anytime, after due process". TDcAIH
In Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC, 36 the Court held that a franchise is
a mere privilege which may be reasonably burdened with some form of public service. Thus:
All broadcasting, whether by radio or by television stations, is licensed by the
government. Airwave frequencies have to be allocated as there are more
individuals who want to broadcast than there are frequencies to assign. A franchise
is thus a privilege subject, among other things, to amendment by Congress in
accordance with the constitutional provision that "any such franchise or right
granted . . . shall be subject to amendment, alteration or repeal by the Congress
when the common good so requires".
xxx xxx xxx
Indeed, provisions for COMELEC Time have been made by amendment of the
franchises of radio and television broadcast stations and, until the present case was
brought, such provisions had not been thought of as taking property without just
compensation. Art. XII, 11 of the Constitution authorizes the amendment of
franchises for "the common good". What better measure can be conceived for the
common good than one for free air time for the benefit not only of candidates but
even more of the public, particularly the voters, so that they will be fully informed
of the issues in an election? "[I]t is the right of the viewers and listeners, not the
right of the broadcasters, which is paramount".
Nor indeed can there be any constitutional objection to the requirement that
broadcast stations give free air time. Even in the United States, there are
responsible scholars who believe that government controls on broadcast media can
constitutionally be instituted to ensure diversity of views and attention to public
affairs to further the system of free expression. For this purpose, broadcast stations
may be required to give free air time to candidates in an election. Thus, Professor
Cass R. Sunstein of the University of Chicago Law School, in urging reforms in
regulations affecting the broadcast industry, writes: TAHcCI
xxx xxx xxx
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In truth, radio and television broadcasting companies, which are given franchises,
do not own the airwaves and frequencies through which they transmit broadcast
signals and images. They are merely given the temporary privilege of using them.
Since a franchise is a mere privilege, the exercise of the privilege may reasonably
be burdened with the performance by the grantee of some form of public
service. . . . 37
There is likewise no merit to ABS-CBN's claim that PMSI's carriage of its signals is for a
commercial purpose; that its being the country's top broadcasting company, the availability of its
signals allegedly enhances PMSI's attractiveness to potential customers; 38 or that the unauthorized
carriage of its signals by PMSI has created competition between its Metro Manila and regional
stations.
ABS-CBN presented no substantial evidence to prove that PMSI carried its signals for profit; or that
such carriage adversely affected the business operations of its regional stations. Except for the
testimonies of its witnesses, 39 no studies, statistical data or information have been submitted in
evidence.
Administrative charges cannot be based on mere speculation or conjecture. The complainant has the
burden of proving by substantial evidence the allegations in the complaint. 40 Mere allegation is not
evidence, and is not equivalent to proof. 41
Anyone in the country who owns a television set and antenna can receive ABS-CBN's signals for
free. Other broadcasting organizations with free-to-air signals such as GMA-7, RPN-9, ABC-5, and
IBC-13 can likewise be accessed for free. No payment is required to view the said
channels 42 because these broadcasting networks do not generate revenue from subscription from
their viewers but from airtime revenue from contracts with commercial advertisers and producers, as
well as from direct sales.
In contrast, cable and DTH television earn revenues from viewer subscription. In the case of PMSI,
it offers its customers premium paid channels from content providers like Star Movies, Star World,
Jack TV, and AXN, among others, thus allowing its customers to go beyond the limits of "Free TV
and Cable TV". 43 It does not advertise itself as a local channel carrier because these local channels
can be viewed with or without DTH television. CDTHSI
Relevantly, PMSI's carriage of Channels 2 and 23 is material in arriving at the ratings and audience
share of ABS-CBN and its programs. These ratings help commercial advertisers and producers
decide whether to buy airtime from the network. Thus, the must-carry rule is actually advantageous
to the broadcasting networks because it provides them with increased viewership which attracts
commercial advertisers and producers.
On the other hand, the carriage of free-to-air signals imposes a burden to cable and DTH television
providers such as PMSI. PMSI uses none of ABS-CBN's resources or equipment and carries the
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signals and shoulders the costs without any recourse of charging. 44 Moreover, such carriage of
signals takes up channel space which can otherwise be utilized for other premium paid channels.
There is no merit to ABS-CBN's argument that PMSI's carriage of Channels 2 and 23 resulted in
competition between its Metro Manila and regional stations. ABS-CBN is free to decide to pattern
its regional programming in accordance with perceived demands of the region; however, it cannot
impose this kind of programming on the regional viewers who are also entitled to the free-to-air
channels. It must be emphasized that, as a national broadcasting organization, one of ABS-CBN's
responsibilities is to scatter its signals to the widest area of coverage as possible. That it should limit
its signal reach for the sole purpose of gaining profit for its regional stations undermines public
interest and deprives the viewers of their right to access to information.
Indeed, television is a business; however, the welfare of the people must not be sacrificed in the
pursuit of profit. The right of the viewers and listeners to the most diverse choice of programs
available is paramount. 45 The Director-General correctly observed, thus:
The "Must-Carry Rule" favors both broadcasting organizations and the public. It
prevents cable television companies from excluding broadcasting organization
especially in those places not reached by signal. Also, the rule prevents cable
television companies from depriving viewers in far-flung areas the enjoyment of
programs available to city viewers. In fact, this Office finds the rule more
burdensome on the part of the cable television companies. The latter carries the
television signals and shoulders the costs without any recourse of charging. On the
other hand, the signals that are carried by cable television companies are dispersed
and scattered by the television stations and anybody with a television set is free to
pick them up. HCDAac
With its enormous resources and vaunted technological capabilities, Appellee's
[herein petitioner ABS-CBN] broadcast signals can reach almost every corner of
the archipelago. That in spite of such capacity, it chooses to maintain regional
stations, is a business decision. That the "Must-Carry Rule" adversely affects the
profitability of maintaining such regional stations since there will be competition
between them and its Metro Manila station is speculative and an attempt to
extrapolate the effects of the rule. As discussed above, Appellant's DTH satellite
television services is of limited subscription. There was not even a showing on part
of the Appellee the number of Appellant's subscribers in one region as compared to
non-subscribing television owners. In any event, if this Office is to engage in
conjecture, such competition between the regional stations and the Metro Manila
station will benefit the public as such competition will most likely result in the
production of better television programs." 46
All told, we find that the Court of Appeals correctly upheld the decision of the IPO Director-General
that PMSI did not infringe on ABS-CBN's intellectual property rights under the IP Code. The
findings of facts of administrative bodies charged with their specific field of expertise, are afforded
great weight by the courts, and in the absence of substantial showing that such findings are made
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from an erroneous estimation of the evidence presented, they are conclusive, and in the interest of
stability of the governmental structure, should not be disturbed. 47
Moreover, the factual findings of the Court of Appeals are conclusive on the parties and are not
reviewable by the Supreme Court. They carry even more weight when the Court of Appeals affirms
the factual findings of a lower fact-finding body, 48 as in the instant case.
There is likewise no merit to ABS-CBN's contention that the Memorandum Circular excludes from
its coverage DTH television services such as those provided by PMSI. Section 6.2 of the
Memorandum Circular requires all cable television system operators operating in a community
within Grade "A" or "B" contours to carry the television signals of the authorized television
broadcast stations. 49 The rationale behind its issuance can be found in the whereas clauses which
state: EaCSTc
Whereas, Cable Television Systems or Community Antenna Television (CATV)
have shown their ability to offer additional programming and to carry much
improved broadcast signals in the remote areas, thereby enriching the lives of the
rest of the population through the dissemination of social, economic, educational
information and cultural programs;
Whereas, the national government supports the promotes the orderly growth of the
Cable Television industry within the framework of a regulated fee enterprise,
which is a hallmark of a democratic society;
Whereas, public interest so requires that monopolies in commercial mass media
shall be regulated or prohibited, hence, to achieve the same, the cable TV industry
is made part of the broadcast media;
Whereas, pursuant to Act 3846 as amended and Executive Order 205 granting the
National Telecommunications Commission the authority to set down rules and
regulations in order to protect the public and promote the general welfare, the
National Telecommunications Commission hereby promulgates the following rules
and regulations on Cable Television Systems; SaIEcA
The policy of the Memorandum Circular is to carry improved signals in remote areas for the good of
the general public and to promote dissemination of information. In line with this policy, it is clear
that DTH television should be deemed covered by the Memorandum Circular. Notwithstanding the
different technologies employed, both DTH and cable television have the ability to carry improved
signals and promote dissemination of information because they operate and function in the same
way.
In its December 20, 2002 letter, 50 the NTC explained that both DTH and cable television services
are of a similar nature, the only difference being the medium of delivering such services. They can
carry broadcast signals to the remote areas and possess the capability to enrich the lives of the
residents thereof through the dissemination of social, economic, educational information and
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cultural programs. Consequently, while the Memorandum Circular refers to cable television, it
should be understood as to include DTH television which provides essentially the same services.
In Eastern Telecommunications Philippines, Inc. v. International Communication
Corporation, 51 we held:
The NTC, being the government agency entrusted with the regulation of activities
coming under its special and technical forte, and possessing the necessary rule-
making power to implement its objectives, is in the best position to interpret its
own rules, regulations and guidelines. The Court has consistently yielded and
accorded great respect to the interpretation by administrative agencies of their own
rules unless there is an error of law, abuse of power, lack of jurisdiction or grave
abuse of discretion clearly conflicting with the letter and spirit of the
law. 52 SEcADa
With regard to the issue of the constitutionality of the must-carry rule, the Court finds that its
resolution is not necessary in the disposition of the instant case. One of the essential requisites for a
successful judicial inquiry into constitutional questions is that the resolution of the constitutional
question must be necessary in deciding the case. 53 In Spouses Mirasol v. Court of Appeals, 54 we
held:
As a rule, the courts will not resolve the constitutionality of a law, if the
controversy can be settled on other grounds. The policy of the courts is to avoid
ruling on constitutional questions and to presume that the acts of the political
departments are valid, absent a clear and unmistakable showing to the contrary. To
doubt is to sustain. This presumption is based on the doctrine of separation of
powers. This means that the measure had first been carefully studied by the
legislative and executive departments and found to be in accord with the
Constitution before it was finally enacted and approved. 55
The instant case was instituted for violation of the IP Code and infringement of ABS-CBN's
broadcasting rights and copyright, which can be resolved without going into the constitutionality of
Memorandum Circular No. 04-08-88. As held by the Court of Appeals, the only relevance of the
circular in this case is whether or not compliance therewith should be considered manifestation of
lack of intent to commit infringement, and if it is, whether such lack of intent is a valid defense
against the complaint of petitioner. 56
The records show that petitioner assailed the constitutionality of Memorandum Circular No. 04-08-
88 by way of a collateral attack before the Court of Appeals. In Philippine National Bank v.
Palma, 57 we ruled that for reasons of public policy, the constitutionality of a law cannot be
collaterally attacked. A law is deemed valid unless declared null and void by a competent court;
more so when the issue has not been duly pleaded in the trial court. 58
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As a general rule, the question of constitutionality must be raised at the earliest opportunity so that if
not raised in the pleadings, ordinarily it may not be raised in the trial, and if not raised in the trial
court, it will not be considered on appeal. 59 In Philippine Veterans Bank v. Court of Appeals, 60 we
held:
We decline to rule on the issue of constitutionality as all the requisites for the
exercise of judicial review are not present herein. Specifically, the question of
constitutionality will not be passed upon by the Court unless, at the first
opportunity, it is properly raised and presented in an appropriate case,
adequately argued, and is necessary to a determination of the case,
particularly where the issue of constitutionality is the verylis mota presented. .
. . 61
Finally, we find that the dismissal of the petition for contempt filed by ABS-CBN is in order.
Indirect contempt may either be initiated (1) motu proprio by the court by issuing an order or any
other formal charge requiring the respondent to show cause why he should not be punished for
contempt or (2) by the filing of a verified petition, complying with the requirements for filing
initiatory pleadings. 62
ABS-CBN filed a verified petition before the Court of Appeals, which was docketed CA G.R. SP
No. 90762, for PMSI's alleged disobedience to the Resolution and Temporary Restraining Order,
both dated July 18, 2005, issued in CA-G.R. SP No. 88092. However, after the cases were
consolidated, the Court of Appeals did not require PMSI to comment on the petition for contempt. It
ruled on the merits of CA-G.R. SP No. 88092 and ordered the dismissal of both petitions.
ABS-CBN argues that the Court of Appeals erred in dismissing the petition for contempt without
having ordered respondents to comment on the same. Consequently, it would have us reinstate CA-
G.R. No. 90762 and order respondents to show cause why they should not be held in contempt.
It bears stressing that the proceedings for punishment of indirect contempt are criminal in nature.
The modes of procedure and rules of evidence adopted in contempt proceedings are similar in nature
to those used in criminal prosecutions. 63 While it may be argued that the Court of Appeals should
have ordered respondents to comment, the issue has been rendered moot in light of our ruling on the
merits. To order respondents to comment and have the Court of Appeals conduct a hearing on the
contempt charge when the main case has already been disposed of in favor of PMSI would be
circuitous. Where the issues have become moot, there is no justiciable controversy, thereby
rendering the resolution of the same of no practical use or value. 64 aTcSID
WHEREFORE, the petition is DENIED. The July 12, 2006 Decision of the Court of Appeals in CA-
G.R. SP Nos. 88092 and 90762, sustaining the findings of the Director-General of the Intellectual
Property Office and dismissing the petitions filed by ABS-CBN Broadcasting Corporation, and the
December 11, 2006 Resolution denying the motion for reconsideration, are AFFIRMED.
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SO ORDERED.
4. Mc Donalds Corp. vs. L. C. Big Mak Burger, Inc. 437 SCRA 10, 37 (2004)
PETITIONERS CLAIM:
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.
RESPONDENTS CLAIMS:
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. 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.
ISSUE
WHETHER OR NOT BIG MAK IS LIABLE FOR TRADEMARK INFRINGEMENT (YES)
HELD:
Section 22 ("Section 22) of Republic Act No. 166, as amended ("RA 166"), the law applicable to this
case, defines trademark infringement as follows:
Infringement, what constitutes. Any person who [1] 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 ...
XXXXX
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." Of these, it is the element of
likelihood of confusion that is the gravamen of trademark infringement. 35
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WHETHER OR NOT THE CLAIM OF OWNERSHIP OF BIG MAC OF MCDONALDS IS
VALID
A mark is valid if it is "distinctive" and thus not barred from registration under Section 4 36 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
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
of goods. 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. "Big Mac" falls under
the class 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.
On Types of Confusion
Two types of confusion, thus:
[Rudolf] Callman notes two types of confusion.
1. 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."
2. 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."
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
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.
On Whether Respondents' Use of the "Big Mak" Mark Results in Likelihood of Confusion
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In determining likelihood of confusion test:
1. The dominancy test focuses on the similarity of the prevalent features of the competing
trademarks that might cause confusion.
2. 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.
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.
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 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.
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.
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 it only requires the less stringent standard of "likelihood of confusion". While proof of
actual confusion is the best evidence of infringement, its absence is inconsequential.
Unfair Competition
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
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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. 77 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
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' 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.
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. Respondents, however, did not give such notice. We
hold respondent corporation is liable for unfair competition.
MCDONALDS 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.
The Case
In their Answer, respondents admitted that they have been using the name Big Mak Burger for their
This is a petition for review 1 of the Decision dated 26 November 1999 of the Court of Appeals 2finding fast-food business. Respondents claimed, however, that McDonalds does not have an exclusive right to
respondent L.C. Big Mak Burger, Inc. not liable for trademark infringement and unfair competition and the Big Mac mark or to any other similar mark. Respondents point out that the Isaiyas Group of
ordering petitioners to pay respondents P1,900,000 in damages, and of its Resolution dated 11 July 2000
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denying reconsideration. The Court of Appeals Decision reversed the 5 September 1994 Decision 3 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 McDonalds Corporation (McDonalds) is a corporation organized under the laws of
Delaware, United States. McDonalds operates, by itself or through its franchisees, a global chain of fast-
food restaurants. McDonalds 4 owns a family of marks 5 including the Big Mac mark for its double-
decker hamburger sandwich. 6 McDonalds registered this trademark with the United States Trademark
Registry on 16 October 1979. 7 Based on this Home Registration, McDonalds 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, McDonalds 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, McDonalds displays the Big Mac mark in items 8 and paraphernalia 9 in its
restaurants, and in its outdoor and indoor signages. From 1982 to 1990, McDonalds spent P10.5 million
in advertisement for Big Mac hamburger sandwiches alone. 10
Petitioner McGeorge Food Industries (petitioner McGeorge), a domestic corporation, is McDonalds
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
corporations 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. McDonalds opposed respondent corporations application on
the ground that Big Mak was a colorable imitation of its registered Big Mac mark for the same food
products. McDonalds 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. ADaSET
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
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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 McDonalds 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 McDonalds 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 McDonalds, the Isaiyas Group did so only in the Supplemental Register of the
PBPTT and such registration does not provide any protection. McDonalds disclosed that it had acquired
Topacios rights to his registration in a Deed of Assignment dated 18 May 1981. 18
The Trial Courts 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 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
McDonalds, and as such, it is entitled [to] protection against infringement.
xxx xxx xxx
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.
xxx xxx xxx
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 McDonalds 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 McDonalds 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 corporations 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
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the B[ig] M[ak] hamburger sandwich he bought is a food-product of plaintiff
McDonalds, 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 . . .
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 . . .
The . . . 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. . . . 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 McDonalds. 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 McDonalds
Corporation and McGeorge Food Industries, Inc. and against defendant L.C. Big
Mak Burger, Inc., as follows:
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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 of P400,000.00, exemplary damages in the amount
of P100,000.00, and attorneys 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,
William 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 McDonalds 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 McDonalds 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. DHACES
xxx xxx xxx
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
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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 therein and a blue lower
garment. Finally, the defendants-appellants food packages are made of plastic
material.
xxx xxx 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 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 . . . sold in a Styrofoam box with the McDonalds logo
and trademark in red, bl[o]ck capital letters printed thereon . . . 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 McDonalds
restaurant usually located in a nearby commercial center, advertised and identified
by its logo the umbrella M, and its mascot Ronald McDonald. A typical
McDonalds 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 . . . . In buying a
B[ig] M[ac], it is necessary to specify it by its trademark. Thus, a customer
needs to look for a McDonalds 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 . . .
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).
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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
MCDONALDS 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
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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. ADEaHT
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 Courts 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
corporations 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 Appeals 27 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.
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The contention has merit. A mark is valid if it is distinctive and thus not barred from registration under Section 4 36 of RA
166 (Section 4). However, once registered, not only the marks validity but also the registrants
The evidence presented during the hearings on petitioners motion for the issuance of a writ of ownership of the mark is prima facie presumed. 37
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 Respondents contend that of the two words in the Big Mac mark, it is only the word Mac that is valid
beef were set in smaller type, along with the locations of branches. 28 Respondents cash invoices because the word Big is generic and descriptive (proscribed under Section 4[e]), and thus incapable of
simply refer to their hamburger sandwiches as Big Mak. 29 It is respondents snack vans that carry the exclusive appropriation. 38
words L.C. Big Mak Burger, Inc. 30
The contention has no merit. The Big Mac mark, which should be treated in its entirety and not
It was only during the trial that respondents presented in evidence the plastic wrappers and bags for their dissected word for word, 39 is neither generic nor descriptive. Generic marks are commonly used as the
hamburger sandwiches relied on by the Court of Appeals. 31 Respondents plastic wrappers and bags name or description of a kind of goods, 40 such as Lite for beer 41 or Chocolate Fudge for chocolate
were identical with those petitioners presented during the hearings for the injunctive writ except that the soda drink. 42 Descriptive marks, on the other hand, convey the characteristics, functions, qualities or
letters L.C. and the words Burger, Inc. in respondents evidence were added above and below the ingredients of a product to one who has never seen it or does not know it exists, 43 such as Arthriticare
words Big Mak, respectively. Since petitioners complaint was based on facts existing before and for arthritis medication. 44 On the contrary, Big Mac falls under the class of fanciful or arbitrary marks
during the hearings on the injunctive writ, the facts established during those hearings are the proper as it bears no logical relation to the actual characteristics of the product it represents. 45 As such, it is
factual bases for the disposition of the issues raised in this petition. highly distinctive and thus valid. Significantly, the trademark Little Debbie for snack cakes was found
arbitrary or fanciful. 46
On the Issue of Trademark Infringement
The Court also finds that petitioners have duly established McDonalds exclusive ownership of the Big
Section 22 (Section 22) of Republic Act No. 166, as amended (RA 166), the law applicable to this Mac mark. Although Topacio and the Isaiyas Group registered the Big Mac mark ahead of
case, 32 defines trademark infringement as follows: McDonalds, Topacio, as petitioners disclosed, Topacio had already assigned his rights to McDonalds.
The Isaiyas Group, on the other hand, registered its trademark only in the Supplemental Register. A mark
Infringement, what constitutes. Any person who [1] shall use, without the
which is not registered in the Principal Register, and thus not distinctive, has no real
consent of the registrant, any reproduction, counterfeit, copy or colorable imitation
protection. 47 Indeed, we have held that registration in the Supplemental Register is not even a prima
of any registered mark or trade-name in connection with the sale, offering for sale,
facie evidence of the validity of the registrants exclusive right to use the mark on the goods specified in
or advertising of any goods, business or services on or in connection with which
the certificate. 48
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 On Types of Confusion
and apply such reproduction, counterfeit, copy, or colorable imitation to labels, Section 22 covers two types of confusion arising from the use of similar or colorable imitation marks,
signs, prints, packages, wrappers, receptacles or advertisements intended to be namely, confusion of goods (product confusion) and confusion of business (source or origin confusion).
used upon or in connection with such goods, business or services, shall be liable to In Sterling Products International, Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et
a civil action by the registrant for any or all of the remedies herein provided. 33 al., 49 the Court distinguished these two types of confusion, thus:

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 plaintiffs
mark; (2) the plaintiffs 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 McDonalds Ownership of such Mark
[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. . . . The other is the
confusion of business: Here though the goods of the parties are different, the
defendants 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

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COMMERCIAL LAW REVIEW (Law on Intellectual Property)
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: IDTcHa
1.15. Defendants have unduly prejudiced and clearly infringed upon the
property rights of plaintiffs in the McDonalds 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 styrofoam box with the McDonalds logo and trademark in red, block letters at a price more expensive
business that petitioners are engaged in, results in confusion of business. Petitioners alleged in their than the hamburgers of respondents. In contrast, respondents sell their Big Mak hamburgers in plastic
complaint:
1.10. For some period of time, and without the consent of plaintiff
McDonalds nor its licensee/franchisee, plaintiff McGeorge, and in clear
violation of plaintiffs exclusive right to use and/or appropriate the
McDonalds 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 defendants 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 McDonalds mark B[ig]
M[ac], . . . Defendant Big Mak Burger has thus unjustly created the
impression that its business is approved and sponsored by, or affiliated with,
plaintiffs . . .
2.2 As a consequence of the acts committed by defendants, which unduly
prejudice and infringe upon the property rights of plaintiffs McDonalds and
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McGeorge as the real owner and rightful proprietor, and the
licensee/franchisee, respectively, of the McDonalds marks,and which are
likely to have caused confusion or deceived the public as to the true source,
sponsorship or 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 McDonalds 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
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
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cases in which the use by a junior appropriator of a trade-mark or trade-name purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; .
is likely to lead to a confusion of source, as where prospective purchasers would . .) (Emphasis supplied.)
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 Court reiterated the dominancy test in Lim Hoa v. Director of Patents, 61 Phil. Nut Industry, Inc. v.
the activities of the infringer; or when it forestalls the normal potential expansion Standard Brands Inc., 62 Converse Rubber Corporation v. Universal Rubber Products, Inc., 63 andAsia
of his business (v. 148 ALR, 77, 84; 52 Am. Jur. 576, 577). 56 (Emphasis supplied) Brewery, Inc. v. Court of Appeals. 64 In the 2001 case of Societe Des Produits Nestl, S.A. v. Court of
Appeals, 65 the Court explicitly rejected the holistic test in this wise:
On Whether Respondents Use of the Big Mak [T]he totality or holistic test is contrary to the elementary postulate of the law on
Mark Results in Likelihood of Confusion trademarks and unfair competition that confusing similarity is to be determined on
In determining likelihood of confusion, jurisprudence has developed two tests, the dominancy test and the basis of visual, aural, connotative comparisons and overall
the holistic test. 57 The dominancy test focuses on the similarity of the prevalent features of the impressions engendered by the marks in controversy as they are encountered in the
competing trademarks that might cause confusion. In contrast, the holistic test requires the court to realities of the marketplace. (Emphasis supplied)
consider the entirety of the marks as applied to the products, including the labels and packaging, in
The test of dominancy is now explicitly incorporated into law in Section 155.1 of the Intellectual
determining confusing similarity.
Property Code which defines infringement as the colorable imitation of a registered mark . . . or
The Court of Appeals, in finding that there is no likelihood of confusion that could arise in the use of adominant feature thereof.
respondents Big Mak mark on hamburgers, relied on the holistic test. Thus, the Court of Appeals ruled
Applying the dominancy test, the Court finds that respondents use of the Big Mak mark results in
that it is not sufficient that a similarity exists in both name(s), but that more importantly, the overall
likelihood of confusion. First, Big Mak sounds exactly the same as Big Mac. Second, the first word
presentation, or in their essential, substantive and distinctive parts is such as would likely MISLEAD or
in Big Mak is exactly the same as the first word in Big Mac. Third, the first two letters in Mak are
CONFUSE persons in the ordinary course of purchasing the genuine article. The holistic test considers
the same as the first two letters in Mac. Fourth, the last letter in Mak while a k sounds the same as
the two marks in their entirety, as they appear on the goods with their labels and packaging. It is not
c when the word Mak is pronounced. Fifth, in Filipino, the letter k replaces c in spelling, thus
enough to consider their words and compare the spelling and pronunciation of the words. 58
Caloocan is spelled Kalookan.
Respondents now vigorously argue that the Court of Appeals application of the holistic test to this case is
In short, aurally the two marks are the same, with the first word of both marks phonetically the same, and
correct and in accord with prevailing jurisprudence.
the second word of both marks also phonetically the same. Visually, the two marks have both two words
This Court, however, has relied on the dominancy test rather than the holistic test. The dominancy test and six letters, with the first word of both marks having the same letters and the second word having the
considers the dominant features in the competing marks in determining whether they are confusingly same first two letters. In spelling, considering the Filipino language, even the last letters of both marks
similar. Under the dominancy test, courts give greater weight to the similarity of the appearance of the are the same.
product arising from the adoption of the dominant features of the registered mark, disregarding minor
Clearly, respondents have adopted in Big Mak not only the dominant but also almost all the features of
differences. 59 Courts will consider more the aural and visual impressions created by the marks in the
Big Mac. Applied to the same food product of hamburgers, the two marks will likely result in
public mind, giving little weight to factors like prices, quality, sales outlets and market segments.
confusion in the public mind.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, 60 the Court ruled:
The Court has taken into account the aural effects of the words and letters contained in the marks in
. . . It has been consistently held that the question of infringement of a trademark is determining the issue of confusing similarity. Thus, in Marvex Commercial Co., Inc. v. Petra Hawpia &
to be determined by the test of dominancy. Similarity in size, form and color, while Co., et al., 66 the Court held: aAHTDS
relevant, is not conclusive. If the competing trademark contains the main or
The following random list of confusingly similar sounds in the matter of
essential or dominant features of another, and confusion and deception is likely to
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947, Vol. 1,
result, infringement takes place. Duplication or imitation is not necessary; nor is it
will reinforce our view that SALONPAS and LIONPAS are confusingly
necessary that the infringing label should suggest an effort to imitate. (G. Heilman
similar in sound: Gold Dust and Gold Drop; Jantzen and Jass-Sea; Silver
Brewing Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White
Flash and Supper Flash; Cascarete and Celborite; Celluloid and
Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases of
Cellonite; Chartreuse and Charseurs; Cutex and Cuticlean; Hebe and
infringement of trademarks is whether the use of the marks involved would be
Meje; Kotex and Femetex; Zuso and Hoo Hoo. Leon Amdur, in his
likely to cause confusion or mistakes in the mind of the public or deceive
book Trade-Mark Law and Practice, pp. 419421, cities, as coming within the

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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 Dys 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 fathers name ahead of his mothers, 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 . . . B[ig] M[ac] trademark, with
their alleged sentiment-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 appearance of the goods, and (2) intent to deceive the public and defraud a competitor. 74The confusing
trademark infringement.
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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:
xxx xxx xxx
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 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. (Emphasis supplied)
The essential elements of an action for unfair competition are (1) confusing similarity in the general
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
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similarity of the appearance of the goods as offered for sale to the public. 75 Actual fraudulent intent Section 29(a) also provides that the defendant gives his goods the general appearance of goods of
need not be shown. 76 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
Unfair competition is broader than trademark infringement and includes passing off goods with or would not give their goods the general appearance of petitioners Big Mac hamburgers. In such case,
without trademark infringement. Trademark infringement is a form of unfair competition. 77Trademark there is only trademark infringement but no unfair competition. However, since respondents chose to
infringement constitutes unfair competition when there is not merely likelihood of confusion, but also apply the Big Mak mark on hamburgers, just like petitioners use of the Big Mac mark on
actual or probable deception on the public because of the general appearance of the goods. There can be hamburgers, respondents have obviously clothed their goods with the general appearance of petitioners
trademark infringement without unfair competition as when the infringer discloses on the labels goods. ASTcEa
containing the mark that he manufactures the goods, thus preventing the public from being deceived that
the goods originate from the trademark owner. 78 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
To support their claim of unfair competition, petitioners allege that respondents fraudulently passed off Mak Burger, Inc. to inform the public of the name of the seller of the hamburgers. However, petitioners
their hamburgers as Big Mac hamburgers. Petitioners add that respondents fraudulent intent can be introduced during the injunctive hearings plastic wrappers and bags with the Big Mak mark without the
inferred from the similarity of the marks in question. 79 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
Passing off (or palming off) takes place where the defendant, by imitative devices on the general
designed to exculpate them from their unfair business conduct. As earlier stated, we cannot consider
appearance of the goods, misleads prospective purchasers into buying his merchandise under the
respondents evidence since petitioners complaint was based on facts existing before and during the
impression that they are buying that of his competitors. 80 Thus, the defendant gives his goods the
injunctive hearings.
general appearance of the goods of his competitor with the intention of deceiving the public that the
goods are those of his competitor. 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
The RTC described the respective marks and the goods of petitioners and respondents in this wise:
clearly shows respondents intent to deceive the public. Had respondents placed a notice on their plastic
The mark B[ig] M[ac] is used by plaintiff McDonalds to identify its double wrappers and bags that the hamburgers are sold by L.C. Big Mak Burger, Inc., then they could validly
decker hamburger sandwich. The packaging material is a styrofoam box with the claim that they did not intend to deceive the public. In such case, there is only trademark infringement
McDonalds logo and trademark in red with block capital letters printed on it. All but no unfair competition. 82 Respondents, however, did not give such notice. We hold that as found by
letters of the B[ig] M[ac] mark are also in red and block capital letters. On the the RTC, respondent corporation is liable for unfair competition.
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. . .
Further, plaintiffs logo and mascot are the umbrella M and Ronald
McDonalds, respectively, compared to the mascot of defendant Corporation The Remedies Available to Petitioners
which is a chubby boy called Macky displayed or printed between the words Under Section 23 83 (Section 23) in relation to Section 29 of RA 166, a plaintiff who successfully
Big and Mak. 81(Emphasis supplied) 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
Respondents point to these dissimilarities as proof that they did not give their hamburgers the Decision of 5 September 1994) and in ordering the payment of P400,000 actual damages in favor of
general appearance of petitioners Big Mac hamburgers. 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
The dissimilarities in the packaging are minor compared to the stark similarities in the words that give
corporations gross sales for three (19881989 and 1991) of the six years (19841990) respondents have
respondents Big Mak hamburgers the general appearance of petitioners Big Mac hamburgers.
used the Big Mak mark. 84
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 The RTC also did not err in awarding exemplary damages by way of correction for the public good 85 in
almost the same words that petitioners use on their styrofoam box. What attracts the attention of the view of the finding of unfair competition where intent to deceive the public is essential. The award of
buying public are the words Big Mak which are almost the same, aurally and visually, as the words attorneys fees and expenses of litigation is also in order. 86
Big Mac. The dissimilarities in the material and other devices are insignificant compared to the glaring
similarity in the words used in the wrappings. 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

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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.
5. Mighty corp. v. Ej Gallo, supra;
FACTS:
On March 12, 1993, respondents sued petitioners in the RTC-Makati for trademark and trade
name infringement and unfair competition, with a prayer for damages and preliminary injunction.
They claimed that petitioners adopted the Gallo trademark to ride on Gallo Winerys and Gallo
and Ernest & Julio Gallo trademarks established reputation and popularity, thus causing confusion,
deception and mistake on the part of the purchasing public who had always associated Gallo and Ernest
and Julio & Gallo trademarks with Gallo Winerys wines.
In their answer, petitioners alleged, among other affirmative defenses that: petitioners Gallo
cigarettes and Gallo Winerys wine were totally unrelated products. To wit:
1. Gallo Winerys GALLO trademark registration certificates covered wines only, and not cigarettes;
2. GALLO cigarettes and GALLO wines were sold through different channels of trade;
3. the target market of Gallo Winerys wines was the middle or high-income bracket while Gallo
cigarette buyers were farmers, fishermen, laborers and other low-income workers;
4. the dominant feature of the Gallo cigarette was the rooster device with the manufacturers name
clearly indicated as MIGHTY CORPORATION, while in the case of Gallo Winerys wines, it was the
full names of the founders-owners ERNEST & JULIO GALLO or just their surname GALLO;
On April 21, 1993, the Makati RTC denied, for lack of merit, respondents prayer for the issuance of a
writ of preliminary injunction.
On August 19, 1993, respondents motion for reconsideration was denied.
On February 20, 1995, the CA likewise dismissed respondents petition for review on certiorari.
After the trial on the merits, however, the Makati RTC, on November 26, 1998, held petitioners liable
for, permanently enjoined from committing trademark infringement and unfair competition with respect
to the GALLO trademark.
On appeal, the CA affirmed the Makati RTCs decision and subsequently denied petitioners motion for
reconsideration.
ISSUE:
Whether GALLO cigarettes and GALLO wines were identical, similar or related goods for the reason
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alone that they were purportedly forms of vice.
HELD:
Wines and cigarettes are not identical, similar, competing or related goods.
In resolving whether goods are related, several factors come into play:
the business (and its location) to which the goods belong
the class of product to which the good belong
the products quality, quantity, or size, including the nature of the package, wrapper or container
the nature and cost of the articles
the descriptive properties, physical attributes or essential characteristics with reference to their form,
composition, texture or quality
the purpose of the goods
whether the article is bought for immediate consumption, that is, day-to-day household items
the field of manufacture
the conditions under which the article is usually purchased and
the articles of the trade through which the goods flow, how they are distributed, marketed,
displayed and sold.
The test of fraudulent simulation is to the likelihood of the deception of some persons in some measure
acquainted with an established design and desirous of purchasing the commodity with which that design
has been associated. The simulation, in order to be objectionable, must be as appears likely to mislead
the ordinary intelligent buyer who has a need to supply and is familiar with the article that he seeks to
purchase.
The petitioners are not liable for trademark infringement, unfair competition or damages.
WHEREFORE, petition is granted
[G.R. No. 154342. July 14, 2004.]
MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO,
INC., petitioners,vs. E. & J. GALLO WINERY and THE ANDRESONS
GROUP, INC., respondents.
In this petition for review on certiorari under Rule 45, petitioners Mighty Corporation and La Campana
Fabrica dend (c) the aforesaid Makati RTC decision itself.
I.
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The Factual Background in the Philippines circa 1974 within the then U.S. military facilities only. By 1979, they had expanded
their Philippine market through authorized distributors and independent outlets. 16
Respondent Gallo Winery is a foreign corporation not doing business in the Philippines but organized and
existing under the laws of the State of California, United States of America (U.S.), where all its wineries Respondents claim that they first learned about the existence of GALLO cigarettes in the latter part of
are located. Gallo Winery produces different kinds of wines and brandy products and sells them in many 1992 when an Andresons employee saw such cigarettes on display with GALLO wines in a Davao
countries under different registered trademarks, including the GALLO and ERNEST & JULIO GALLO supermarket wine cellar section. 17 Forthwith, respondents sent a demand letter to petitioners asking
wine trademarks. them to stop using the GALLO trademark, to no avail.
Respondent domestic corporation, Andresons, has been Gallo Winery's exclusive wine importer and
distributor in the Philippines since 1991, selling these products in its own name and for its own II.
account. 5
The Legal Dispute
Gallo Winery's GALLO wine trademark was registered in the principal register of the Philippine Patent
On March 12, 1993, respondents sued petitioners in the Makati RTC for trademark and tradename
Office (now Intellectual Property Office) on November 16, 1971 under Certificate of Registration No.
infringement and unfair competition, with a prayer for damages and preliminary injunction.
17021 which was renewed on November 16, 1991 for another 20 years. 6 Gallo Winery also applied for
registration of its ERNEST & JULIO GALLO wine trademark on October 11, 1990 under Application Respondents charged petitioners with violating Article 622 They claimed that petitioners adopted the
Serial No. 901011-00073599-PN but the records do not disclose if it was ever approved by the Director GALLO trademark to ride on Gallo Winery's GALLO and ERNEST & JULIO GALLO trademarks'
of Patents. 7 established reputation and popularity, thus causing confusion, deception and mistake on the part of the
purchasing public who had always associated GALLO and ERNEST & JULIO GALLO trademarks with
On the other hand, petitioners Mighty Corporation and La Campana and their sister company, Tobacco
Gallo Winery's wines. Respondents prayed for the issuance of a writ of preliminary injunction and ex
Industries of the Philippines (Tobacco Industries), are engaged in the cultivation, manufacture,
parte restraining order, plus P2 million as actual and compensatory damages, at least P500,000 as
distribution and sale of tobacco products for which they have been using the GALLO cigarette trademark
exemplary and moral damages, and at least P500,000 as attorney's fees and litigation expenses. 23
since 1973. 8
In their answer, petitioners alleged, among other affirmative defenses, that: petitioner's GALLO cigarettes
The Bureau of Internal Revenue (BIR) approved Tobacco Industries' use of GALLO 100's cigarette mark
and Gallo Winery's wines were totally unrelated products; Gallo Winery's GALLO trademark registration
on September 14, 1973 and GALLO filter cigarette mark on March 26, 1976, both for the manufacture
certificate covered wines only, not cigarettes; GALLO cigarettes and GALLO wines were sold through
and sale of its cigarette products. In 1976, Tobacco Industries filed its manufacturer's sworn statement as
different channels of trade; GALLO cigarettes, sold at P4.60 for GALLO filters and P3 for GALLO
basis for BIR's collection of specific tax on GALLO cigarettes. 9
menthols, were low-cost items compared to Gallo Winery's high-priced luxury wines which cost between
On February 5, 1974, Tobacco Industries applied for, but eventually did not pursue, the registration of the P98 to P242.50; the target market of Gallo Winery's wines was the middle or high-income bracket with at
GALLO cigarette trademark in the principal register of the then Philippine Patent Office. 10 least P10,000 monthly income while GALLO cigarette buyers were farmers, fishermen, laborers and
other low-income workers; the dominant feature of the GALLO cigarette mark was the rooster device
In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La Campana which, on with the manufacturer's name clearly indicated as MIGHTY CORPORATION while, in the case of Gallo
July 16, 1985, applied for trademark registration in the Philippine Patent Office. 11 On July 17, 1985, the Winery's wines, it was the full names of the founders-owners ERNEST & JULIO GALLO or just their
National Library issued Certificate of Copyright Registration No. 5834 for La Campana's lifetime surname GALLO; by their inaction and conduct, respondents were guilty of laches and estoppel; and
copyright claim over GALLO cigarette labels. 12 petitioners acted with honesty, justice and good faith in the exercise of their right to manufacture and sell
GALLO cigarettes.
Subsequently, La Campana authorized Mighty Corporation to manufacture and sell cigarettes bearing the
GALLO trademark. 13 BIR approved Mighty Corporation's use of GALLO 100's cigarette brand, under In an order dated April 21, 1993, 24 the Makati RTC denied, for lack of merit, respondent's prayer for the
licensing agreement with Tobacco Industries, on May 18, 1988, and GALLO SPECIAL MENTHOL issuance of a writ of preliminary injunction, 25 holding that respondent's GALLO trademark registration
100's cigarette brand on April 3, 1989. 14 certificate covered wines only, that respondents' wines and petitioners' cigarettes were not related goods
and respondents failed to prove material damage or great irreparable injury as required by Section 5, Rule
Petitioners claim that GALLO cigarettes have been sold in the Philippines since 1973, initially by 58 of the Rules of Court. 26
Tobacco Industries, then by La Campana and finally by Mighty Corporation. 15
On August 19, 1993, the Makati RTC denied, for lack of merit, respondents' motion for reconsideration.
On the other hand, although the GALLO wine trademark was registered in the Philippines in 1971, The court reiterated that respondents' wines and petitioners' cigarettes were not related goods since the
respondents claim that they first introduced and sold the GALLO and ERNEST & JULIO GALLO wines likelihood of deception and confusion on the part of the consuming public was very remote. The trial

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COMMERCIAL LAW REVIEW (Law on Intellectual Property) Atty. Busmente

court emphasized that it could not rely on foreign rulings cited by respondents "because the[se] cases On June 24, 1999, the Makati RTC granted respondent's motion for partial reconsideration and increased
were decided by foreign courts on the basis of unknown facts peculiar to each case or upon factual the award of actual and compensatory damages to 10% of P199,290,000 or P19,929,000. 30
surroundings which may exist only within their jurisdiction. Moreover, there [was] no showing that
[these cases had] been tested or found applicable in our jurisdiction." 27 On appeal, the CA affirmed the Makati RTC decision and subsequently denied petitioner's motion for
reconsideration.
On February 20, 1995, the CA likewise dismissed respondents' petition for review on certiorari, docketed
as CA-G.R. No. 32626, thereby affirming the Makati RTC's denial of the application for issuance of a III.
writ of preliminary injunction against petitioners. 28
The Issues
After trial on the merits, however, the Makati RTC, on November 26, 1998, held petitioners liable for,
and permanently enjoined them from, committing trademark infringement and unfair competition with Petitioners now seek relief from this Court contending that the CA did not follow prevailing laws and
respect to the GALLO trademark: jurisprudence when it held that: [a] RA 8293 (Intellectual Property Code of the Philippines [IP Code])
was applicable in this case; [b] GALLO cigarettes and GALLO wines were identical, similar or related
WHEREFORE, judgment is rendered in favor of the plaintiff (sic) and against the goods for the reason alone that they were purportedly forms of vice; [c] both goods passed through the
defendant (sic), to wit: same channels of trade and [d] petitioners were liable for trademark infringement, unfair competition and
damages. 31
a. permanently restraining and enjoining defendants, their
distributors, trade outlets, and all persons acting for them or under Respondents, on the other hand, assert that this petition which invokes Rule 45 does not involve pure
their instructions, from (i) using E & J's registered trademark questions of law, and hence, must be dismissed outright.
GALLO or any other reproduction, counterfeit, copy or colorable
imitation of said trademark, either singly or in conjunction with IV.
other words, designs or emblems and other acts of similar nature,
and (ii) committing other acts of unfair competition against Discussion
plaintiffs by manufacturing and selling their cigarettes in the
domestic or export markets under the GALLO trademark. THE EXCEPTIONAL CIRCUMSTANCES IN
b. ordering defendants to pay plaintiffs THIS CASE OBLIGE THE COURT TO REVIEW
THE CA'S FACTUAL FINDINGS
(i) actual and compensatory damages for the injury and As a general rule, a petition for review on certiorari under Rule 45 must raise only "questions of
prejudice and impairment of plaintiffs' business and law" 32 (that is, the doubt pertains to the application and interpretation of law to a certain set of facts) and
goodwill as a result of the acts and conduct pleaded as not "questions of fact" (where the doubt concerns the truth or falsehood of alleged facts), 33 otherwise,
basis for this suit, in an amount equal to 10% of the petition will be denied. We are not a trier of facts and the Court of Appeals' factual findings are
FOURTEEN MILLION TWO HUNDRED THIRTY generally conclusive upon us. 34
FIVE THOUSAND PESOS (PHP14,235,000.00) from
the filing of the complaint until fully paid; This case involves questions of fact which are directly related and intertwined with questions of law. The
resolution of the factual issues concerning the goods' similarity, identity, relation, channels of trade, and
acts of trademark infringement and unfair competition is greatly dependent on the interpretation of
(ii) exemplary damages in the amount of applicable laws. The controversy here is not simply the identity or similarity of both parties' trademarks
PHP100,000.00; but whether or not infringement or unfair competition was committed, a conclusion based on statutory
interpretation. Furthermore, one or more of the following exceptional circumstances oblige us to review
(iii) attorney's fees and expenses of litigation in the the evidence on record: 35
amount of PHP1,130,068.91;
(1) the conclusion is grounded entirely on speculation, surmises,
(iv) the cost of suit. and conjectures;

SO ORDERED." 29 (2) the inference of the Court of Appeals from its findings of fact
is manifestly mistaken, absurd and impossible;

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COMMERCIAL LAW REVIEW (Law on Intellectual Property)
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts;
(5) 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) the findings are without citation of specific evidence on which
they are based;
(7) 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
(8) the findings of fact of the Court of Appeals are premised on the
absence of evidence and are contradicted [by the evidence] on
record. 36
In this light, after thoroughly examining the evidence on record, weighing, analyzing and balancing all filing of the complaint.
factors to determine whether trademark infringement and/or unfair competition has been committed, we
conclude that both the Court of Appeals and the trial court veered away from the law and well-settled
jurisprudence.
Thus, we give due course to the petition.
THE TRADEMARK LAW AND THE PARIS
CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE
We note that respondents sued petitioners on March 12, 1993 for trademark infringement and unfair The law on trademarks is thus a specialized subject distinct from the law on unfair competition, although
competition committed during the effectivity of the Paris Convention and the Trademark Law.
Yet, in the Makati RTC decision of November 26, 1998, petitioners were held liable not only under the trademark, he may still obtain relief on the ground of his competitor's unfairness or fraud. Conduct
aforesaid governing laws but also under the IP Code which took effect only on January 1, 1998, 37 or constitutes unfair competition if the effect is to pass off on the public the goods of one man as the goods
about five years after the filing of the complaint:
Defendants' unauthorized use of the GALLO trademark constitutes trademark
infringement pursuant to Section 22 of Republic Act No. 166, Section 155 of the
IP Code, Article 6bis of the Paris Convention, and Article 16(1) of the TRIPS
Agreement as it causes confusion, deception and mistake on the part of the
purchasing public. 38 (Emphasis and italics supplied)
The CA apparently did not notice the error and affirmed the Makati RTC decision:
In the light of its finding that appellants' use of the GALLO trademark on its
cigarettes is likely to create confusion with the GALLO trademark on wines
previously registered and used in the Philippines by appellee E & J Gallo Winery,
the trial court thus did not err in holding that appellants' acts not only violated the
38
Atty. Busmente
provisions of the our trademark laws (R.A. No. 166 and R.A. Nos. (sic) 8293) but
also Article 6bis of the Paris Convention. 39 (Emphasis and italics supplied)
We therefore hold that the courts a quo erred in retroactively applying the IP Code in this case.
It is a fundamental principle that the validity and obligatory force of a law proceed from the fact that it
has first been promulgated. A law that is not yet effective cannot be considered as conclusively known by
the populace. To make a law binding even before it takes effect may lead to the arbitrary exercise of the
legislative power. 40 Nova constitutio futuris formam imponere debet non praeteritis. A new state of the
law ought to affect the future, not the past. Any doubt must generally be resolved against the retroactive
operation of laws, whether these are original enactments, amendments or repeals. 41 There are only a few
instances when laws may be given retroactive effect, 42 none of which is present in this case.
The IP Code, repealing the Trademark Law, 43 was approved on June 6, 1997. Section 241 thereof
expressly decreed that it was to take effect only on January 1, 1998, without any provision for retroactive
application. Thus, the Makati RTC and the CA should have limited the consideration of the present case
within the parameters of the Trademark Law and the Paris Convention, the laws in force at the time of the
DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION
Although the laws on trademark infringement and unfair competition have a common conception at their
root, that is, a person shall not be permitted to misrepresent his goods or his business as the goods or
business of another, the law on unfair competition is broader and more inclusive than the law on
trademark infringement. The latter is more limited but it recognizes a more exclusive right derived from
the trademark adoption and registration by the person whose goods or business is first associated with it.
the two subjects are entwined with each other and are dealt with together in the Trademark Law (now,
both are covered by the IP Code). Hence, even if one fails to establish his exclusive property right to a
of another. It is not necessary that any particular means should be used to this end. 44
In Del Monte Corporation vs. Court of Appeals, 45 we distinguished trademark infringement from unfair
competition:
(1) Infringement of trademark is the unauthorized use of a
trademark, whereas unfair competition is the passing off of one's
goods as those of another.
(2) In infringement of trademark fraudulent intent is unnecessary,
whereas in unfair competition fraudulent intent is essential.
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COMMERCIAL LAW REVIEW (Law on Intellectual Property)
(3) In infringement of trademark the prior registration of the
trademark is a prerequisite to the action, whereas in unfair
competition registration is not necessary.
PERTINENT PROVISIONS ON TRADEMARK
INFRINGEMENT UNDER THE PARIS
CONVENTION AND THE TRADEMARK LAW
Article 6bis of the Paris Convention, 46 an international agreement binding on the Philippines and the
United States (Gallo Winery's country of domicile and origin) prohibits "the [registration] or use of a
trademark which constitutes a reproduction, imitation or 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 the [Paris] Convention and used
for identical or similar goods. [This rule also applies] when the essential part of the mark constitutes a
reproduction of any such well-known mark or an imitationliable to create confusion therewith." There is
no time limit for seeking the prohibition of the use of marks used in bad faith. 47
Thus, under Article 6bis of the Paris Convention, the following are the elements of trademark
infringement:
(a) registration or use by another person of a trademark which is a
reproduction, imitation or translation liable to create confusion,
(b) of a mark considered by the competent authority of the country
of registration or use 48 to be well-known in that country and is
already the mark of a person entitled to the benefits of the Paris
Convention, and
(c) such trademark is used for identical or similar goods.
On the other hand, Section 22 of the Trademark Law holds a person liable for infringement when, among
others, he "uses without the consent of the registrant, any reproduction, counterfeit, copy or colorable
imitation of any registered mark or tradename in connection with the sale, offering for sale, or advertising
of any goods, business or services 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 tradename 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." 49 Trademark registration and actual use are material to the complaining party's
cause of action.
Corollary to this, Section 20 of the Trademark Law 50 considers the trademark registration certificate liability.
as prima facie evidence of the validity of the registration, the registrant's ownership and exclusive right to
use the trademark in connection with the goods, business or services as classified by the Director of
Patents 51 and as specified in the certificate, subject to the conditions and limitations stated
39
Atty. Busmente
therein. Sections 2 and 2-A 52 of the Trademark Law emphasize the importance of the trademark's actual
use in commerce in the Philippines prior to its registration. In the adjudication of trademark rights
between contending parties, equitable principles of laches, estoppel, and acquiescence may be considered
and applied. 53
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the following constitute the
elements of trademark infringement:
(a) a trademark actually used in commerce in the Philippines and
registered in the principal register of the Philippine Patent Office
(b) is used by another person in connection with the sale, offering
for sale, or advertising of any goods, business or services 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
such trademark is reproduced, counterfeited, copied or colorably
imitated by another person and such reproduction, counterfeit,
copy or colorable imitation is applied to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be
used upon or in connection with such goods, business or services
as to likely cause confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant
or assignee.
In summary, the Paris Convention protects well-known trademarks only (to be determined by domestic
authorities), while the Trademark Law protects all trademarks, whether well-known or not, provided that
they have been registered and are in actual commercial use in the Philippines. Following universal
acquiescence and comity, in case of domestic legal disputes on any conflicting provisions between the
Paris Convention (which is an international agreement) and the Trademark law (which is a municipal
law) the latter will prevail. 54
Under both the Paris Convention and the Trademark Law, the protection of a registered trademark is
limited only to goods identical or similar to those in respect of which such trademark is registered and
only when there is likelihood of confusion. Under both laws, the time element in commencing
infringement cases is material in ascertaining the registrant's express or implied consent to another's use
of its trademark or a colorable imitation thereof. This is why acquiescence, estoppel or laches may defeat
the registrant's otherwise valid cause of action.
Hence, proof of all the elements of trademark infringement is a condition precedent to any finding of
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COMMERCIAL LAW REVIEW (Law on Intellectual Property)
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.
By respondents' own judicial admission, the GALLO wine trademark was registered in the Philippines in
November 1971 but the wine itself was first marketed and sold in the country only in 1974 and only
within the former U.S. military facilities, and outside thereof, only in 1979. To prove commercial use of
the GALLO wine trademark in the Philippines, respondents presented sales invoice no. 29991 dated July
9, 1981 addressed to Conrad Company Inc., Makati, Philippines and sales invoice no. 85926 dated March
22, 1996 addressed to Andresons Global, Inc., Quezon City, Philippines. Both invoices were for the sale
and shipment of GALLO wines to the Philippines during that period. 55 Nothing at all, however, was
presented to evidence the alleged sales of GALLO wines in the Philippines in 1974 or, for that matter,
prior to July 9, 1981.
On the other hand, by testimonial evidence supported by the BIR authorization letters, forms and
manufacturer's sworn statement, it appears that petitioners and its predecessor-in-interest, Tobacco
Industries, have indeed been using and selling GALLO cigarettes in the Philippines since 1973 or before
July 9, 1981. 56
In Emerald Garment Manufacturing Corporation vs. Court of Appeals, 57 we reiterated our rulings
in Pagasa Industrial Corporation vs. Court of Appeals, 58 Converse Rubber Corporation vs.Universal
Rubber Products, Inc., 59 Sterling Products International, Inc. vs. Farbenfabriken Bayer
Aktiengesellschaft, 60 Kabushi Kaisha Isetan vs. Intermediate Appellate Court, 61 and Philip Morris
vs. Court of Appeals, 62 giving utmost importance to the actual commercial use of a trademark in the
Philippines prior to its registration, notwithstanding the provisions of the Paris Convention:
xxx xxx xxx
In addition to the foregoing, we are constrained to agree with petitioner's
contention thatprivate respondent failed to prove prior actual commercial use of
its "LEE" trademark in the Philippines before filing its application for registration
with the BPTTT and hence, has not acquired ownership over said mark.
Actual use in commerce in the Philippines is an essential prerequisite for the
acquisition of ownership over a trademark pursuant to Sec. 2 and 2-A of the
Philippine Trademark Law (R.A. No. 166) . . .
xxx xxx xxx
The provisions of the 1965 Paris Convention for the Protection of Industrial
Property relied upon by private respondent and Sec. 21-A of the Trademark Law
(R.A. No. 166) were sufficiently expounded upon and qualified in the recent case
of Philip Morris, Inc. v. Court of Appeals (224 SCRA 576 [1993]):
xxx xxx xxx
40
Atty. Busmente
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 (Mortisen 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.
xxx xxx xxx
In other words, (a foreign corporation) 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 of
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 the Philippines files a
complaint for infringement, the entity need not be actually using the
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.
xxx xxx xxx
Undisputably, private respondent is the senior registrant, having obtained several
registration certificates for its various trademarks "LEE," "LEE RIDERS," and
"LEESURES" in both the supplemental and principal registers, as early as 1969 to
1973. However, registration alone will not suffice. In Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft (27 SCRA 1214
[1969]; Reiterated in Kabushi Isetan vs.Intermediate Appellate Court (203 SCRA
583 [1991]) we declared:
xxx xxx xxx
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 in the acquisition of the right of ownership over a
trademark.
xxx xxx xxx
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COMMERCIAL LAW REVIEW (Law on Intellectual Property)
The credibility placed on a certificate of registration of one's trademark, or its
weight as evidence of validity, ownership and exclusive use, is qualified. A
registration certificate serves merely as prima facie evidence. It is not conclusive
but can and may be rebutted by controverting evidence.
xxx xxx xxx
In the case at bench, however, we reverse the findings of the Director of Patents
and the Court of Appeals. After a meticulous study of the records, we observe that
the Director of Patents and the Court of Appeals relied mainly on the registration
certificates as proof of use by private respondent of the trademark "LEE" which,
as we have previously discussed are not sufficient. We cannot give credence to
private respondent's claim that its "LEE" mark first reached the Philippines in the
1960's through local sales by the Post Exchanges of the U.S. Military Bases in the
Philippines (Rollo, p. 177) based as it was solely on the self-serving statements of
Mr. Edward Poste, General Manager of Lee (Phils.), Inc., a wholly owned
subsidiary of the H.D. Lee, Co., Inc., U.S.A., herein private respondent. (Original
Records, p.52) Similarly, we give little weight to the numerous vouchers
representing various advertising expenses in the Philippines for "LEE" products. It
is well to note that these expenses were incurred only in 1981 and 1982 by LEE
(Phils.), Inc. after it entered into a licensing agreement with private respondent on
11 May 1981. (Exhibit E)
On the other hand, petitioner has sufficiently shown that it has been in the business
of selling jeans and other garments adopting its "STYLISTIC MR. LEE" trademark
since 1975 as evidenced by appropriate sales invoices to various stores and
retailers. (Exhibit 1-e to 1-o)
Our rulings in Pagasa Industrial Corp. v. Court of Appeals (118 SCRA 526
[1982]) andConverse Rubber Corp. v. Universal Rubber Products, Inc., (147
SCRA 154 [1987]), respectively, are instructive:
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 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 be clear, definite
and free from inconsistencies. "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 law. Respondent did not expect
income from such "samples." There were no receipts to establish sale,
41
Atty. Busmente
and no proof were presented to show that they were subsequently sold in
the Philippines. SDTIHA
xxx xxx xxx
For lack of adequate proof of actual use of its trademark in the Philippines prior
to petitioner's use of its own mark and for failure to establish confusing similarity
between said trademarks, private respondent's action for infringement must
necessarily fail. (Emphasis supplied.)
In view of the foregoing jurisprudence and respondents' judicial admission that the actual commercial
use of the GALLO wine trademark was subsequent to its registration in 1971 and to Tobacco Industries'
commercial use of the GALLO cigarette trademark in 1973, we rule that, on this account, respondents
never enjoyed the exclusive right to use the GALLO wine trademark to the prejudice of Tobacco
Industries and its successors-in-interest, herein petitioners, either under the Trademark Law or the Paris
Convention.
RESPONDENTS' GALLO TRADEMARK
REGISTRATION IS LIMITED TO
WINES ONLY
We also note that the GALLO trademark registration certificates in the Philippines and in other countries
expressly state that they cover wines only, without any evidence or indication that registrant Gallo Winery
expanded or intended to expand its business to cigarettes. 63
Thus, by strict application of Section 20 of the Trademark Law, Gallo Winery's exclusive right to use the
GALLO trademark should be limited to wines, the only product indicated in its registration certificates.
This strict statutory limitation on the exclusive right to use trademarks was amply clarified in our ruling
in Faberge, Inc. vs. Intermediate Appellate Court: 64
Having thus reviewed the laws applicable to the case before Us, it is not difficult to
discern from the foregoing statutory enactments that private respondent may be
permitted to register the trademark "BRUTE" for briefs produced by it
notwithstanding petitioner's vehement protestations of unfair dealings in marketing
its own set of items which are limited to: after-shave lotion, shaving cream,
deodorant, talcum powder and toilet soap.Inasmuch as petitioner has not ventured
in the production of briefs, an item which is not listed in its certificate of
registration, petitioner cannot and should not be allowed to feign that private
respondent had invaded petitioner's exclusive domain. To be sure, it is significant
that petitioner failed to annex in its Brief the so-called "eloquent proof that
petitioner indeed intended to expand its mark 'BRUT' to other goods" (Page 27,
Brief for the Petitioner; page 202, Rollo). Even then, a mere application by
petitioner in this aspect does not suffice and may not vest an exclusive right in its
favor that can ordinarily be protected by the Trademark Law. In
short, paraphrasing Section 20 of the Trademark Law as applied to the
documentary evidence adduced by petitioner, the certificate of registration issued
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COMMERCIAL LAW REVIEW (Law on Intellectual Property)
by the Director of Patents can confer upon petitioner the exclusive right to use its
own symbol only to those goods specified in the certificate, subject to any
conditions and limitations stated therein. This basic point is perhaps the
unwritten rationale of Justice Escolin in Philippine Refining Co., Inc. vs. Ng
Sam (115 SCRA 472 [1982]), when he stressed the principle enunciated by the
United States Supreme Court in American Foundries vs.Robertson (269 U.S. 372,
381, 70 L ed 317, 46 Sct. 160) that one who has adopted and used a trademark on
his goods does not prevent the adoption and use of the same trademark by others
for products which are of a different description. Verily, this Court had the
occasion to observe in the 1966 case of George W. Luft Co., Inc. vs. Ngo Guan (18
SCRA 944 [1966]) that no serious objection was posed by the petitioner therein
since the applicant utilized the emblem "Tango" for no other product than hair
pomade in which petitioner does not deal.
This brings Us back to the incidental issue raised by petitioner which private
respondent sought to belie as regards petitioner's alleged expansion of its business.
It may be recalled that petitioner claimed that it has a pending application for
registration of the emblem "BRUT 33" for briefs (page 25, Brief for the Petitioner;
page 202, Rollo) to impress upon Us the Solomonic wisdom imparted by Justice
JBL Reyes in Sta. Ana vs. Maliwat (24 SCRA 1018 [1968]), to the effect that
dissimilarity of goods will not preclude relief if the junior user's goods are not
remote from any other product which the first user would be likely to make or
sell (vide, at page 1025). Commenting on the former provision of the Trademark
Law now embodied substantially under Section 4(d) of Republic Act No. 166, as
amended, the erudite jurist opined that the law in point "does not require that the
articles of manufacture of the previous user and late user of the mark should
possess the same descriptive properties or should fall into the same categories as to
bar the latter from registering his mark in the principal register." (supra at page
1026).
Yet, it is equally true that as aforesaid, the protective mantle of the Trademark Law
extends only to the goods used by the first user as specified in the certificate of
registration following the clear message conveyed by Section 20.
How do We now reconcile the apparent conflict between Section 4(d) which was
relied upon by Justice JBL Reyes in the Sta. Ana case and Section 20? It would
seem that Section 4(d) does not require that the goods manufactured by the second
user be related to the goods produced by the senior user while Section 20 limits the
exclusive right of the senior user only to those goods specified in the certificate of
registration. But the rule has been laid down that the clause which comes later
shall be given paramount significance over an anterior proviso upon the
presumption that it expresses the latest and dominant purpose. (Graham Paper
Co. vs. National Newspapers Asso. (Mo. App.) 193 S.W. 1003; Barnett
vs.Merchant's L. Ins. Co., 87 Okl. 42; State ex nel Atty. Gen. vs. Toledo, 26 N.E., p.
1061; cited byMartin, Statutory Construction Sixth ed., 1980 Reprinted, p. 144). It
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Atty. Busmente
ineluctably follows thatSection 20 is controlling and, therefore, private respondent
can appropriate its symbol for the briefs it manufactures because as aptly
remarked by Justice Sanchez in Sterling Products International
Inc. vs. Farbenfabriken Bayer (27 SCRA 1214 [1969]):
"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." (1226).
NO LIKELIHOOD OF CONFUSION, MISTAKE
OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS' AND RESPONDENTS'
GOODS OR BUSINESS
A crucial issue in any trademark infringement case is the likelihood of confusion, mistake or deceit as to
the identity, source or origin of the goods or identity of the business as a consequence of using a certain
mark. Likelihood of confusion is admittedly a relative term, to be determined rigidly according to the
particular (and sometimes peculiar) circumstances of each case. Thus, in trademark cases, more than in
other kinds of litigation, precedents must be studied in the light of each particular case. 65
There are two types of confusion in trademark infringement. The first is "confusion of goods" when an
otherwise prudent purchaser is induced to purchase one product in the belief that he is purchasing
another, in which case defendant's goods are then bought as the plaintiff's and its poor quality reflects
badly on the plaintiff's reputation. The other is "confusion of business" wherein the goods of the parties
are different but the defendant's product can reasonably (though mistakenly) be assumed to originate
from the plaintiff, thus deceiving the public into believing that there is some connection between the
plaintiff and defendant which, in fact, does not exist. 66
In determining the likelihood of confusion, the Court must consider: [a] the resemblance between the
trademarks; [b] the similarity of the goods to which the trademarks are attached; [c] the likely effect on
the purchaser and [d] the registrant's express or implied consent and other fair and equitable
considerations.
Petitioners and respondents both use "GALLO" in the labels of their respective cigarette and wine
products. But, as held in the following cases, the use of an identical mark does not, by itself, lead to a
legal conclusion that there is trademark infringement:
(a) in Acoje Mining Co., Inc. vs. Director of Patent, 67 we ordered
the approval of Acoje Mining's application for registration of the
trademark LOTUS for its soy sauce even though Philippine
Refining Company had prior registration and use of such identical
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COMMERCIAL LAW REVIEW (Law on Intellectual Property)
mark for its edible oil which, like soy sauce, also belonged to
Class 47;
(b) in Philippine Refining Co., Inc. vs. Ng Sam and Director of
Patents, 68 we upheld the Patent Director's registration of the
same trademark CAMIA for Ng Sam's ham under Class 47, despite
Philippine Refining Company's prior trademark registration and
actual use of such mark on its lard, butter, cooking oil (all of which
belonged to Class 47), abrasive detergents, polishing materials and
soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and
Santos Lim Bun Liong, 69 we dismissed Hickok's petition to
cancel private respondent's HICKOK trademark registration for its
Marikina shoes as against petitioner's earlier registration of the
same trademark for handkerchiefs, briefs, belts and wallets;
(d) in Shell Company of the Philippines vs. Court of Appeals, 70 in
a minute resolution, we dismissed the petition for review for lack
of merit and affirmed the Patent Office's registration of the
trademark SHELL used in the cigarettes manufactured by
respondent Fortune Tobacco Corporation, notwithstanding Shell
Company's opposition as the prior registrant of the same trademark
for its gasoline and other petroleum products;
(e) in Esso Standard Eastern, Inc. vs. Court of Appeals, 71 we
dismissed ESSO's complaint for trademark infringement against
United Cigarette Corporation and allowed the latter to use the
trademark ESSO for its cigarettes, the same trademark used by
ESSO for its petroleum products, and
(f) in Canon Kabushiki Kaisha vs. Court of Appeals and NSR
Rubber Corporation,72 we affirmed the rulings of the Patent
Office and the CA that NSR Rubber Corporation could use the
trademark CANON for its sandals (Class 25) despite Canon
Kabushiki Kaisha's prior registration and use of the same
trademark for its paints, chemical products, toner and dyestuff
(Class 2).
Whether a trademark causes confusion and is likely to deceive the public hinges on "colorable
imitation" 73 which has been defined as "such similarity in form, content, words, sound, meaning, special
arrangement or general appearance of the trademark or tradename in their overall presentation or in their
essential and substantive and distinctive parts as would likely mislead or confuse persons in the ordinary
course of purchasing the genuine article." 74
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Jurisprudence has developed two tests in determining similarity and likelihood of confusion in trademark
resemblance: 75
(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of
Appeals 76 and other cases, 77 and
(b) the Holistic or Totality Test used in Del Monte Corporation
vs. Court of Appeals 78 and its preceding cases. 79
The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks
which might cause confusion or deception, and thus infringement. If the competing trademark contains
the main, essential or dominant features of another, and confusion or 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. The question is whether the use of the marks involved is likely
to cause confusion or mistake in the mind of the public or deceive purchasers. 80
On the other hand, the Holistic Test requires that the entirety of the marks in question be considered in
resolving confusing similarity. Comparison of words is not the only determining factor. The trademarks
in their entirety as they appear in their respective labels or hang tags must also be considered in relation
to the goods to which they are attached. The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing in both labels in order that he may draw his
conclusion whether one is confusingly similar to the other. 81
In comparing the resemblance or colorable imitation of marks, various factors have been considered, such
as the dominant color, style, size, form, meaning of letters, words, designs and emblems used, the
likelihood of deception of the mark or name's tendency to confuse 82 and the commercial impression
likely to be conveyed by the trademarks if used in conjunction with the respective goods of the parties. 83
Applying the Dominancy and Holistic Tests, we find that the dominant feature of the GALLO cigarette
trademark is the device of a large rooster facing left, outlined in black against a gold background. The
rooster's color is either green or red green for GALLO menthols and red for GALLO filters. Directly
below the large rooster device is the word GALLO. The rooster device is given prominence in the
GALLO cigarette packs in terms of size and location on the labels. 84
The GALLO mark appears to be a fanciful and arbitrary mark for the cigarettes as it has no relation at all
to the product but was chosen merely as a trademark due to the fondness for fighting cocks of the son of
petitioners' president. Furthermore, petitioners adopted GALLO, the Spanish word for rooster, as a
cigarette trademark to appeal to one of their target markets, the sabungeros(cockfight aficionados). 85
Also, as admitted by respondents themselves, 86 on the side of the GALLO cigarette packs are the words
"MADE BY MIGHTY CORPORATION," thus clearly informing the public as to the identity of the
manufacturer of the cigarettes.
On the other hand, GALLO Winery's wine and brandy labels are diverse. In many of them, the labels are
embellished with sketches of buildings and trees, vineyards or a bunch of grapes while in a few, one or
two small roosters facing right or facing each other (atop the EJG crest, surrounded by leaves or ribbons),
with additional designs in green, red and yellow colors, appear as minor features thereof. 87 Directly
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below or above these sketches is the entire printed name of the founder-owners, "ERNEST & JULIO (g) whether the article is bought for immediate
GALLO" or just their surname "GALLO," 88 which appears indifferent fonts, sizes, styles and labels, consumption, 100 that is, day-to-day household items 101
unlike petitioners' uniform casque-font bold-lettered GALLO mark.
(h) the fields of manufacture 102
Moreover, on the labels of Gallo Winery's wines are printed the words "VINTED AND BOTTLED BY
ERNEST & JULIO GALLO, MODESTO, CALIFORNIA." 89 (i) the conditions under which the article is usually
purchased 103 and
The many different features like color schemes, art works and other markings of both products drown out
the similarity between them the use of the word "GALLO" a family surname for the Gallo Winery's (j) the channels of trade through which the goods flow, 104 how
wines and a Spanish word for rooster for petitioners' cigarettes. they are distributed, marketed, displayed and sold. 105
The wisdom of this approach is its recognition that each trademark infringement case presents its own
WINES AND CIGARETTES ARE NOT unique set of facts. No single factor is preeminent, nor can the presence or absence of one determine,
IDENTICAL, SIMILAR, COMPETING OR without analysis of the others, the outcome of an infringement suit. Rather, the court is required to sift the
RELATED GOODS evidence relevant to each of the criteria. This requires that the entire panoply of elements constituting the
Confusion of goods is evident where the litigants are actually in competition; but confusion of business relevant factual landscape be comprehensively examined. 106It is a weighing and balancing process.
may arise between non-competing interests as well. 90 With reference to this ultimate question, and from a balancing of the determinations reached on all of the
factors, a conclusion is reached whether the parties have a right to the relief sought. 107
Thus, apart from the strict application of Section 20 of the Trademark Law and Article 6bis of the Paris
Convention which proscribe trademark infringement not only of goods specified in the certificate of
registration but also of identical or similar goods, we have also uniformly recognized and applied the
A very important circumstance though is whether there exists a likelihood that an appreciable number of
modern concept of "related goods." 91 Simply stated, when goods are so related that the public may be,
ordinarily prudent purchasers will be misled, or simply confused, as to the source of the goods in
or is actually, deceived and misled that they come from the same maker or manufacturer, trademark
question. 108 The "purchaser" is not the "completely unwary consumer" but is the "ordinarily intelligent
infringement occurs. 92
buyer" considering the type of product involved. 109 He is "accustomed to buy, and therefore to some
Non-competing goods may be those which, though they are not in actual competition, are so related to extent familiar with, the goods in question. The test of fraudulent simulation is to be found in the
each other that it can reasonably be assumed that they originate from one manufacturer, in which case, likelihood of the deception of some persons in some measure acquainted with an established design and
confusion of business can arise out of the use of similar marks. 93They may also be those which, being desirous of purchasing the commodity with which that design has been associated. The test is not found
entirely unrelated, cannot be assumed to have a common source; hence, there is no confusion of business, in the deception, or the possibility of deception, of the person who knows nothing about the design which
even though similar marks are used. 94 Thus, there is no trademark infringement if the public does not has been counterfeited, and who must be indifferent between that and the other. The simulation, in order
expect the plaintiff to make or sell the same class of goods as those made or sold by the defendant. 95 to be objectionable, must be such as appears likely to mislead the ordinary intelligent buyer who has a
need to supply and is familiar with the article that he seeks to purchase." 110
In resolving whether goods are related, 96 several factors come into play:
Hence, in the adjudication of trademark infringement, we give due regard to the goods' usual purchaser's
(a) the business (and its location) to which the goods belong character, attitude, habits, age, training and education. 111
(b) the class of product to which the goods belong Applying these legal precepts to the present case, petitioner's use of the GALLO cigarette trademark is
not likely to cause confusion or mistake, or to deceive the "ordinarily intelligent buyer" of either wines or
(c) the product's quality, quantity, or size, including the nature of cigarettes or both as to the identity of the goods, their source and origin, or identity of the business of
the package, wrapper or container 97 petitioners and respondents.
(d) the nature and cost of the articles 98 Obviously, wines and cigarettes are not identical or competing products. Neither do they belong to the
(e) the descriptive properties, physical attributes or essential same class of goods. Respondents' GALLO wines belong to Class 33 under Rule 84[a] Chapter III, Part II
characteristics with reference to their form, composition, texture or of the Rules of Practice in Trademark Cases while petitioners' GALLO cigarettes fall under Class 34.
quality We are mindful that product classification alone cannot serve as the decisive factor in the resolution of
(f) the purpose of the goods 99 whether or not wines and cigarettes are related goods. Emphasis should be on the similarity of the

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products involved and not on the arbitrary classification or general description of their properties or the parties are not of a character which purchasers would likely attribute
characteristics. But the mere fact that one person has adopted and used a particular trademark for his to a common origin.
goods does not prevent the adoption and use of the same trademark by others on articles of a different
description. 112 The observations and conclusion of the Director of Patents are correct. The
particular goods of the parties are so unrelated that consumers, would not, in any
Both the Makati RTC and the CA held that wines and cigarettes are related products because: (1) "they probability mistake one as the source of origin of the product of the other.
are related forms of vice, harmful when taken in excess, and used for pleasure and relaxation" and (2) (Emphasis supplied).
"they are grouped or classified in the same section of supermarkets and groceries."
The same is true in the present case. Wines and cigarettes are non-competing and are totally unrelated
We find these premises patently insufficient and too arbitrary to support the legal conclusion that wines products not likely to cause confusion vis--vis the goods or the business of the petitioners and
and cigarettes are related products within the contemplation of the Trademark Law and the Paris respondents.
Convention.
Wines are bottled and consumed by drinking while cigarettes are packed in cartons or packages and
First, anything not only wines and cigarettes can be used for pleasure and relaxation and can be smoked. There is a whale of a difference between their descriptive properties, physical attributes or
harmful when taken in excess. Indeed, it would be a grave abuse of discretion to treat wines and essential characteristics like form, composition, texture and quality.
cigarettes as similar or related products likely to cause confusion just because they are pleasure-giving,
relaxing or potentially harmful. Such reasoning makes no sense. GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO wines are patronized by
middle-to-high-income earners while GALLO cigarettes appeal only to simple folks like farmers,
Second, it is common knowledge that supermarkets sell an infinite variety of wholly unrelated products fishermen, laborers and other low-income workers. 116 Indeed, the big price difference of these two
and the goods here involved, wines and cigarettes, have nothing whatsoever in common with respect to products is an important factor in proving that they are in fact unrelated and that they travel in different
their essential characteristics, quality, quantity, size, including the nature of their packages, wrappers or channels of trade. There is a distinct price segmentation based on vastly different social classes of
containers. 113 purchasers. 117
Accordingly, the U.S. patent office and courts have consistently held that the mere fact that goods are GALLO cigarettes and GALLO wines are not sold through the same channels of trade. GALLO
sold in one store under the same roof does not automatically mean that buyers are likely to be confused as cigarettes are Philippine-made and petitioners neither claim nor pass off their goods as imported or
to the goods' respective sources, connections or sponsorships. The fact that different products are emanating from Gallo Winery. GALLO cigarettes are distributed, marketed and sold through ambulant
available in the same store is an insufficient standard, in and of itself, to warrant a finding of likelihood of
and sidewalk vendors, small local sari-sari stores and grocery stores in Philippine rural areas, mainly in
confusion. 114 Misamis Oriental, Pangasinan, Bohol, and Cebu. 118 On the other hand, GALLO wines are imported,
distributed and sold in the Philippines through Gallo Winery's exclusive contracts with a domestic entity,
In this regard, we adopted the Director of Patents' finding in Philippine Refining Co., Inc. vs. Ng Sam and which is currently Andresons. By respondents' own testimonial evidence, GALLO wines are sold in
the Director of Patents: 115 hotels, expensive bars and restaurants, and high-end grocery stores and supermarkets, not through sari-
sari stores or ambulant vendors. 119
In his decision, the Director of Patents enumerated the factors that set respondent's
products apart from the goods of petitioner. He opined and we quote: Furthermore, the Makati RTC and the CA erred in relying on Carling Brewing Company vs. Philip
Morris, Inc. 120 to support its finding that GALLO wines and GALLO cigarettes are related goods. The
"I have taken into account such factors as probable purchaser attitude
courts a quo should have taken into consideration the subsequent case of IDV North America, Inc. and R
and habits, marketing activities, retail outlets, and commercial
& A Bailey Co. Limited vs. S & M Brands, Inc.: 121
impression likely to be conveyed by the trademarks if used in
conjunction with the respective goods of the parties, I believe that ham IDV correctly acknowledges, however, that there is no per se rule that the use of
on one hand, and lard, butter, oil, and soap on the other are products the same mark on alcohol and tobacco products always will result in a likelihood
that would not move in the same manner through the same channels of of confusion. Nonetheless, IDV relies heavily on the decision in John Walker &
trade. They pertain to unrelated fields of manufacture, might be Sons, Ltd. vs. Tampa Cigar Co., 124 F. Supp. 254, 256 (S.D. Fla. 1954), aff'd, 222
distributed and marketed under dissimilar conditions, and are displayed F. 2d 460 (5th Cir. 1955), wherein the court enjoined the use of the mark
separately even though they frequently may be sold through the same "JOHNNIE WALKER" on cigars because the fame of the plaintiff's mark for
retail food establishments. Opposer's products are ordinary day-to-day scotch whiskey and because the plaintiff advertised its scotch whiskey on, or in
household items whereas ham is not necessarily so. Thus, the goods of connection with tobacco products. The court, in John Walker & Sons, placed great

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significance on the finding that the infringers use was a deliberate attempt to
capitalize on the senior marks' fame. Id. At 256. IDV also relies on Carling
Brewing Co. v. Philip Morris, Inc., 297 F. Supp. 1330, 1338 (N.D. Ga. 1968), in
which the court enjoined the defendant's use of the mark "BLACK LABEL" for
cigarettes because it was likely to cause confusion with the plaintiff's well-known
mark "BLACK LABEL" for beer.
xxx xxx xxx
Those decisions, however, must be considered in perspective of the principle that
tobacco products and alcohol products should be considered related only in cases
involving special circumstances. Schenley Distillers, Inc. v. General Cigar Co., 57
C.C.P.A. 1213, 427 F. 2d 783, 785 (1970). The presence of special circumstances
has been found to exist where there is a finding of unfair competition or where a
'famous' or 'well-known mark' is involved and there is a demonstrated intent to
capitalize on that mark. For example, in John Walker & Sons, the court was
persuaded to find a relationship between products, and hence a likelihood of
confusion, because of the plaintiff's long use and extensive advertising of its mark
and placed great emphasis on the fact that the defendant used the trademark
'Johnnie Walker with full knowledge of its fame and reputation and with the
intention of taking advantage thereof.' John Walker & Sons, 124 F. Supp. At
256; see Mckesson & Robbins, Inc. v. P.Lorillard Co., 1959 WL 5894, 120
U.S.P.Q. 306, 307 (1959) (holding that the decision in John Walker & Sons was
'merely the law on the particular case based upon its own peculiar facts'); see
also Alfred Dunhill, 350 F. Supp. At 1363 (defendant's adoption of 'Dunhill' mark
was not innocent). However, in Schenley, the court noted that the relation between
tobacco and whiskey products is significant where a widely known arbitrary mark
has long been used for diversified products emanating from a single source and a
newcomer seeks to use the same mark on unrelated goods. Schenley, 427 F.2d. at
785. Significantly, in Schenley, the court looked at the industry practice and the
facts of the case in order to determine the nature and extent of the relationship
between the mark on the tobacco product and the mark on the alcohol product.
The record here establishes conclusively that IDV has never advertised BAILEYS
liqueurs in conjunction with tobacco or tobacco accessory products and that IDV
has no intent to do so. And, unlike the defendant in Dunhill, S & M Brands does
not market bar accessories, or liqueur related products, with its cigarettes. The
advertising and promotional materials presented a trial in this action demonstrate a
complete lack of affiliation between the tobacco and liqueur products bearing the
marks here at issue.
xxx xxx xxx
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Of equal significance, it is undisputed that S & M Brands had no intent, by
adopting the family name 'Bailey's' as the mark for its cigarettes, to capitalize upon
the fame of the 'BAILEYS' mark for liqueurs. See Schenley, 427 F. 2d at
785. Moreover, as will be discussed below, and as found in Mckesson & Robbins,
the survey evidence refutes the contention that cigarettes and alcoholic beverages
are so intimately associated in the public mind that they cannot under any
circumstances be sold under the same mark without causing confusion. See
Mckesson & Robbins, 120 U.S.P.Q. at 308.
Taken as a whole, the evidence here demonstrates the absence of the 'special
circumstances' in which courts have found a relationship between tobacco and
alcohol products sufficient to tip the similarity of goods analysis in favor of the
protected mark and against the allegedly infringing mark. It is true that BAILEYS
liqueur, the world's best selling liqueur and the second best selling in the United
States, is a well-known product. That fact alone, however, is insufficient to invoke
the special circumstances connection here where so much other evidence and so
many other factors disprove a likelihood of confusion. The similarity of products
analysis, therefore, augers against finding that there is a likelihood of confusion.
(Emphasis supplied).
In short, tobacco and alcohol products may be considered related only in cases involving special
circumstances which exist only if a famous mark is involved and there is a demonstrated intent to
capitalize on it. Both of these are absent in the present case.
THE GALLO WINE TRADEMARK IS NOT A
WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS
First, the records bear out that most of the trademark registrations took place in the late 1980s and the
1990s, that is, after Tobacco Industries' use of the GALLO cigarette trademark in 1973 and petitioners'
use of the same mark in 1984.
GALLO wines and GALLO cigarettes are neither the same, identical, similar nor related goods,
arequisite element under both the Trademark Law and the Paris Convention.
Second, the GALLO trademark cannot be considered a strong and distinct mark in the Philippines.
Respondents do not dispute the documentary evidence that aside from Gallo Winery's GALLO trademark
registration, the Bureau of Patents, Trademarks and Technology Transfer also issued on September 4,
1992 Certificate of Registration No. 53356 under the Principal Register approvingProductos Alimenticios
Gallo, S.A's April 19, 1990 application for GALLO trademark registration and use for its "noodles,
prepared food or canned noodles, ready or canned sauces for noodles, semolina, wheat flour and bread
crumbs, pastry, confectionery, ice cream, honey, molasses syrup, yeast, baking powder, salt, mustard,
vinegar, species and ice." 122
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COMMERCIAL LAW REVIEW (Law on Intellectual Property)
Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs. Court of Appeals and
NSR Rubber Corporation, 123 "GALLO" cannot be considered a "well-known" mark within the
contemplation and protection of the Paris Convention in this case since wines and cigarettes are not
identical or similar goods:
We agree with public respondents that the controlling doctrine with respect to the
applicability of Article 8 of the Paris Convention is that established in Kabushi
Kaisha Isetan vs. Intermediate Appellate Court (203 SCRA 59 [1991]). As pointed
out by the BPTTT:
"Regarding the applicability of Article 8 of the Paris Convention, this
Office believes that there is no automatic protection afforded an entity
whose tradename is alleged to have been infringed through the use of
that name as a trademark by a local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al.,
G.R. No. 75420, 15 November 1991, the Honorable Supreme Court held
that:
'The Paris Convention for the Protection of Industrial Property
does not automatically exclude all countries of the world
which have signed it from using a tradename which happens to
be used in one country. To illustrate if a taxicab or bus
company in a town in the United Kingdom or India happens to
use the tradename 'Rapid Transportation,' it does not
necessarily follow that 'Rapid' can no longer be registered in
Uganda, Fiji, or the Philippines.
This office is not unmindful that in (sic) the Treaty of Paris for the
Protection of Intellectual Property regarding well-known marks and
possible application thereof in this case. Petitioner, as this office sees it,
is trying to seek refuge under its protective mantle, claiming that the
subject mark is well known in this country at the time the then
application of NSR Rubber was filed.
However, the then Minister of Trade and Industry, the Hon. Roberto V.
Ongpin, issued a memorandum dated 25 October 1983 to the Director of
Patents, a set of guidelines in the implementation of Article 6bis of the
Treaty of Paris. These conditions are:
a) the mark must be internationally known;
b) the subject of the right must be a trademark,
not a patent or copyright or anything else;
c) the mark must be for use in the same or
similar kinds of goods; and
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d) the person claiming must be the owner of
the mark (The Parties Convention
Commentary on the Paris Convention. Article
by Dr. Bogsch, Director General of the World
Intellectual Property Organization, Geneva,
Switzerland, 1985)'
From the set of facts found in the records, it is ruled that the Petitioner
failed to comply with the third requirement of the said memorandum that
is the mark must be for use in the same or similar kinds of goods. The
Petitioner is using the mark "CANON" for products belonging to class 2
(paints, chemical products) while the Respondent is using the same mark
for sandals (class 25).
Hence, Petitioner's contention that its mark is well-known at the time the
Respondent filed its application for the same mark should fail."
(Emphasis supplied.)
CONSENT OF THE REGISTRANT AND
OTHER AIR, JUST AND EQUITABLE
CONSIDERATIONS
Each trademark infringement case presents a unique problem which must be answered by weighing the
conflicting interests of the litigants. 124
Respondents claim that GALLO wines and GALLO cigarettes flow through the same channels of trade,
that is, retail trade. If respondents' assertion is true, then both goods co-existed peacefully for a
considerable period of time. It took respondents almost 20 years to know about the existence of GALLO
cigarettes and sue petitioners for trademark infringement. Given, on one hand, the long period of time
that petitioners were engaged in the manufacture, marketing, distribution and sale of GALLO cigarettes
and, on the other, respondents' delay in enforcing their rights (not to mention implied consent,
acquiescence or negligence) we hold that equity, justice and fairness require us to rule in favor of
petitioners. The scales of conscience and reason tip far more readily in favor of petitioners than
respondents.
Moreover, there exists no evidence that petitioners employed malice, bad faith or fraud, or that they
intended to capitalize on respondents' goodwill in adopting the GALLO mark for their cigarettes which
are totally unrelated to respondents' GALLO wines. Thus, we rule out trademark infringement on the part
of petitioners.
PETITIONERS ARE ALSO NOT LIABLE
FOR UNFAIR COMPETITION
Under Section 29 of the Trademark Law, any person who employs deception or any other means contrary
to good faith by which he passes off the goods manufactured by him or in which he deals, or his business,
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COMMERCIAL LAW REVIEW (Law on Intellectual Property)
or services for those of the one having established such goodwill, or who commits any acts calculated to
produce said result, is guilty of unfair competition. It includes the following acts:
(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;
(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.
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 constitutes unfair competition. Actual
or probable deception and confusion on the part of customers by reason of defendant's practices must
always appear. 125 On this score, we find that petitioners never attempted to pass off their cigarettes as
those of respondents. There is no evidence of bad faith or fraud imputable to petitioners in using their
GALLO cigarette mark.
All told, after applying all the tests provided by the governing laws as well as those recognized by
jurisprudence, we conclude that petitioners are not liable for trademark infringement, unfair competition
or damages.
WHEREFORE, finding the petition for review meritorious, the same is hereby GRANTED. The
questioned decision and resolution of the Court of Appeals in CA-G.R. CV No. 65175 and the November
26, 1998 decision and the June 24, 1999 order of the Regional Trial Court of Makati, Branch 57 in Civil
Case No. 93-850 are hereby REVERSED and SET ASIDE and the complaint against petitioners
DISMISSED.
Costs against respondents.
SO ORDERED.
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6. Great White Shark Ent. V. Cavalde, Jr., G.R. No. 192294, Nov. 21, 2012
FACTS:
On July 31, 2002, Caralde filed before the Bureau of Legal Affairs (BLA), IPO a trademark application
seeking to register the mark "SHARK & LOGO" for his manufactured goods under Class 25, such as
slippers, shoes and sandals. Petitioner, a foreign corporation domiciled in Florida, USA, opposed the
application claiming to be the owner of the mark consisting of a representation of a shark in color. It
alleged that the mark pending registration is confusingly similar with theirs which is likely to confuse
the public.
Caralde averred that the subject marks are distinctively different from one another and easily
distinguishable.
The BLA Director ruled in favor of petitioners citing that the shark logo was both a dominant feature
and are similar and that both trademarks belong to the same class. The Director General of the IPO
affirmed this decision. The CA, however, reversed the decision citing that there were no confusing
similarity.
ISSUE: Whether there is confusing similarity between the trademarks.
RULING:
No. A trademark device is susceptible to registration if it is crafted fancifully or arbitrarily and is
capable of identifying and distinguishing the goods of one manufacturer or seller from those of another.
Apart from its commercial utility, the benchmark of trademark registrability is distinctiveness. Thus, a
generic figure, as that of a shark in this case, if employed and designed in a distinctive manner, can be a
registrable trademark device, subject to the provisions of the IP Code.
Irrespective of the Holistic and Dominancy tests, the Court finds no confusing similarity between the
subject marks. While both marks use the shape of a shark, the Court noted distinct visual and aural
differences between them.
As may be gleaned from the foregoing, the visual dissimilarities between the two (2) marks are evident
and significant, negating the possibility of confusion in the minds of the ordinary purchaser, especially
considering the distinct aural difference between the marks.
Finally, there being no confusing similarity between the subject marks, the matter of whether Great
White Sharks mark has gained recognition and acquired becomes unnecessary.
[G.R. No. 192294. November 21, 2012.]
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COMMERCIAL LAW REVIEW (Law on Intellectual Property)
GREAT WHITE SHARK ENTERPRISES, INC., petitioner, vs. DANILO M.
CARALDE, JR.,respondent.
Assailed in this Petition for Review on Certiorari under Rule 45 of the Rules of Court is the December
14, 2009 Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 105787, which reversed and set
aside the October 6, 2008 Decision 2 of the Director General of the Intellectual Property Office (IPO),
and directed him to grant the application for the mark "SHARK & LOGO" filed by respondent Danilo M.
Caralde, Jr. (Caralde).
The Factual Antecedents
On July 31, 2002, Caralde filed before the Bureau of Legal Affairs (BLA), IPO a trademark application
seeking to register the mark "SHARK & LOGO" for his manufactured goods under Class 25, such as
slippers, shoes and sandals. Petitioner Great White Shark Enterprises, Inc. (Great White Shark), a foreign
corporation domiciled in Florida, USA, opposed 3 the application claiming to be the owner of the mark
consisting of a representation of a shark in color, known as "GREG NORMAN LOGO" (associated with
apparel worn and promoted by Australian golfer Greg Norman). It alleged that, being a world famous
mark which is pending registration before the BLA since February 19, 2002, 4 the confusing similarity
between the two (2) marks is likely to deceive or confuse the purchasing public into believing that
Caralde's goods are produced by or originated from it, or are under its sponsorship, to its damage and
prejudice. aHTCIc
In his Answer, 5 Caralde explained that the subject marks are distinctively different from one another and
easily distinguishable. When compared, the only similarity in the marks is in the word "shark" alone,
differing in other factors such as appearance, style, shape, size, format, color, ideas counted by marks,
and even in the goods carried by the parties.
Pending the inter partes proceedings, Great White Shark's trademark application was granted and it was
issued Certificate of Registration No. 4-2002-001478 on October 23, 2006 for clothing, headgear and
footwear, including socks, shoes and its components. 6
The Ruling of the BLA Director
On June 14, 2007, the BLA Director rendered a Decision 7 rejecting Caralde's application, ratiocinating, as their dominant feature. It observed that Caralde's mark is more fanciful and colorful, and contains
as follows:
Prominent in both competing marks is the illustration of a shark. The dominant
feature in opposer's mark is the illustration of a shark drawn plainly. On the other
hand, the dominant feature in respondent's mark is a depiction of shark shaded
darkly, with its body designed in a way to contain the letters "A" and "R" with the
tail suggestive of the letter "K." Admittedly, there are some differences between
the competing marks. Respondent's mark contains additional features which are
absent in opposer's mark. Their dominant features,i.e., that of an illustration of a
shark, however, are of such degree that the overall impression it create [sic] is that
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the two competing marks are at least strikingly similar to each another [ sic], hence,
the likelihood of confusion of goods is likely to occur. . . .
Moreover, the goods of the competing marks falls [sic] under the same Class 25.
Opposer's mark GREG NORMAN LOGO, which was applied for registration on
February 19, 2002, pertains to clothing apparel particularly hats, shirts and pants.
Respondent, on the other hand, later applied for the registration of the mark
SHARK & LOGO on July 3, 2002 (should be July 31, 2002) for footwear products
particularly slippers, shoes, sandals. Clearly, the goods to which the parties use
their marks belong to the same class and are related to each other." 8 (Italics ours)
The BLA Director, however, found no merit in Great White Shark's claim that its mark was famous and
well-known for insufficiency of evidence.
The Ruling of the IPO Director General
On appeal, the IPO Director General affirmed 9 the final rejection of Caralde's application, ruling that the
competing marks are indeed confusingly similar. Great White Shark's mark is used in clothing and
footwear, among others, while Caralde's mark is used on similar goods like shoes and slippers. Moreover,
Great White Shark was first in applying for registration of the mark on February 19, 2002, followed by
Caralde on July 31, 2002. Furthermore, Great White Shark's mark consisted of an illustration of a shark
while Caralde's mark had a composite figure forming a silhouette of a shark. Thus, as to content, word,
sound and meaning, both marks are similar, barring the registration of Caralde's mark under Section
123.1 (d) of Republic Act No. 8293, otherwise known as the Intellectual Property Code (IP Code).
Nonetheless, while Great White Shark submitted evidence of the registration of its mark in several other
countries, the IPO Director General considered its mark as not well-known for failing to meet the other
criteria laid down under Rule 102 10 of the Rules and Regulations on Trademarks, Service Marks, Trade
Names and Marked or Stamped Containers. cCaATD
The Ruling of the Court of Appeals
However, on petition for review, the CA reversed and set aside the foregoing Decision and directed the
IPO to grant Caralde's application for registration of the mark "SHARK & LOGO." The CA found no
confusing similarity between the subject marks notwithstanding that both contained the shape of a shark
several elements which are easily distinguishable from that of the Great White Shark. It further opined
that considering their price disparity, there is no likelihood of confusion as they travel in different
channels of trade. 11
Issues Before the Court
THE COURT OF APPEALS ERRED IN RULING THAT THE
RESPONDENT'S MARK SUBJECT OF THE APPLICATION BEING
OPPOSED BY THE PETITIONER IS NOT CONFUSINGLY SIMILAR TO
PETITIONER'S REGISTERED MARK
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THE COURT OF APPEALS ERRED IN RULING THAT THE COST OF

GOODS COULD NEGATE LIKELIHOOD OF CON[F]USION
THE COURT OF APPEALS ERRED IN REVERSING THE PREVIOUS
RESOLUTIONS OF THE DIRECTOR GENERAL AND THE BLA 12

The Court's Ruling

In the instant petition for review on certiorari, Great White Shark maintains that the two (2) competing
marks are confusingly similar in appearance, shape and color scheme because of the dominant feature of
a shark which is likely to deceive or cause confusion to the purchasing public, suggesting an intention on
Caralde's part to pass-off his goods as that of Great White Shark and to ride on its goodwill. This,
notwithstanding the price difference, targets market and channels of trade between the competing
products. Hence, the CA erred in reversing the rulings of the IPO Director General and the BLA Director
who are the experts in the implementation of the IP Code.
In contrast, the shark in Caralde's "SHARK & LOGO" mark 17 is illustrated in letters outlined in the
The petition lacks merit.
form of a shark with the letter "S" forming the head, the letter "H" forming the fins, the letters "A" and
A trademark device is susceptible to registration if it is crafted fancifully or arbitrarily and is capable of "R" forming the body, and the letter "K" forming the tail. In addition, the latter mark includes several
identifying and distinguishing the goods of one manufacturer or seller from those of another. Apart from more elements such as the word "SHARK" in a different font underneath the shark outline, layers of
its commercial utility, the benchmark of trademark registrability is distinctiveness. 13 Thus, a generic waves, and a tree on the right side, and liberally used the color blue with some parts in red, yellow, green
figure, as that of a shark in this case, if employed and designed in a distinctive manner, can be a and white. 18 The whole design is enclosed in an elliptical shape with two linings, thus:
registrable trademark device, subject to the provisions of the IP Code.
Corollarily, Section 123.1 (d) of the IP Code provides that a mark cannot be registered if it is identical
with a registered mark belonging to a different proprietor with an earlier filing or priority date, with
respect to the same or closely related goods or services, or has a near resemblance to such mark as to
likely deceive or cause confusion. HCEISc
In determining similarity and likelihood of confusion, case law has developed the Dominancy Test and
the Holistic or Totality Test. The Dominancy Test focuses on the similarity of the dominant features of the
competing trademarks that might cause confusion, mistake, and deception in the mind of the ordinary
purchaser, and gives more consideration to the aural and visual impressions created by the marks on the
buyers of goods, giving little weight to factors like prices, quality, sales outlets, and market segments. In
contrast, the Holistic or Totality Test considers the entirety of the marks as applied to the products,
including the labels and packaging, and focuses not only on the predominant words but also on the other
features appearing on both labels to determine whether one is confusingly similar to the other 14 as to
mislead the ordinary purchaser. The"ordinary purchaser" refers to one "accustomed to buy, and
therefore to some extent familiarwith, the goods in question." 15
Irrespective of both tests, the Court finds no confusing similarity between the subject marks. While both
marks use the shape of a shark, the Court noted distinct visual and aural differences between them. In
Great White Shark's "GREG NORMAN LOGO," there is an outline of a shark formed with the use of
green, yellow, blue and red 16 lines/strokes, to wit:

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As may be gleaned from the foregoing, the visual dissimilarities between the two (2) marks are evident
and significant, negating the possibility of confusion in the minds of the ordinary purchaser, especially
considering the distinct aural difference between the marks.
Finally, there being no confusing similarity between the subject marks, the matter of whether Great White
Shark's mark has gained recognition and acquired goodwill becomes unnecessary. 19Besides, both the
BLA Director and the IPO Director General have ruled that Great White Shark failed to meet the criteria
under Rule 102 of the Rules and Regulations on Trademarks, Service Marks, Trade Names and Marked
or Stamped Containers to establish that its mark is well-known, and the latter failed to show otherwise.
WHEREFORE, the Court resolves to DENY the instant petition and AFFIRM the assailed December
14, 2009 Decision of the Court of Appeals (CA) for failure to show that the CA committed reversible
error in setting aside the Decision of the IPO Director General and allowing the registration of the mark
"SHARK & LOGO" by respondent Danilo M. Caralde, Jr. cACEHI
SO ORDERED.
7. Dermaline, Inc. v. Myra Pharmaceuticals, Inc. G.R. No. 190065, Aug. 16, 2010
Facts: Dermaline filed with the IPO an application to register the trademark Dermaline. Myra
opposed this alleging that the trademark resembles its trademark Dermalin and will cause confusion,
mistake and deception to the purchasing public. Dermalin was registered way back 1986 and was
commercially used since 1977. Myra claims that despite attempts of Dermaline to differentiate its mark,
the dominant feature is the term Dermaline to which the first 8 letters were identical to that of
Dermalin. The pronunciation for both is also identical. Further, both have 3 syllables each with
identical sound and appearance.
Issue: W/N the IPO should allow the registration of the trademark Dermaline. NO
Held: As Myra correctly posits, it has the right under Section 147 of R.A. No. 8293 to prevent third
parties from using a trademark, or similar signs or containers for goods or services, without its consent,
identical or similar to its registered trademark, where such use would result in a likelihood of confusion.
In determining confusion, case law has developed two (2) tests, the Dominancy Test and the Holistic or
Totality Test.
The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks
that might cause confusion or deception. Duplication or imitation is not even required; neither is it
necessary that the label of the applied mark for registration should suggest an effort to imitate. Relative
to the question on confusion of marks and trade names, jurisprudence noted two (2) types of confusion,
viz: (1) confusion of goods (product confusion), where the ordinarily prudent purchaser would be
induced to purchase one product in the belief that he was purchasing the other; and (2) confusion of
business (source or origin confusion), where, although the goods of the parties are different, the
product, the mark of which registration is applied for by one party, is such as might reasonably be
assumed to originate with the registrant of an earlier product, and the public would then be deceived
either into that belief or into the belief that there is some connection between the two parties, though
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inexistent.
Using this test, the IPO declared that both confusion of goods and service and confusion of business or
of origin were apparent in both trademarks. While it is true that the two marks are presented differently,
they are almost spelled in the same way, except for Dermalines mark which ends with the letter "E,"
and they are pronounced practically in the same manner in three (3) syllables, with the ending letter "E"
in Dermalines mark pronounced silently. Thus, when an ordinary purchaser, for example, hears an
advertisement of Dermalines applied trademark over the radio, chances are he will associate it with
Myras. When one applies for the registration of a trademark or label which is almost the same or that
very closely resembles one already used and registered by another, the application should be rejected
and dismissed outright, even without any opposition on the part of the owner and user of a previously
registered label or trademark.
Further, Dermalines stance that its product belongs to a separate and different classification from
Myras products with the registered trademark does not eradicate the possibility of mistake on the part
of the purchasing public to associate the former with the latter, especially considering that both
classifications pertain to treatments for the skin.
[G.R. No. 190065. August 16, 2010.]
DERMALINE, INC., petitioner, vs. MYRA PHARMACEUTICALS,
INC., respondent.
This is a petition for review on certiorari 1 seeking to reverse and set aside the Decision dated
August 7, 2009 2 and the Resolution dated October 28, 2009 3 of the Court of Appeals (CA) in CA-
G.R. SP No. 108627.
The antecedent facts and proceedings
On October 21, 2006, petitioner Dermaline, Inc. (Dermaline) filed before the Intellectual Property
Office (IPO) an application for registration of the trademark "DERMALINE DERMALINE, INC."
(Application No. 4-2006011536). The application was published for Opposition in the IPO E-
Gazette on March 9, 2007.
On May 8, 2007, respondent Myra Pharmaceuticals, Inc. (Myra) filed a Verified
Opposition4 alleging that the trademark sought to be registered by Dermaline so resembles its
trademark "DERMALIN" and will likely cause confusion, mistake and deception to the purchasing
public. Myra said that the registration of Dermaline's trademark will violate Section
123 5 of Republic Act (R.A.) No. 8293 (Intellectual Property Code of the Philippines). It further
alleged that Dermaline's use and registration of its applied trademark will diminish the
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COMMERCIAL LAW REVIEW (Law on Intellectual Property)
distinctiveness and dilute the goodwill of Myra's "DERMALIN," registered with the IPO way back
July 8, 1986, renewed for ten (10) years on July 8, 2006. Myra has been extensively using
"DERMALIN" commercially since October 31, 1977, and said mark is still valid and subsisting.
Myra claimed that, despite Dermaline's attempt to differentiate its applied mark, the dominant
feature is the term "DERMALINE," which is practically identical with its own "DERMALIN," more
particularly that the first eight (8) letters of the marks are identical, and that notwithstanding the
additional letter "E" by Dermaline, the pronunciation for both marks are identical. Further, both
marks have three (3) syllables each, with each syllable identical in sound and appearance, even if the
last syllable of "DERMALINE" consisted of four (4) letters while "DERMALIN" consisted only of
three (3). CIcTAE
Myra also pointed out that Dermaline applied for the same mark "DERMALINE" on June 3, 2003
and was already refused registration by the IPO. By filing this new application for registration,
Dermaline appears to have engaged in a fishing expedition for the approval of its mark. Myra argued
that its intellectual property right over its trademark is protected under Section 147 6 of R.A. No.
8293.
Myra asserted that the mark "DERMALINE DERMALINE, INC." is aurally similar to its own mark
such that the registration and use of Dermaline's applied mark will enable it to obtain benefit from
Myra's reputation, goodwill and advertising and will lead the public into believing that Dermaline is,
in any way, connected to Myra. Myra added that even if the subject application was under
Classification 44 7 for various skin treatments, it could still be connected to the "DERMALIN" mark
under Classification 5 8 for pharmaceutical products, since ultimately these goods are very closely
related.
In its Verified Answer, 9 Dermaline countered that a simple comparison of the trademark
"DERMALINE DERMALINE, INC." vis- -vis Myra's "DERMALIN" trademark would show that
they have entirely different features and distinctive presentation, thus it cannot result in confusion,
mistake or deception on the part of the purchasing public. Dermaline contended that, in determining
if the subject trademarks are confusingly similar, a comparison of the words is not the only
determinant, but their entirety must be considered in relation to the goods to which they are
attached, including the other features appearing in both labels. It claimed that there were glaring and
striking dissimilarities between the two trademarks, such that its trademark "DERMALINE
DERMALINE, INC." speaks for itself (Res ipsa loquitur). Dermaline further argued that there could
not be any relation between its trademark for health and beauty services from Myra's trademark
classified under medicinal goods against skin disorders.
In determining likelihood of confusion, case law has developed two (2) tests, the Dominancy Test and the
Holistic or Totality Test.
The parties failed to settle amicably. Consequently, the preliminary conference was terminated and
they were directed to file their respective position papers. 10
On April 10, 2008, the IPO-Bureau of Legal Affairs rendered Decision No. 2008-70 11sustaining
Myra's opposition pursuant to Section 123.1 (d) of R.A. No. 8293. It disposed
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WHEREFORE, the Verified Opposition is, as it is, hereby SUSTAINED.
Consequently, Application Serial No. 4-2006-011536 for the mark 'DERMALINE,
DERMALINE, INC. Stylized Wordmark' for Dermaline, Inc. under class 44
covering the aforementioned goods filed on 21 October 2006, is as it is hereby,
REJECTED.
Let the file wrapper of 'DERMALINE, DERMALINE, INC. Stylized Wordmark'
subject matter of this case be forwarded to the Bureau of Trademarks (BOT) for
appropriate action in accordance with this Decision.
SO ORDERED. 12
Aggrieved, Dermaline filed a motion for reconsideration, but it was denied under Resolution No.
2009-12 (D) 13 dated January 16, 2009.
Expectedly, Dermaline appealed to the Office of the Director General of the IPO. However, in an
Order 14 dated April 17, 2009, the appeal was dismissed for being filed out of time. TCaADS
Undaunted, Dermaline appealed to the CA, but it affirmed and upheld the Order dated April 17,
2009 and the rejection of Dermaline's application for registration of trademark. The CA likewise
denied Dermaline's motion for reconsideration; hence, this petition raising the issue of whether the
CA erred in upholding the IPO's rejection of Dermaline's application for registration of trademark.
The petition is without merit.
A trademark is any distinctive word, name, symbol, emblem, sign, or device, or any combination
thereof, adopted and used by a manufacturer or merchant on his goods to identify and distinguish
them from those manufactured, sold, or dealt by others. 15 Inarguably, it is an intellectual property
deserving protection by law. In trademark controversies, each case must be scrutinized according to
its peculiar circumstances, such that jurisprudential precedents should only be made to apply if they
are specifically in point. 16
As Myra correctly posits, as a registered trademark owner, it has the right under Section 147 of R.A.
No. 8293 to prevent third parties from using a trademark, or similar signs or containers for goods or
services, without its consent, identical or similar to its registered trademark, where such use would
result in a likelihood of confusion.
The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks
that might cause confusion or deception. 17 It is applied when the trademark sought to be registered
contains the main, essential and dominant features of the earlier registered trademark, and confusion
or deception is likely to result. Duplication or imitation is not even required; neither is it necessary
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that the label of the applied mark for registration should suggest an effort to imitate. The important
issue is whether the use of the marks involved would likely cause confusion or mistake in the mind
of or deceive the ordinary purchaser, or one who is accustomed to buy, and therefore to some extent
familiar with, the goods in question. 18 Given greater consideration are 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. 19 The test of dominancy is now explicitly incorporated
into law in Section 155.1 of R.A. No. 8293 which provides
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; (emphasis supplied) DETcAH
On the other hand, the Holistic Test entails a consideration of the entirety of the marks as applied to
the products, including labels and packaging, in determining confusing similarity. The scrutinizing
eye of the observer must focus not only on the predominant words but also on the other features
appearing in both labels so that a conclusion may be drawn as to whether one is confusingly similar
to the other. 20
Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2)
types of confusion, viz.: (1) confusion of goods (product confusion), where the ordinarily prudent
purchaser would be induced to purchase one product in the belief that he was purchasing the other;
and (2) confusion of business (source or origin confusion), where, although the goods of the parties
are different, the product, the mark of which registration is applied for by one party, is such as might
reasonably be assumed to originate with the registrant of an earlier product, and the public would
then be deceived either into that belief or into the belief that there is some connection between the
two parties, though inexistent. 21
In rejecting the application of Dermaline for the registration of its mark "DERMALINE
DERMALINE, INC.," the IPO applied the Dominancy Test. It declared that both confusion of goods
and service and confusion of business or of origin were apparent in both trademarks. It also noted
that, per Bureau Decision No. 2007-179 dated December 4, 2007, it already sustained the opposition
of Myra involving the trademark "DERMALINE" of Dermaline under Classification 5. The IPO
also upheld Myra's right under Section 138 of R.A. No. 8293, which provides that a certification of
registration of a mark is prima facie evidence of the validity of the registration, the registrant's
ownership of the mark, and of the registrant's exclusive right to use the same in connection with the
goods and those that are related thereto specified in the certificate.
We agree with the findings of the IPO. As correctly applied by the IPO in this case, while there are
no set rules that can be deduced as what constitutes a dominant feature with respect to trademarks
applied for registration; usually, what are taken into account are signs, color, design, peculiar shape
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or name, or some special, easily remembered earmarks of the brand that readily attracts and catches
the attention of the ordinary consumer. 22
Dermaline's insistence that its applied trademark "DERMALINE DERMALINE, INC." had
differences "too striking to be mistaken" from Myra's "DERMALIN" cannot, therefore, be sustained.
While it is true that the two marks are presented differently Dermaline's mark is written with the
first "DERMALINE" in script going diagonally upwards from left to right, with an upper case "D"
followed by the rest of the letters in lower case, and the portion "DERMALINE, INC." is written in
upper case letters, below and smaller than the long-hand portion; while Myra's mark "DERMALIN"
is written in an upright font, with a capital "D" and followed by lower case letters the likelihood
of confusion is still apparent. This is because they are almost spelled in the same way, except for
Dermaline's mark which ends with the letter "E," and they are pronounced practically in the same
manner in three (3) syllables, with the ending letter "E" in Dermaline's mark pronounced silently.
Thus, when an ordinary purchaser, for example, hears an advertisement of Dermaline's applied
trademark over the radio, chances are he will associate it with Myra's registered mark. aECSHI
Further, Dermaline's stance that its product belongs to a separate and different classification from
Myra's products with the registered trademark does not eradicate the possibility of mistake on the
part of the purchasing public to associate the former with the latter, especially considering that both
classifications pertain to treatments for the skin.
Indeed, the registered trademark owner may use its 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 is cognizant that the registered trademark
owner enjoys protection in product and market areas that are the normal potential expansion of his
business. Thus, we have held
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). 23(Emphasis supplied)
Thus, the public may mistakenly think that Dermaline is connected to or associated with Myra, such
that, considering the current proliferation of health and beauty products in the market, the purchasers
would likely be misled that Myra has already expanded its business through Dermaline from merely
carrying pharmaceutical topical applications for the skin to health and beauty services.
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Verily, when one applies for the registration of a trademark or label which is almost the same or that
very closely resembles one already used and registered by another, the application should be rejected
and dismissed outright, even without any opposition on the part of the owner and user of a
previously registered label or trademark. This is intended not only to avoid confusion on the part of
the public, but also to protect an already used and registered trademark and an established
goodwill. 24
Besides, the issue on protection of intellectual property, such as trademarks, is factual in nature. The
findings of the IPO, upheld on appeal by the same office, and further sustained by the CA, bear great
weight and deserves respect from this Court. Moreover, the decision of the IPO had already attained
finality when Dermaline failed to timely file its appeal with the IPO Office of the Director General.
WHEREFORE, the petition is DENIED. The Decision dated August 7, 2009 and the Resolution
dated October 28, 2009 of the Court of Appeals in CA-G.R. SP No. 108627 areAFFIRMED. Costs
against petitioner. aTADcH
SO ORDERED.
8. Societe Des Produits Nestle, S.A. Martin Dy, Jr. G.R. No. 172276, Aug. 8, 2010).
FACTS: CFC Corp filed with the BPTTT an application for the registration of the trademark FLAVOR
MASTER for instant coffee. Societe Des Produits Nestle, a Swiss company registered under Swiss laws
and domiciled in Switzerland, filed an Opposition claiming that the trademark is confusingly similar to
its trademarks for coffee and coffee extracts: MASTER ROAST and MASTER BLEND.
Likewise, an opposition was filed by Nestle Philippines, a Philippine corp and a licensee of
Societe. Nestle claimed that the use by CFC of the trademark FLAVOR MASTER and its registration
would likely cause confusion in the trade; or deceive purchasers and would falsely suggest to the
purchasing public a connection in the business of Nestle, as the dominant word present in the 3
trademarks is MASTER; or that the goods of CFC might be mistaken as having originated from the
latter.
BPTTT denied CFCs application for registration applying the dominancy test. CA reversed
applying the holistic test.
ISSUE: Whether the trademark FLAVOR MASTER is a colorable imitation of the trademarks
MASTER ROAST and MASTER BLEND and thus should be denied registration.
HELD: YES applying the dominancy test.
Colorable imitation denotes such a close or ingenious imitation as to be calculated to deceive
ordinary persons to purchase the one supposing it to be the other. In determining if colorable
imitation exists, jurisprudence has developed two kinds of tests - the Dominancy Test and the
Holistic Test. The test of dominancy focuses on the similarity of the prevalent features of the
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competing trademarks which might cause confusion or deception and thus constitute infringement.
The holistic test mandates that the entirety of the marks in question must be considered in
determining confusing similarity.
In infringement or trademark cases in the Philippines, particularly in ascertaining whether one
trademark is confusingly similar to or is a colorable imitation of another, no set rules can be
deduced. Each case must be decided on its own merits.
The CA held that the test to be applied should be the totality or holistic test, since what is of
paramount consideration is the ordinary purchaser who is, in general, undiscerningly rash in
buying the more common and less expensive household products like coffee, and is therefore less
inclined to closely examine specific details of similarities and dissimilarities between competing
products.
This Court cannot agree with the above reasoning. If the ordinary purchaser is "undiscerningly
rash" in buying such common and inexpensive household products as instant coffee, and would
therefore be "less inclined to closely examine specific details of similarities and dissimilarities"
between the two competing products, then it would be less likely for the ordinary purchaser to
notice that CFCs trademark FLAVOR MASTER carries the colors orange and mocha while that of
Nestles uses red and brown. The application of the totality or holistic test is improper since the
ordinary purchaser would not be inclined to notice the specific features, similarities or
dissimilarities, considering that the product is an inexpensive and common household item.
Moreover, the 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. The totality or holistic test
only relies on visual comparison between two trademarks whereas the dominancy test relies not
only on the visual but also on the aural and connotative comparisons and overall impressions
between the two trademarks.
This Court agrees with the BPTTT when it applied the test of dominancy. The word MASTER is
the dominant feature of opposers mark. It is printed across the middle portion of the label in bold
letters almost twice the size of the printed word ROAST. Further, the word MASTER has always
been given emphasis in the TV and radio commercials and other advertisements made in
promoting the product. Robert Jaworski and Atty. Ric Puno, the personalities engaged to promote
the product, are given the titles Master of the Game and Master of the Talk Show, respectively. In
due time, because of these advertising schemes the mind of the buying public had come to learn to
associate the word MASTER with the opposers goods.
When one looks at the label bearing the trademark FLAVOR MASTER, ones attention is easily
attracted to the word MASTER, rather than to the dissimilarities that exist. Therefore, the
possibility of confusion as to the goods which bear the competing marks or as to the origins thereof
is not farfetched.
The word "MASTER" is neither a generic nor a descriptive term. As such, it may be legally
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protected. Generic terms are those which constitute "the common descriptive name of an article or
substance," or comprise the "genus of which the particular product is a species," or are "commonly
used as the name or description of a kind of goods," or "imply reference to every member of a
genus and the exclusion of individuating characters," or "refer to the basic nature of the wares or
services provided rather than to the more idiosyncratic characteristics of a particular product," and
are not legally protectable. A term is descriptive and therefore invalid as a trademark if, as
understood in its normal and natural sense, it "forthwith conveys the characteristics, functions,
qualities or ingredients of a product to one who has never seen it and does not know what it is," or
"if it forthwith conveys an immediate idea of the ingredients, qualities or characteristics of the
goods," or if it clearly denotes what goods or services are provided in such a way that the
consumer does not have to exercise powers of perception or imagination.
The term "MASTER" is a suggestive term brought about by the advertising scheme of Nestle.
Suggestive terms are those which require "imagination, thought and perception to reach a
conclusion as to the nature of the goods." Such terms, "which subtly connote something about the
product," are eligible for protection in the absence of secondary meaning. While suggestive marks
are capable of shedding "some light" upon certain characteristics of the goods or services in
dispute, they nevertheless involve "an element of incongruity," "figurativeness," or " imaginative
effort on the part of the observer."
The term "MASTER" has acquired a certain connotation to mean the coffee products MASTER
ROAST and MASTER BLEND produced by Nestle. As such, the use by CFC of the term
"MASTER" in the trademark for its coffee product FLAVOR MASTER is likely to cause
confusion or mistake or even to deceive the ordinary purchasers.
[G.R. No. 172276. August 9, 2010.]
SOCIETE DES PRODUITS NESTLE, S.A., petitioner, vs. MARTIN T. DY,
JR.,respondent.
The Case
This is a petition 1 for review on certiorari under Rule 45 of the Rules of Court. The petition
challenges the 1 September 2005 Decision 2 and 4 April 2006 Resolution 3 of the Court of Appeals
in CA-G.R. CV No. 62730, finding respondent Martin T. Dy, Jr. (Dy, Jr.) not liable for trademark
infringement. The Court of Appeals reversed the 18 September 1998 Decision 4 of the Regional
Trial Court (RTC), Judicial Region 7, Branch 9, Cebu City, in Civil Case No. CEB-19345. TDcHCa
The Facts
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Petitioner Societe Des Produits Nestle, S.A. (Nestle) is a foreign corporation organized under the
laws of Switzerland. It manufactures food products and beverages. As evidenced by Certificate of
Registration No. R-14621 5 issued on 7 April 1969 by the then Bureau of Patents, Trademarks and
Technology Transfer, Nestle owns the "NAN" trademark for its line of infant powdered milk
products, consisting of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. NAN is classified under Class
6 "diatetic preparations for infant feeding."
Nestle distributes and sells its NAN milk products all over the Philippines. It has been investing
tremendous amounts of resources to train its sales force and to promote the NAN milk products
through advertisements and press releases.
Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered milk from Australia and repacks the
powdered milk into three sizes of plastic packs bearing the name "NANNY." The packs weigh 80,
180 and 450 grams and are sold for P8.90, P17.50 and P39.90, respectively. NANNY is is also
classified under Class 6 "full cream milk for adults in [sic] all ages." Dy, Jr. distributes and sells
the powdered milk in Dumaguete, Negros Oriental, Cagayan de Oro, and parts of Mindanao.
In a letter dated 1 August 1985, Nestle requested Dy, Jr. to refrain from using "NANNY" and to
undertake that he would stop infringing the "NAN" trademark. Dy, Jr. did not act on Nestle's request.
On 1 March 1990, Nestle filed before the RTC, Judicial Region 7, Branch 31, Dumaguete City, a
complaint 6 against Dy, Jr. for infringement. Dy, Jr. filed a motion 7 to dismiss alleging that the
complaint did not state a cause of action. In its 4 June 1990 order, 8 the trial court dismissed the
complaint. Nestle appealed the 4 June 1990 order to the Court of Appeals. In its 16 February 1993
Resolution, the Court of Appeals set aside the 4 June 1990 order and remanded the case to the trial
court for further proceedings.
Pursuant to Supreme Court Administrative Order No. 113-95, Nestle filed with the trial court a
motion 9 to transfer the case to the RTC, Judicial Region 7, Branch 9, Cebu City, which was
designated as a special court for intellectual property rights.
The RTC's Ruling
In its 18 September 1998 Decision, the trial court found Dy, Jr. liable for infringement. The trial
court held:
If determination of infringement shall only be limited on whether or not the mark
used would likely cause confusion or mistake in the minds of the buying public or
deceive customers, such in [sic] the most considered view of this forum would
be highly unlikely to happen in the instant case. This is because upon comparison
of the plaintiff's NAN and defendant's NANNY, the following features would
reveal the absence of any deceptive tendency in defendant's NANNY: (1) all NAN
products are contained tin cans [sic], while NANNY are contained in plastic packs;
(2) the predominant colors used in the labels of NAN products are blue and white,
while the predominant colors in the plastic packings of NANNY
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are blue and green; (3) the labels of NAN products have at the bottom portion an
elliptical shaped figure containing inside it a drawing of nestling birds, which is
overlapped by the trade-name "Nestle", while the plastic packs of NANNY have a
drawing of milking cows lazing on a vast green field, back-dropped with snow
covered mountains; (4) the word NAN are [sic] all in large, formal and
conservative-like block letters, while the word NANNY are [sic] all in small and
irregular style of letters with curved ends; and (5) all NAN products are milk
formulas intended for use of [sic] infants, while NANNY is an instant full cream
powdered milk intended for use of [sic] adults. DTaSIc
The foregoing has clearly shown that infringement in the instant case cannot be
proven with the use of the "test of dominancy" because the deceptive tendency of
the unregistered trademark NANNY is not apparent from the essential features of
the registered trademark NAN.
However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et al., L-29971,
Aug. 31, 1982, the Supreme Court took the occasion of discussing what is implied
in the definition of "infringement" when it stated: "Implicit in this definition is the
concept that the goods must be so related that there is likelihood either of
confusion of goods or business. . . . But as to whether trademark infringement
exists depends for the most part upon whether or not the goods are so related that
the public may be, or is actually, deceived and misled that they came from the
same maker or manufacturer. For non-competing goods may be those which,
though they are not in actual competition, are so related to each other that it might
reasonably be assumed that they originate from one manufacturer. Non-competing
goods may also be those which, being entirely unrelated, could not reasonably be
assumed to have a common source. In the former case of related goods, confusion
of business could arise out of the use of similar marks; in the latter case of non-
related goods, it could not."
Furthermore, in said case the Supreme Court as well discussed on when goods may
become so related for purposes of infringement when it stated: "Goods are related
when they belong to the same class or have same descriptive properties; when they
possess the same physical attributes or essential characteristics with reference to
their form, composition, texture or quality. They may also be related because they
serve the same purpose or are sold in grocery stores. . . .
Considering that defendant's NANNY belongs to the same class as that of
plaintiff's NAN because both are food products, the defendant's unregistered trade
mark NANNY should be held an infringement to plaintiff's registered trademark
NAN because defendant's use of NANNY would imply that it came from the
manufacturer of NAN. Furthermore, since the word "nanny" means a "child's
nurse," there might result the not so remote probability that defendant's NANNY
may be confused with infant formula NAN despite the aparent [sic] disparity
between the features of the two products. 10
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Dy, Jr. appealed the 18 September 1998 Decision to the Court of Appeals.
The Court of Appeals' Ruling
In its 1 September 2005 Decision, the Court of Appeals reversed the trial court's 18 September 1998
Decision and found Dy, Jr. not liable for infringement. The Court of Appeals held:
[T]he trial court appeared to have made a finding that there is no colorable
imitation of the registered mark "NAN" in Dy's use of "NANNY" for his own milk
packs. Yet it did not stop there. It continued on applying the "concept of related
goods."
The Supreme Court utlilized the "concept of related goods" in the said case of Esso
Standard Easter, Inc. versus Court of Appeals, et al., wherein two contending
parties used the same trademark "ESSO" for two different goods, i.e., petroleum
products and cigarettes. It rules that there is infringement of trademark involving
two goods bearing the same mark or label, even if the said goods are non-
competing, if and only if they are so related that the public may be, or is actually,
deceived that they originate from the one maker or manufacturer. Since petroleum
products and cigarettes, in kind and nature, flow through different trade channels,
and since the possibility of confusion is unlikely in the general appearances of each
mark as a whole, the Court held in this case that they cannot be so related in the
context of infringement.
In applying the concept of related goods in the present case, the trial court
haphazardly concluded that since plaintiff-appellee's NAN and defendant-
appellant's NANNY belong to the same class being food products, the unregistered
NANNY should be held an infringement of Nestle's NAN because "the use of
NANNY would imply that it came from the manufacturer of NAN." Said court
went on to elaborate further: "since the word "NANNY" means a "child's nurse,"
there might result the not so remote probability that defendant's NANNY may be
confused with infant formula NAN despite the aparent (sic) disparity between the
features of the two products as discussed above." ASHECD
The trial court's application of the doctrine laid down by the Supreme Court in the
Esso Standard case aforementioned and the cases cited therein is quite misplaced.
The goods of the two contending parties in those cases bear similar marks or
labels: "Esso" for petroleum products and cigarettes, "Selecta" for biscuits and
milk, "X-7" for soap and perfume, lipstick and nail polish. In the instant case, two
dissimilar marks are involved plaintiff-appellee's "NAN" and defendant-
appellant's "NANNY." Obviously, the concept of related goods cannot be utilized
in the instant case in the same way that it was used in the Esso Standard case.
In the Esso Standard case, the Supreme Court even cautioned judges that in
resolving infringement or trademark cases in the Philippines, particularly in
ascertaining whether one trademark is confusingly similar to or is a colorable
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imitation of another, precedent must be studied in the light of the facts of the
particular case. Each case must be decided on its own merits. In the more recent
case of Societe Des Produits Nestle S.A. Versus Court of Appeals, the High Court
further stressed that due to the peculiarity of the facts of each infringement case, a
judicial forum should not readily apply a certain test or standard just because of
seeming similarities. The entire panoply of elements constituting the relevant
factual landscape should be comprehensively examined.
While it is true that both NAN and NANNY are milk products and that the word
"NAN" is contained in the word "NANNY," there are more glaring dissimilarities
in the entirety of their trademarks as they appear in their respective labels and also
in relation to the goods to which they are attached. The discerning eye of the
observer must focus not only on the predominant words but also on the other
features appearing in both labels in order that he may draw his conclusion whether
one is confusingly similar to the other. Even the trial court found these glaring
dissimilarities as above-quoted. We need not add more of these factual
dissimilarities.
NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and NAN-2, are all
infant preparations, while NANNY is a full cream milk for adults in [sic] all ages.
NAN milk products are sold in tin cans and hence, far expensive than the full
cream milk NANNY sold in three (3) plastic packs containing 80, 180 and 450
grams and worth P8.90, P17.50 and P39.90 per milk pack. The labels of NAN
products are of the colors blue and white and have at the bottom portion an
elliptical shaped figure containing inside it a drawing of nestling birds, which is
overlapped by the trade-name "Nestle." On the other hand, the plastic packs
NANNY have a drawing of milking cows lazing on a vast green field, back-
dropped with snow-capped mountains and using the predominant colors of blue
and green. The word NAN are [sic] all in large, formal and conservative-like block
letters, while the word NANNY are [sic] all in small and irregular style of letters
with curved ends. With these material differences apparent in the packaging of
both milk products, NANNY full cream milk cannot possibly be an infringement
of NAN infant milk.
Moreover, NAN infant milk preparation is more expensive than NANNY instant
full cream milk. The cheaper price of NANNY would give, at the very first
instance, a considerable warning to the ordinary purchaser on whether he is buying
an infant milk or a full cream milk for adults. A cursory examination of the
packaging would confirm the striking differences between the products in
question.
In view of the foregoing, we find that the mark NANNY is not confusingly similar
to NAN. Dy therefore cannot be held liable for infringement. 11
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Nestle filed a motion 12 for reconsideration. In its 4 April 2006 Resolution, the Court of Appeals
denied the motion for lack of merit. Hence, the present petition.
Issue
The issue is whether Dy, Jr. is liable for infringement.
The Court's Ruling
The petition is meritorious.
Section 22 of Republic Act (R.A.) No. 166, as amended, states:
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.
Section 155 of R.A. No. 8293 states:
Remedies; Infringement. Any person who shall, without the consent of the
owner of the registered mark: ESHcTD
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 which such 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
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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.
In Prosource International, Inc. v. Horphag Research Management SA, 13 the Court laid down the
elements of infringement under R.A. Nos. 166 and 8293:
In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A,
and 20 thereof, the following constitute the elements of trademark infringement:
"(a) A trademark actually used in commerce in the Philippines and
registered in the principal register of the Philippine Patent
Office[;]
(b) [It] is used by another person in connection with the sale,
offering for sale, or advertising of any goods, business or services
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
such trademark is reproduced, counterfeited, copied or colorably
imitated by another person and such reproduction, counterfeit,
copy or colorable imitation is applied to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be
used upon or in connection with such goods, business or services
as to likely cause confusion or mistake or to deceive purchasers[;]
(c) [T]he trademark is used for identical or similar goods[;] and
(d) [S]uch act is done without the consent of the trademark
registrant or assignee."
On the other hand, the elements of infringement under R.A. No. 8293 are as
follows:
(1) The trademark being infringed is registered in the Intellectual
Property Office; however, in infringement of trade name, the same
need not be registered;
(2) The trademark or trade name is reproduced, counterfeited,
copied, or colorably imitated by the infringer;
(3) The infringing mark or trade name is used in connection with
the sale, offering for sale, or advertising of any goods, business or
services; or the infringing mark or trade name is applied to labels,
signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods,
business or services;
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(4) The use or application of the infringing mark or trade name is
likely to cause confusion or mistake or to deceive purchasers or
others as to the goods or services themselves or as to the source or
origin of such goods or services or the identity of such business;
and
(5) It is without the consent of the trademark or trade name owner
or the assignee thereof. 14
Among the elements, the element of likelihood of confusion is the gravamen of trademark
infringement. 15 There are two types of confusion in trademark infringement: confusion of goods
and confusion of business. 16 In Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, 17 the Court distinguished the two types of confusion:
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." 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." 18 TAEcSC
There are two tests to determine likelihood of confusion: the dominancy test and holistic test. The
dominancy test focuses on the similarity of the main, prevalent or essential features of the
competing trademarks that might cause confusion. Infringement takes place when the competing
trademark contains the essential features of another. Imitation or an effort to imitate is unnecessary.
The question is whether the use of the marks is likely to cause confusion or deceive purchasers. 19
The holistic test considers the entirety of the marks, including labels and packaging, in determining
confusing similarity. The focus is not only on the predominant words but also on the other features
appearing on the labels. 20
In cases involving trademark infringement, no set of rules can be deduced. Each case must be
decided on its own merits. Jurisprudential precedents must be studied in the light of the facts of each
particular case. In McDonald's Corporation v. MacJoy Fastfood Corporation, 21the Court held:
In trademark cases, particularly in ascertaining whether one trademark is
confusingly similar to another, no set rules can be deduced because each case must
be decided on its merits. In such cases, even more than in any other litigation,
precedent must be studied in the light of the facts of the particular case. That is the
reason why in trademark cases, jurisprudential precedents should be applied only
to a case if they are specifically in point.22
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In the light of the facts of the present case, the Court holds that the dominancy test is applicable. In
recent cases with similar factual milieus, the Court has consistently applied the dominancy test.
In Prosource International, Inc., the Court applied the dominancy test in holding that "PCO-
GENOLS" is confusingly similar to "PYCNOGENOL." The Court held:
The trial and appellate courts applied the Dominancy Test in determining whether
there was a confusing similarity between the marks PYCNOGENOL and PCO-
GENOL. Applying the test, the trial court found, and the CA affirmed, that:
"Both the word[s] PYCNOGENOL and PCO-GENOLS have the same
suffix "GENOL" which on evidence, appears to be merely descriptive
and furnish no indication of the origin of the article and hence, open for
trademark registration by the plaintiff through combination with another
word or phrase such as PYCNOGENOL, Exhibits "A" to "A-3."
Furthermore, although the letters "Y" between P and C, "N" between O
and C and "S" after L are missing in the [petitioner's] mark PCO-
GENOLS, nevertheless, when the two words are pronounced, the sound
effects are confusingly similar not to mention that they are both
described by their manufacturers as a food supplement and thus,
identified as such by their public consumers. And although there were
dissimilarities in the trademark due to the type of letters used as well as
the size, color and design employed on their individual packages/bottles,
still the close relationship of the competing product's name is sounds as
they were pronounced, clearly indicates that purchasers could be misled
into believing that they are the same and/or originates from a common
source and manufacturer."
We find no cogent reason to depart from such conclusion.
This is not the first time the Court takes into account the aural effects of the words
and letters contained in the marks in determining the issue of confusing similarity.
In Marvex Commercial Co., Inc. v Petra Hawpia & Co., et al., cited
in McDonald's Corporation v. L.C. Big Mak Burger, Inc., 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 [sic], 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
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"Celdura" and "Condura" 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." 23 DEICaA
In McDonald's Corporation v. MacJoy Fastfood Corporation, the Court applied the dominancy test
in holding that "MACJOY" is confusingly similar to "MCDONALD'S." The Court held:
While we agree with the CA's detailed enumeration of differences between the two
(2) competing trademarks herein involved, we believe that the holistic test is not
the one applicable in this case, the dominancy test being the one more suitable. In
recent cases with a similar factual milieu as here, the Court has consistently used
and applied the dominancy test in determining confusing similarity or likelihood of
confusion between competing trademarks.
xxx xxx xxx
Applying the dominancy test to the instant case, the Court finds that herein
petitioner's "MCDONALD'S" and respondent's "MACJOY" marks are confusingly
similar with each other that an ordinary purchaser can conclude an association or
relation between the marks.
To begin with, both marks use the corporate "M" design logo and the prefixes
"Mc" and/or "Mac" as dominant features. . . .
For sure, it is the prefix "Mc," and abbreviation of "Mac," which visually and
aurally catches the attention of the consuming public. Verily, the word "MACJOY"
attracts attention the same way as did "McDonalds," "MacFries," "McSpaghetti,"
"McDo," "Big Mac" and the rest of the MCDONALD'S marks which all use the
prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale of fastfood
products. Indisputably, the respondent's trademark application for the "MACJOY
& DEVICE" trademark covers goods under Classes 29 and 30 of the International
Classification of Goods, namely, fried chicken, chicken barbeque, burgers, fries,
spaghetti, etc. Likewise, the petitioner's trademark registration for the
MCDONALD'S marks in the Philippines covers goods which are similar if not
identical to those covered by the respondent's application. 24
In McDonald's Corporation v. L.C. Big Mak Burger, Inc., the Court applied the dominancy test in
holding that "BIG MAK" is confusingly similar to "BIG MAC." The Court held:
This Court . . . 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
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from the adoption of the dominant features of the registered mark, disregarding
minor differences. 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, the Court ruled:
. . . 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 558; . . .)
xxx xxx xxx
The test of dominancy is now explicitly incorporated into law in Section 155.1 of
theIntellectual Property Code which defines infringement as the "colorable
imitation of a registered mark . . . 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 "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." 25
In Societe Des Produits Nestle, S.A. v. Court of Appeals, 26 the Court applied the dominancy test in
holding that "FLAVOR MASTER" is confusingly similar to "MASTER ROAST" and "MASTER
BLEND." The Court held:
While this Court agrees with the Court of Appeals' detailed enumeration of
differences between the respective trademarks of the two coffee products, this
Court cannot agree that totality test is the one applicable in this case. Rather, this
Court believes that the dominancy test is more suitable to this case in light of its
peculiar factual milieu.
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Moreover, the 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. The totality or holistic test only relies on visual
comparison between two trademarks whereas the dominancy test relies not only on
the visual but also on the aural and connotative comparisons and overall
impressions between the two trademarks.
For this reason, this Court agrees with the BPTTT when it applied the test of
dominancy and held that:
From the evidence at hand, it is sufficiently established that the word
MASTER is the dominant feature of opposer's mark. The word
MASTER is printed across the middle portion of the label in bold letters
almost twice the size of the printed word ROAST. Further, the word
MASTER has always been given emphasis in the TV and radio
commercials and other advertisements made in promoting the product. . .
. In due time, because of these advertising schemes the mind of the
buying public had come to learn to associate the word MASTER with
the opposer's goods. TcSCEa
. . . . It is the observation of this Office that much of the dominance
which the word MASTER has acquired through Opposer's advertising
schemes is carried over when the same is incorporated into respondent-
applicant's trademark FLAVOR MASTER. Thus, when one looks at the
label bearing the trademark FLAVOR MASTER (exh. 4) one's attention
is easily attracted to the word MASTER, rather than to the dissimilarities
that exist. Therefore, the possibility of confusion as to the goods which
bear the competing marks or as to the origins thereof is not
farfetched. 27
Applying the dominancy test in the present case, the Court finds that "NANNY" is confusingly
similar to "NAN." "NAN" is the prevalent feature of Nestle's line of infant powdered milk products.
It is written in bold letters and used in all products. The line consists of PRE- NAN, NAN-
H.A., NAN-1, and NAN-2. Clearly, "NANNY" contains the prevalent feature "NAN." The first three
letters of "NANNY" are exactly the same as the letters of "NAN." When "NAN" and "NANNY" are
pronounced, the aural effect is confusingly similar.
In determining the issue of confusing similarity, the Court takes into account the aural effect of the
letters contained in the marks. 28 In Marvex Commercial Company, Inc. v. Petra Hawpia &
Company, 29 the Court held:
It is our considered view that the trademarks "SALONPAS" and "LIONPAS" are
confusingly similar in sound.
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Both these words have the same suffix, "PAS", which is used to denote a plaster
that adheres to the body with curative powers. "PAS," being merely descriptive,
furnishes no indication of the origin of the article and therefore is open for
appropriation by anyone (Ethepa vs. Director of Patents, L-20635, March 31,
1966) and may properly become the subject of a trademark by combination with
another word or phrase.
xxx xxx xxx
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 [sic], 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 "Condura" 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. 30
The scope of protection afforded to registered trademark owners is not limited to protection from
infringers with identical goods. The scope of protection extends to protection from infringers with
related goods, and to market areas that are the normal expansion of business of the registered
trademark owners. Section 138 of R.A. No. 8293 states:
Certificates of Registration. A certificate of registration of a mark shall
be prima facieevidence of validity of the registration, the registrant's ownership of
the mark, and of the registrant's exclusive right to use the same in connection with
the goods or services and those that are related thereto specified in the
certificate. (Emphasis supplied)
In Mighty Corporation v. E. & J. Gallo Winery, 31 the Court held that, "Non-competing goods may
be those which, though they are not in actual competition, are so related to each other that it can
reasonably be assumed that they originate from one manufacturer, in which case, confusion of
business can arise out of the use of similar marks." 32 In that case, the Court enumerated factors in
determining whether goods are related: (1) classification of the goods; (2) nature of the goods; (3)
descriptive properties, physical attributes or essential characteristics of the goods, with reference to
their form, composition, texture or quality; and (4) style of distribution and marketing of the goods,
including how the goods are displayed and sold. 33
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NANNY and NAN have the same classification, descriptive properties and physical attributes. Both
are classified under Class 6, both are milk products, and both are in powder form. Also, NANNY
and NAN are displayed in the same section of stores the milk section.
The Court agrees with the lower courts that there are differences between NAN and NANNY: (1)
NAN is intended for infants while NANNY is intended for children past their infancy and for adults;
and (2) NAN is more expensive than NANNY. However, as the registered owner of the "NAN"
mark, Nestle should be free to use its mark on similar products, in different segments of the market,
and at different price levels. In McDonald's Corporation v. L.C. Big Mak Burger, Inc., the Court held
that the scope of protection afforded to registered trademark owners extends to market areas that are
the normal expansion of business:
xxx xxx xxx
Even respondent's 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. DASEac
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 sq; 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). 34 (Emphasis
supplied)
WHEREFORE, we GRANT the petition. We SET ASIDE the 1 September 2005 Decision and 4
April 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 62730 and REINSTATE the 18
September 1998 Decision of the Regional Trial Court, Judicial Region 7, Branch 9, Cebu City, in
Civil Case No. CEB-19345.
SO ORDERED.
9. Dermaline, Inc. v. Myra pharmaceuticals, Inc. G.R. No. 190065, Aug. 16, 2010
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COMMERCIAL LAW REVIEW (Law on Intellectual Property)
***SAME AS CASE #7***
10. Canon Kabushiki Kaisha v. CA and NSR Rubber Corporation, 336 SCRA 266 {2000}
On January 25, 1985, private respondent NSR Rubber Corporation filed an application for registration
of the mark CANON for sandals in the Bureau of Patents, Trademarks and Technology Transfer
(BPTTT). A verified Notice of Opposition was filed by petitioner, a foreign corporation duly organized
and existing under the laws of Japan, alleging that it will be damaged by the registration of the
trademark CANON in various countries covering goods belonging to Class 2 (paints, chemical
products, toner and dye stuff). Petitioner also submitted in evidence its Philippine Trademark
Registration No. 39398, showing ownership over the trademark CANON also under Class 2. On
November 10, 1992 the BPTTT issued its decision dismissing the opposition of petitioner and giving
due course to private respondents application for the registration of the trademark CANON. On
February 16, 1993, petitioner appealed the decision of the BPTTT with public respondent CA that
eventually affirmed the decision of BPTTT. Hence, this petition for review.
ISSUE: Whether the respondent can use as its trademark the word CANON
HELD: YES. The BPTTT and CA share the opinion that the trademark CANON as used by petitioner
for its paints, chemical products, toner and dyestuff can be used by private respondent for it s sandals
because the products of these two parties are dissimilar. Petitioner protests the appropriation of the mark
CANON by private respondent on the ground that petitioner has used and continues to use the
trademark CANON in its wide range of goods worldwide. Allegedly, the corporate name or tradename
of petitioner is also used as its trademark on diverse goods including footwear and other related
products like shoe polisher and polishing agents. To lend credence to its claim, petitioner points out that
it has branched out in its business based on the various goods carrying its trademark CANON, private
respondent sought to register the mark CANON. For petitioner, the fact alone that its trademark
CANON is carried by its other products like footwear, shoe polisher and polishing agents should have
precluded the BPTTT from giving due course to the application of private respondent. The SC finds the
arguments of petitioner to be unmeritorious. Ordinarily, the ownership of a trademark or tradename is a
property right that the owner is entitled to protect as mandated by the Trademark Law. However, when a
trademark is used by a party for a product in which the other party does not deal, the use of the same
trademark on the latters product cannot be validly objected.
[G.R. No. 120900. July 20, 2000.]
CANON KABUSHIKI KAISHA, petitioner, vs. COURT OF APPEALS and
NSR RUBBER CORPORATION, respondents.
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SYNOPSIS
Petitioner Canon Kabushiki Kaisha seeks a review of the decision of the Court of Appeals (CA) and the
Bureau of Patents, Trademarks and Technology Transfer (BPTTT) which approved private respondent's
application for registration of the mark CANON for sandals.
On appeal, the Supreme Court upheld the decision of the CA and the BPTTT ruling that the trademark
"CANON" as used by petitioner for its paints, chemical products, toner and dyestuff, can be used by
private respondent for its sandals because the products of these two parties are dissimilar; that petitioner
failed to present evidence that it has also embarked in the production of footwear products; and that the
evident disparity of the products of the parties in this case rendered unfounded the apprehension of
petitioner that confusion of business or origin might occur if private respondent is allowed to use the
mark CANON.
SYLLABUS
1. COMMERCIAL LAW; TRADEMARK LAW; USE OF A TRADEMARK FOR A PRODUCT
DISSIMILAR TO THE PRODUCT OF TRADEMARK OWNER IS VALID; CASE AT BAR.
Ordinarily, the ownership of a trademark or tradename is a property right that the owner is
entitled to protect as mandated by the Trademark Law. However, when a trademark is used by a
party for a product in which the other party does not deal, the use of the same trademark on the
latter's product cannot be validly objected to. A review of the records shows that with the order of
the BPTTT declaring private respondent in default for failure to file its answer, petitioner had
every opportunity to present ex-parte all of its evidence to prove that its certificates of registration
for the trademark CANON cover footwear. The certificates of registration for the trademark
CANON in other countries and in the Philippines as presented by petitioner, clearly showed that
said certificates of registration cover goods belonging to class 2 (paints, chemical products, toner,
dyestuff). On this basis, the BPTTT correctly ruled that since the certificate of registration of
petitioner for the trademark CANON covers class 2 (paints, chemical products, toner, dyestuff),
private respondent can use the trademark CANON for its goods classified as class 25 (sandals).
Clearly, there is a world of difference between the paints, chemical products, toner, and dyestuff
of petitioner and the sandals of private respondent.
2. ID.; ID.; ID.; EXCLUSIVE RIGHT OF TRADEMARK OWNER TO USE TRADEMARK IS
LIMITED TO GOODS COVERED BY ITS CERTIFICATE OF REGISTRATION; CASE AT
BAR. Petitioner counters that notwithstanding the dissimilarity of the products of the parties,
the trademark owner is entitled to protection when the use of by the junior user "forestalls the
normal expansion of his business." Petitioner's opposition to the registration of its trademark
(CANON) by private respondent rests upon petitioner's insistence that it would be precluded from
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using the mark CANON for various kinds of footwear, when in fact it has earlier used said mark Petitioner moved to declare private respondent in default for its failure to file its answer within the
for said goods. Stretching this argument, petitioner claims that it is possible that the public could prescribed period. The BPTTT then declared private respondent in default and allowed petitioner to
presume that petitioner would also produce a wide variety of footwear considering the diversity present its evidence ex-parte.
of its products marketed worldwide. We do not agree. Even in this instant petition, except for its
Based on the records, the evidence presented by petitioner consisted of its certificates of registration for
bare assertions, petitioner failed to attach evidence that would convince this Court that petitioner
the mark CANON in various countries covering goods belonging to class 2 (paints, chemical products,
has also embarked in the production of footwear products. . . . In Faberge, Incorporated
toner, and dye stuff). Petitioner also submitted in evidence its Philippine Trademark Registration No.
vs. Intermediate Appellate Court, . . . We reiterated the principle that the certificate of registration
39398, showing its ownership over the trademark CANON also under class 2.
confers upon the trademark owner the exclusive right to use its own symbol only to those goods
specified in the certificate, subject to the conditions and limitations stated therein. Thus, the On November 10, 1992, the BPTTT issued its decision dismissing the opposition of petitioner and giving
exclusive right of petitioner in this case to use the trademark CANON is limited to the products due course to private respondent's application for the registration of the trademark CANON. On February
covered by its certificate of registration. AcICHD 16, 1993 petitioner appealed the decision of the BPTTT with public respondent Court of Appeals that
eventually affirmed the decision of BPTTT. Hence, this petition for review.
3. ID.; ID.; ID.; ID.; CONFUSION OF BUSINESS OR ORIGIN NOT LIKELY DUE TO
EVIDENT DISPARITY OF THE PRODUCTS OF THE PARTIES IN CASE AT BAR. The Petitioner anchors this instant petition on these grounds:
likelihood of confusion of goods or business is a relative concept, to be determined only
according to the particular, and sometimes peculiar, circumstances of each case. Indeed, in A) PETITIONER IS ENTITLED TO EXCLUSIVE USE OF THE
trademark law cases, even more than in other litigation, precedent must be studied in the light of MARK CANON BECAUSE IT IS ITS TRADEMARK AND IS
the facts of the particular case. Contrary to petitioner's supposition, the facts of this case will USED ALSO FOR FOOTWEAR.
show that the cases of Sta. Ana vs.Maliwat, Ang vs. Teodoro and Converse Rubber Corporation
vs. Universal Rubber Products, Inc. are hardly in point. The just cited cases involved goods that B) TO ALLOW PRIVATE RESPONDENT TO REGISTER
were confusingly similar, if not identical, as in the case of Converse Rubber Corporation CANON FOR FOOTWEAR IS TO PREVENT PETITIONER
vs. Universal Rubber Products, Inc. Here, the products involved are so unrelated that the public FROM USING CANON FOR VARIOUS KINDS OF
will not be misled that there is the slightest nexus between petitioner and the goods of private FOOTWEAR, WHEN IN FACT, PETITIONER HAS EARLIER
respondent. In cases of confusion of business or origin, the question that usually arises is whether USED SAID MARK FOR SAID GOODS.
the respective goods or services of the senior user and the junior user are so related as to likely C) PETITIONER IS ALSO ENTITLED TO THE RIGHT TO
cause confusion of business or origin, and thereby render the trademark or tradenames confusing EXCLUSIVELY USE CANON TO PREVENT CONFUSION OF
similar. . . . Undoubtedly, the paints, chemical products, toner and dyestuff of petitioner that carry BUSINESS.
the trademark CANON are unrelated to sandals, the product of private respondent.
D) PETITIONER IS ALSO ENTITLED TO THE EXCLUSIVE
USE OF CANON BECAUSE IT FORMS PART OF ITS
CORPORATE NAME, PROTECTED BY THE PARIS
Before us is a petition for review that seeks to set aside the Decision 1 dated February 21, 1995 of the CONVENTION. 2
Court of Appeals in CA-GR SP No. 30203, entitled "Canon Kabushiki Kaisha vs. NSR Rubber
Corporation" and its Resolution dated June 27, 1995 denying the motion for reconsideration of herein The BPTTT and the Court of Appeals share the opinion that the trademark "CANON" as used by
petitioner Canon Kabushiki Kaisha (petitioner). petitioner for its paints, chemical products, toner, and dyestuff, can be used by private respondent for its
sandals because the products of these two parties are dissimilar. Petitioner protests the appropriation of
On January 15, 1985, private respondent NSR Rubber Corporation (private respondent) filed an the mark CANON by private respondent on the ground that petitioner has used and continues to use the
application for registration of the mark CANON for sandals in the Bureau of Patents, Trademarks, and trademark CANON on its wide range of goods worldwide. Allegedly, the corporate name or tradename of
Technology Transfer (BPTTT). A Verified Notice of Opposition was filed by petitioner, a foreign petitioner is also used as its trademark on diverse goods including footwear and other related products
corporation duly organized and existing under the laws of Japan, alleging that it will be damaged by the like shoe polisher and polishing agents. To lend credence to its claim, petitioner points out that it has
registration of the trademark CANON in the name of private respondent. The case was docketed as Inter branched out in its business based on the various goods carrying its trademark CANON 3 , including
Partes Case No. 3043. footwear which petitioner contends covers sandals, the goods for which private respondent sought to
register the mark CANON. For petitioner, the fact alone that its trademark CANON is carried by its other
products like footwear, shoe polisher and polishing agents should have precluded the BPTTT from giving
due course to the application of private respondent. SDEHIa

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We find the arguments of petitioner to be unmeritorious. Ordinarily, the ownership of a trademark or listed in its certificate of registration, (the senior user), cannot and should not be allowed to feign that (the
tradename is a property right that the owner is entitled to protect 4 as mandated by the Trademark junior user) had invaded (the senior user's) exclusive domain." 10 We reiterated the principle that the
Law. 5 However, when a trademark is used by a party for a product in which the other party does not certificate of registration confers upon the trademark owner the exclusive right to use its own
deal, the use of the same trademark on the latter's product cannot be validly objected to. 6 symbol only to those goods specified in the certificate, subject to the conditions and limitations stated
therein. 11 Thus, the exclusive right of petitioner in this case to use the trademark CANON is limited to
A review of the records shows that with the order of the BPTTT declaring private respondent in default the products covered by its certificate of registration.
for failure to file its answer, petitioner had every opportunity to present ex-parte all of its evidence to
prove that its certificates of registration for the trademark CANON cover footwear. The certificates of Petitioner further argues that the alleged diversity of its products all over the world makes it plausible that
registration for the trademark CANON in other countries and in the Philippines as presented by the public might be misled into thinking that there is some supposed connection between private
petitioner, clearly showed that said certificates of registration cover goods belonging to class 2 (paints, respondent's goods and petitioner. Petitioner is apprehensive that there could be confusion as to the origin
chemical products, toner, dyestuff). On this basis, the BPTTT correctly ruled that since the certificate of of the goods, as well as confusion of business, if private respondent is allowed to register the mark
registration of petitioner for the trademark CANON covers class 2 (paints, chemical products, toner, CANON. In such a case, petitioner would allegedly be immensely prejudiced if private respondent would
dyestuff), private respondent can use the trademark CANON for its goods classified as class 25 (sandals). be permitted to take "a free ride on, and reap the advantages of, the goodwill and reputation of petitioner
Clearly, there is a world of difference between the paints, chemical products, toner, and dyestuff of Canon". 12 In support of the foregoing arguments, petitioner invokes the rulings in Sta. Ana vs.
petitioner and the sandals of private respondent. Maliwat, 13 Ang vs. Teodoro 14 and Converse Rubber Corporation vs. Universal Rubber Products,
Inc. 15
The likelihood of confusion of goods or business is a relative concept, to be determined only according to
Petitioner counters that notwithstanding the dissimilarity of the products of the parties, the trademark the particular, and sometimes peculiar, circumstances of each case. 16 Indeed, in trademark law cases,
owner is entitled to protection when the use of by the junior user "forestalls the normal expansion of his even more than in other litigation, precedent must be studied in the light of the facts of the particular
business". 7 Petitioner's opposition to the registration of its trademark CANON by private respondent case. 17 Contrary to petitioner's supposition, the facts of this case will show that the cases of Sta. Ana vs.
rests upon petitioner's insistence that it would be precluded from using the mark CANON for various Maliwat, Ang vs. Teodoro and Converse Rubber Corporation vs. Universal Rubber Products, Inc. are
kinds of footwear, when in fact it has earlier used said mark for said goods. Stretching this argument, hardly in point. The just cited cases involved goods that were confusingly similar, if not identical, as in
petitioner claims that it is possible that the public could presume that petitioner would also produce a the case of Converse Rubber Corporation vs. Universal Rubber Products, Inc. Here, the products
wide variety of footwear considering the diversity of its products marketed worldwide. involved are so unrelated that the public will not be misled that there is the slightest nexus between
petitioner and the goods of private respondent.
We do not agree. Even in this instant petition, except for its bare assertions, petitioner failed to attach
evidence that would convince this Court that petitioner has also embarked in the production of footwear In cases of confusion of business or origin, the question that usually arises is whether the respective
products. We quote with approval the observation of the Court of Appeals that: goods or services of the senior user and the junior user are so related as to likely cause confusion of
business or origin, and thereby render the trademark or tradenames confusingly similar. 18 Goods are
"The herein petitioner has not made known that it intends to venture into the
related when they belong to the same class or have the same descriptive properties; when they possess the
business of producing sandals. This is clearly shown in its Trademark Principal
same physical attributes or essential characteristics with reference to their form, composition, texture or
Register (Exhibit "U") where the products of the said petitioner had been clearly
quality. 19 They may also be related because they serve the same purpose or are sold in grocery stores. 20
and specifically described as "Chemical products, dyestuffs, pigments, toner
developing preparation, shoe polisher, polishing agent." It would be taxing one's Thus, in Esso Standard Eastern, Inc. vs. Court of Appeals, this Court ruled that the petroleum products on
credibility to aver at this point that the production of sandals could be considered which the petitioner therein used the trademark ESSO, and the product of respondent, cigarettes are "so
as a possible "natural or normal expansion" of its business operation". 8 foreign to each other as to make it unlikely that purchasers would think that petitioner is the manufacturer
of respondent's goods." 21 Moreover, the fact that the goods involved therein flow through different
In Faberge, Incorporated vs. Intermediate Appellate Court, 9 the Director of patents allowed the junior
channels of trade highlighted their dissimilarity, a factor explained in this wise:
user to use the trademark of the senior user on the ground that the briefs manufactured by the junior user,
the product for which the trademark BRUTE was sought to be registered, was unrelated and non- "The products of each party move along and are disposed through different
competing with the products of the senior user consisting of after shave lotion, shaving cream, deodorant, channels of distribution. The (petitioner's) products are distributed principally
talcum powder, and toilet soap. The senior user vehemently objected and claimed that it was expanding through gasoline service and lubrication stations, automotive shops and hardware
its trademark to briefs and argued that permitting the junior user to register the same trademark would stores. On the other hand, the (respondent's) cigarettes are sold in sari-sari stores,
allow the latter to invade the senior user's exclusive domain. In sustaining the Director of Patents, this grocery store, and other small distributor outlets. (Respondent's) cigarettes are
Court said that since "(the senior user) has not ventured in the production of briefs, an item which is not even peddled in the streets while (petitioner's) 'gasul' burners are not. Finally, there

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is a marked distinction between oil and tobacco, as well as between petroleum and competent authority of the country of registration or use to be
cigarettes. Evidently, in kind and nature the products of (respondent) and of well-known in that country as being already the mark of a person
(petitioner) are poles apart." 22 entitled to the benefits of the present Convention and used for
identical or similar goods. These provisions shall also apply when
Undoubtedly, the paints, chemical products, toner and dyestuff of petitioner that carry the trademark the essential part of the mark constitutes a reproduction of any
CANON are unrelated to sandals, the product of private respondent. We agree with the BPTTT, following such well-known mark or an imitation liable to create confusion
the Esso doctrine, when it noted that the two classes of products in this case flow through different trade therewith.
channels. The products of petitioner are sold through special chemical stores or distributors while the
products of private respondent are sold in grocery stores, sari-saristores and department stores. 23 Thus, (2) A period of at least five years from the date of registration shall
the evident disparity of the products of the parties in the case at bar renders unfounded the apprehension be allowed for seeking the cancellation of such a mark. The
of petitioner that confusion of business or origin might occur if private respondent is allowed to use the countries of the Union may provide for a period within which the
mark CANON. prohibition of use must be sought.
In its bid to bar the registration of private respondent of the mark CANON, petitioner invokes the
protective mantle of the Paris Convention. Petitioner asserts that it has the exclusive right to the mark
CANON because it forms part of its corporate name or tradename, protected by Article 8 of the Paris (3) No time limit shall be fixed for seeking the cancellation or the
Convention, to wit: AcSHCD prohibition of the use of marks or used in bad faith."

"A tradename shall be protected in all the countries of the Union without the Petitioner insists that what it seeks is the protection of Article 8 of the Paris Convention, the provision
obligation of filing or registration, whether or not it forms part of a trademark." that pertains to the protection of tradenames. Petitioner believes that the appropriate memorandum to
consider is that issued by the then Minister of Trade and Industry, Luis Villafuerte, directing the Director
Public respondents BPTTT and the Court of Appeals allegedly committed an oversight when they of Patents to:
required petitioner to prove that its mark is a well-known mark at the time the application of private
respondent was filed. Petitioner questions the applicability of the guidelines embodied in "reject all pending applications for Philippine registration of signature and other
the Memorandum of then Minister of Trade and Industry Roberto Ongpin (Ongpin) dated October 25, world famous trademarks by applicants other than the original owners or users."
1983 which according to petitioner implements Article 6bis of the Paris Convention, the provision
As far as petitioner is concerned, the fact that its tradename is at risk would call for the protection granted
referring to the protection of trademarks. The memorandum reads:
by Article 8 of the Paris Convention. Petitioner calls attention to the fact that Article 8, even as embodied
"a) the mark must be internationally known; in par. 6, Sec. 37 of RA 166, mentions no requirement of similarity of goods. Petitioner claims that the
reason there is no mention of such a requirement, is "because there is a difference between the referent of
b) the subject of the right must be a trademark, not a patent or copyright or the name and that of the mark" 24 and that "since Art. 8 protects the tradename in the countries of the
anything else; Union, such as Japan and the Philippines, Petitioner's tradename should be protected here." 25
c) the mark must be for use in the same or similar class of goods; We cannot uphold petitioner's position.
d) the person claiming must be the owner of the mark." The term "trademark" is defined by RA 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
According to petitioner, it should not be required to prove that its trademark is well-known and that the identify his goods and distinguish them for those manufactured, sold or dealt in by others." 26 Tradename
products are not similar as required by the quoted memorandum. Petitioner emphasizes that the is defined by the same law as including "individual names and surnames, firm names, tradenames,
guidelines in the memorandum of Ongpin implement Article 6bis of the Paris Convention, the provision devices or words used by manufacturers, industrialists, merchants, agriculturists, and others to identify
for the protection of trademarks, not tradenames. Article 6bis of the Paris Convention states: 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
(1) The countries of the Union undertake, either administratively if
organizations engaged in trade or commerce." 27Simply put, a trade name refers to the business and its
their legislation so permits, or at the request of an interested party,
goodwill; a trademark refers to the goods.28
to refuse or to cancel the registration and to prohibit the use of a
trademark which constitutes a reproduction, imitation or The Convention of Paris for the Protection of Industrial Property, otherwise known as the Paris
translation, liable to create confusion, of a mark considered by the Convention, of which both the Philippines and Japan, the country of petitioner, are signatories, 29is a

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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. 30 We agree with public respondents that the
controlling doctrine with respect to the applicability of Article 8 of the Paris Convention is that
established in Kabushi Kaisha Isetan vs. Intermediate Appellate Court. 31As pointed out by the BPTTT:
"Regarding the applicability of Article 8 of the Paris Convention, this Office
believes that there is no automatic protection afforded an entity whose tradename
is alleged to have been infringed through the use of that name as a trademark by a
local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al., G.R. No.
75420, 15 November 1991, the Honorable Supreme Court held that:
'The Paris Convention for the Protection of Industrial Property does not
automatically exclude all countries of the world which have signed it
from using a tradename which happens to be used in one country. To
illustrate if a taxicab or bus company in a town in the United
Kingdom or India happens to use the tradename "Rapid Transportation",
it does not necessarily follow that "Rapid" can no longer be registered in
Uganda, Fiji, or the Philippines.
This office is not unmindful that in the Treaty of Paris for the Protection of
Intellectual Property regarding well-known marks and possible application thereof
in this case. Petitioner, as this office sees it, is trying to seek refuge under its
protective mantle, claiming that the subject mark is well known in this country at
the time the then application of NSR Rubber was filed.
However, the then Minister of Trade and Industry, the Hon. Roberto V. Ongpin,
issued a memorandum dated 25 October 1983 to the Director of Patents, a set of
guidelines in the implementation of Article 6bis (sic) of the Treaty of Paris. These
conditions are:
a) the mark must be internationally known;
b) the subject of the right must be a trademark, not a
patent or copyright or anything else;
c) the mark must be for use in the same or similar kinds
of goods; and
d) the person claiming must be the owner of the mark
(The Parties Convention Commentary on the Paris
Convention. Article by Dr. Bogsch, Director General of
the World Intellectual Property Organization, Geneva,
Switzerland, 1985)'
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From the set of facts found in the records, it is ruled that the Petitioner failed to
comply with the third requirement of the said memorandum that is the mark must
be for use in the same or similar kinds of goods. The Petitioner is using the mark
"CANON" for products belonging to class 2 (paints, chemical products) while the
Respondent is using the same mark for sandals (class 25). Hence, Petitioner's
contention that its mark is well-known at the time the Respondent filed its
application for the same mark should fail." 32
Petitioner assails the application of the case of Kabushi Kaisha Isetan vs. Intermediate Appellate Court to
this case. Petitioner points out that in the case of Kabushi Kaisha Isetan vs. Intermediate Appellate Court,
petitioner therein was found to have never at all conducted its business in the Philippines unlike herein
petitioner who has extensively conducted its business here and also had its trademark registered in this
country. Hence, petitioner submits that this factual difference renders inapplicable our ruling in the case
of Kabushi Kaisha Isetan vs. Intermediate Appellate Court that Article 8 of the Paris Convention does not
automatically extend protection to a tradename that is in danger of being infringed in a country that is
also a signatory to said treaty. This contention deserves scant consideration. Suffice it to say that the just
quoted pronouncement in the case of Kabushi Kaisha Isetan vs. Intermediate Appellate Court, was made
independent of the factual finding that petitioner in said case had not conducted its business in this
country.
WHEREFORE, in view of the foregoing, the instant petition for review on certiorari is DENIED for lack
of merit. SDaHEc
SO ORDERED.
11. Coffee Partners, Inc., vs. San Francisco Coffee and Roastery, Inc., G.R. No. 169504, March 3,
2010
Facts:
The petitioner holds a business in maintaining coffee shops in the Philippines. It is registered with the
Securities and Exchange Commission in January 2001. In its franchise agreement with Coffee Partners
Ltd, it carries the trademark San Francisco Coffee. Respondent is engaged in the wholesale and retail
sale of coffee that was registered in SEC in May 1995 under a registered business name of San
Francisco Coffee &Roastery, Inc. It entered into a joint venture with Boyd Coffee USA to study coffee
carts in malls.
When respondent learned that petitioner will open a coffee shop in Libis, Q.C. they sent a letter to the
petitioner demanding them to stop using the name San Francisco Coffee as it causes confusion tothe
minds of the public. A complaint was also filed by respondents before the Bureau of Legal Affairs of
the Intellectual Property Office for infringement and unfair competition with claims for damages.
Petitioners contend that there are distinct differences in the appearance of their trademark and that
respondent abandoned the use of their trademark when it joined venture with Boyd Coffee USA. The
Bureau of Legal Affairs of the IPO held that petitioners trademark infringed on the respondents trade
name as it registered its business name first with the DTI in 1995 while petitioner only registered its
trademark in 2001.
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Furthermore, it ruled that the respondent did not abandon the use of its trade name upon its joint venture
with Boyd Coffee USA since in order for abandonment to exist it must be permanent, intentional and
voluntary. It also held that petitioners use of the trademark "SAN FRANCISCO COFFEE" will likely
cause confusion because of the exact similarity in sound, spelling, pronunciation, and commercial
impression of the words "SAN FRANCISCO" which is the dominant portion of respondents trade
name and petitioners trademark. Upon appeal before the office of the Director General of the IPO, the
decision of its legal affairs was reversed declaring there was no infringement. The Court of Appeals
however set aside its decision and reinstated the IPO legal affairs decision. Petitioner contends that the
respondents trade name is not registered therefore a suit for infringement is not available.
Issue:
Whether or not the petitioners use of the trademark "SAN FRANCISCO COFFEE" constitutes
infringement of respondents trade name "SAN FRANCISCO COFFEE & ROASTERY, INC.," even if
the trade name is not registered with the Intellectual Property Office (IPO).
Ruling:
Registration of a trademark before the IPO is no longer a requirement to file an action for infringement
as provided in Section 165.2 of RA 8293. All that is required is that the trade name is previously used in
trade or commerce in the Philippines. There is no showing that respondent abandoned the use of its
trade name as it continues to embark to conduct research on retailing coffee, import and sell coffee
machines as among the services for which the use of the business name has been registered.
The court also laid down two tests to determine similarity and likelihood of confusion. The dominancy
test focuses on similarity of the prevalent features of the trademarks that could cause deception and
confusion that constitutes infringement. Exact duplication or imitation is not required. The question is
whether the use of the marks involved is likely to cause confusion or mistake in the mind of the public
or to deceive consumers. the holistic test entails a consideration of the entirety of the marks as applied
to the products, including the labels and packaging, in determining confusing similarity. 15 The
discerning eye of the observer must focus not only on the predominant words but also on the other
features appearing on both marks in order that the observer may draw his conclusion whether one is
confusingly similar to the other. Applying either the dominancy test or the holistic test, petitioners
"SAN FRANCISCO COFFEE" trademark is a clear infringement of respondents "SAN FRANCISCO
COFFEE & ROASTERY, INC." trade name. The descriptive words "SAN FRANCISCO COFFEE" are
precisely the dominant features of respondents trade name. And because both are involved in coffee
business there is always the high chance that the public will get confused of the source of the coffee
sold by the petitioner. Respondent has acquired an exclusive right to the use of the trade name "SAN
FRANCISCO COFFEE & ROASTERY, INC." since the registration of the business name with the DTI
in 1995.
Facts:
Petitioner Coffee Partners entered into a franchise agreement with Coffee Partners Ltd. to operate coffee
shops in the country using the trademark San Francisco Coffee. Respondent on the other hand, is a
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local corporation engaged in the wholesale and retail sale of coffee and uses the business name San
Francisco Coffee & Roastery registered with the DTI. Later, respondent filed an infringement and/or
unfair competition complaint against petitioner alleging that the latter was about to open a coffee shop
under the name San Francisco Coffee causing confusion in the minds of the public as it bore a similar
name and is engaged also in selling of coffee. Petitioner contended no infringement would arise because
respondents tradename was not registered.
Issue:
Whether or not petitioners trademark would infringe respondents tradename.
Ruling: YES.
In Prosource International, Inc. v. Horphag Research Management SA, this Court laid down what
constitutes infringement of an unregistered trade name, thus:
(1) The trademark being infringed is registered in the Intellectual Property Office; however, in
infringement of trade name, the same need not be registered;
(2) The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the
infringer;
(3) The infringing mark or trade name is used in connection with the sale, offering for sale, or
advertising of any goods, business or services; or the infringing mark or trade name is applied to labels,
signs, prints, packages, wrappers, receptacles, or advertisements intended to be used upon or in
connection with such goods, business, or services;
(4) The use or application of the infringing mark or trade name is likely to cause confusion or mistake
or to deceive purchasers or others as to the goods or services themselves or as to the source or origin of
such goods or services or the identity of such business; and
(5) It is without the consent of the trademark or trade name owner or the assignee thereof.
RA 8293, which took effect on 1 January 1998, has dispensed with the registration requirement. Section
165.2 of RA 8293 categorically states that trade names shall be protected, even prior to or without
registration with the IPO, against any unlawful act including any subsequent use of the trade name by a
third party, whether as a trade name or a trademark likely to mislead the public.
It is the likelihood of confusion that is the gravamen of infringement. Applying the dominancy test or
the holistic test, petitioners SAN FRANCISCO COFFEE trademark is a clear infringement of
respondents SAN FRANCISCO COFFEE & ROASTERY, INC. trade name. The descriptive words
SAN FRANCISCO COFFEE are precisely the dominant features of respondents trade name.
Petitioner and respondent are engaged in the same business of selling coffee, whether wholesale or
retail. The likelihood of confusion is higher in cases where the business of one corporation is the same
or substantially the same as that of another corporation. In this case, the consuming public will likely be
confused as to the source of the coffee being sold at petitioners coffee shops.
[G.R. No. 169504. March 3, 2010.]
COFFEE PARTNERS, INC., petitioner, vs. SAN FRANCISCO COFFEE &
ROASTERY, INC., respondent.
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The Case
This is a petition for review 1 of the 15 June 2005 Decision 2 and the 1 September 2005
Resolution 3 of the Court of Appeals in CA-G.R. SP No. 80396. In its 15 June 2005 Decision, the
Court of Appeals set aside the 22 October 2003 Decision 4 of the Office of the Director General-
Intellectual Property Office and reinstated the 14 August 2002 Decision 5 of the Bureau of Legal
Affairs-Intellectual Property Office. In its 1 September 2005 Resolution, the Court of Appeals
denied petitioner's motion for reconsideration and respondent's motion for partial reconsideration.
The Facts
Petitioner Coffee Partners, Inc. is a local corporation engaged in the business of establishing and
maintaining coffee shops in the country. It registered with the Securities and Exchange Commission
(SEC) in January 2001. It has a franchise agreement 6 with Coffee Partners Ltd. (CPL), a business
entity organized and existing under the laws of British Virgin Islands, for a non-exclusive right to
operate coffee shops in the Philippines using trademarks designed by CPL such as "SAN
FRANCISCO COFFEE."
Respondent is a local corporation engaged in the wholesale and retail sale of coffee. It registered
with the SEC in May 1995. It registered the business name "SAN FRANCISCO COFFEE &
ROASTERY, INC." with the Department of Trade and Industry (DTI) in June 1995. Respondent had
since built a customer base that included Figaro Company, Tagaytay Highlands, Fat Willy's, and
other coffee companies.
In 1998, respondent formed a joint venture company with Boyd Coffee USA under the company
name Boyd Coffee Company Philippines, Inc. (BCCPI). BCCPI engaged in the processing, roasting,
and wholesale selling of coffee. Respondent later embarked on a project study of setting up coffee
carts in malls and other commercial establishments in Metro Manila.
In June 2001, respondent discovered that petitioner was about to open a coffee shop under the name
"SAN FRANCISCO COFFEE" in Libis, Quezon City. According to respondent, petitioner's shop
caused confusion in the minds of the public as it bore a similar name and it also engaged in the
business of selling coffee. Respondent sent a letter to petitioner demanding that the latter stop using
the name "SAN FRANCISCO COFFEE." Respondent also filed a complaint with the Bureau of
Legal Affairs-Intellectual Property Office (BLA-IPO) for infringement and/or unfair competition
with claims for damages. DAHSaT
In its answer, petitioner denied the allegations in the complaint. Petitioner alleged it filed with the
Intellectual Property Office (IPO) applications for registration of the mark "SAN FRANCISCO
COFFEE & DEVICE" for class 42 in 1999 and for class 35 in 2000. Petitioner maintained its mark
could not be confused with respondent's trade name because of the notable distinctions in their
appearances. Petitioner argued respondent stopped operating under the trade name "SAN
FRANCISCO COFFEE" when it formed a joint venture with Boyd Coffee USA. Petitioner
contended respondent did not cite any specific acts that would lead one to believe petitioner had,
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through fraudulent means, passed off its mark as that of respondent, or that it had diverted business
away from respondent.
Mr. David Puyat, president of petitioner corporation, testified that the coffee shop in Libis, Quezon
City opened sometime in June 2001 and that another coffee shop would be opened in Glorietta Mall,
Makati City. He stated that the coffee shop was set up pursuant to a franchise agreement executed in
January 2001 with CPL, a British Virgin Island Company owned by Robert Boxwell. Mr. Puyat said
he became involved in the business when one Arthur Gindang invited him to invest in a coffee shop
and introduced him to Mr. Boxwell. For his part, Mr. Boxwell attested that the coffee shop "SAN
FRANCISCO COFFEE" has branches in Malaysia and Singapore. He added that he formed CPL in
1997 along with two other colleagues, Shirley Miller John and Leah Warren, who were former
managers of Starbucks Coffee Shop in the United States. He said they decided to invest in a similar
venture and adopted the name "SAN FRANCISCO COFFEE" from the famous city in California
where he and his former colleagues once lived and where special coffee roasts came from.
The Ruling of the Bureau of Legal Affairs-Intellectual Property Office
In its 14 August 2002 Decision, the BLA-IPO held that petitioner's trademark infringed on
respondent's trade name. It ruled that the right to the exclusive use of a trade name with freedom
from infringement by similarity is determined from priority of adoption. Since respondent registered
its business name with the DTI in 1995 and petitioner registered its trademark with the IPO in 2001
in the Philippines and in 1997 in other countries, then respondent must be protected from
infringement of its trade name.
The BLA-IPO also held that respondent did not abandon the use of its trade name as substantial
evidence indicated respondent continuously used its trade name in connection with the purpose for
which it was organized. It found that although respondent was no longer involved in blending,
roasting, and distribution of coffee because of the creation of BCCPI, it continued making plans and
doing research on the retailing of coffee and the setting up of coffee carts. The BLA-IPO ruled that
for abandonment to exist, the disuse must be permanent, intentional, and voluntary.
The BLA-IPO held that petitioner's use of the trademark "SAN FRANCISCO COFFEE" will likely
cause confusion because of the exact similarity in sound, spelling, pronunciation, and commercial
impression of the words "SAN FRANCISCO" which is the dominant portion of respondent's trade
name and petitioner's trademark. It held that no significant difference resulted even with a diamond-
shaped figure with a cup in the center in petitioner's trademark because greater weight is given to
words the medium consumers use in ordering coffee products. DIcTEC
On the issue of unfair competition, the BLA-IPO absolved petitioner from liability. It found that
petitioner adopted the trademark "SAN FRANCISCO COFFEE" because of the authority granted to
it by its franchisor. The BLA-IPO held there was no evidence of intent to defraud on the part of
petitioner.
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The BLA-IPO also dismissed respondent's claim of actual damages because its claims of profit loss
were based on mere assumptions as respondent had not even started the operation of its coffee carts.
The BLA-IPO likewise dismissed respondent's claim of moral damages, but granted its claim of
attorney's fees.
Both parties moved for partial reconsideration. Petitioner protested the finding of infringement,
while respondent questioned the denial of actual damages. The BLA-IPO denied the parties' partial
motion for reconsideration. The parties appealed to the Office of the Director General-Intellectual
Property Office (ODG-IPO).
The Ruling of the Office of the Director General-
Intellectual Property Office
In its 22 October 2003 Decision, the ODG-IPO reversed the BLA-IPO. It ruled that petitioner's use
of the trademark "SAN FRANCISCO COFFEE" did not infringe on respondent's trade name. The
ODG-IPO found that respondent had stopped using its trade name after it entered into a joint venture
with Boyd Coffee USA in 1998 while petitioner continuously used the trademark since June 2001
when it opened its first coffee shop in Libis, Quezon City. It ruled that between a subsequent user of
a trade name in good faith and a prior user who had stopped using such trade name, it would be
inequitable to rule in favor of the latter.
The Ruling of the Court of Appeals
In its 15 June 2005 Decision, the Court of Appeals set aside the 22 October 2003 decision of the
ODG-IPO in so far as it ruled that there was no infringement. It reinstated the 14 August 2002
decision of the BLA-IPO finding infringement. The appellate court denied respondent's claim for
actual damages and retained the award of attorney's fees. In its 1 September 2005 Resolution, the
Court of Appeals denied petitioner's motion for reconsideration and respondent's motion for partial
reconsideration.
The Issue
The sole issue is whether petitioner's use of the trademark "SAN FRANCISCO COFFEE"
constitutes infringement of respondent's trade name "SAN FRANCISCO COFFEE & ROASTERY,
INC.," even if the trade name is not registered with the Intellectual Property Office (IPO).
The Court's Ruling
The petition has no merit.
Petitioner contends that when a trade name is not registered, a suit for infringement is not available.
Petitioner alleges respondent has abandoned its trade name. Petitioner points out that respondent's
registration of its business name with the DTI expired on 16 June 2000 and it was only in 2001
when petitioner opened a coffee shop in Libis, Quezon City that respondent made a belated effort to
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seek the renewal of its business name registration. Petitioner stresses respondent's failure to continue
the use of its trade name to designate its goods negates any allegation of infringement. Petitioner
claims no confusion is likely to occur between its trademark and respondent's trade name because of
a wide divergence in the channels of trade, petitioner serving ready-made coffee while respondent is
in wholesale blending, roasting, and distribution of coffee. Lastly, petitioner avers the proper noun
"San Francisco" and the generic word "coffee" are not capable of exclusive appropriation. cACTaI
Respondent maintains the law protects trade names from infringement even if they are not registered
with the IPO. Respondent claims Republic Act No. 8293 (RA 8293) 7 dispensed with registration of
a trade name with the IPO as a requirement for the filing of an action for infringement. All that is
required is that the trade name is previously used in trade or commerce in the Philippines.
Respondent insists it never abandoned the use of its trade name as evidenced by its letter to
petitioner demanding immediate discontinuation of the use of its trademark and by the filing of the
infringement case. Respondent alleges petitioner's trademark is confusingly similar to respondent's
trade name. Respondent stresses ordinarily prudent consumers are likely to be misled about the
source, affiliation, or sponsorship of petitioner's coffee.
As to the issue of alleged abandonment of trade name by respondent, the BLA-IPO found that
respondent continued to make plans and do research on the retailing of coffee and the establishment
of coffee carts, which negates abandonment. This finding was upheld by the Court of Appeals,
which further found that while respondent stopped using its trade name in its business of selling
coffee, it continued to import and sell coffee machines, one of the services for which the use of the
business name has been registered. The binding effect of the factual findings of the Court of Appeals
on this Court applies with greater force when both the quasi-judicial body or tribunal like the BLA-
IPO and the Court of Appeals are in complete agreement on their factual findings. It is also settled
that absent any circumstance requiring the overturning of the factual conclusions made by the quasi-
judicial body or tribunal, particularly if affirmed by the Court of Appeals, the Court necessarily
upholds such findings of fact. 8
Coming now to the main issue, in Prosource International, Inc. v Horphag Research Management
SA, 9 this Court laid down what constitutes infringement of an unregistered trade name, thus:
(1) The trademark being infringed is registered in the Intellectual Property
Office; however, in infringement of trade name, the same need not be
registered;
(2) The trademark or trade name is reproduced, counterfeited, copied, or
colorably imitated by the infringer;
(3) The infringing mark or trade name is used in connection with the sale,
offering for sale, or advertising of any goods, business or services; or the
infringing mark or trade name is applied to labels, signs, prints, packages,
wrappers, receptacles, or advertisements intended to be used upon or in
connection with such goods, business, or services;
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(4) The use or application of the infringing mark or trade name is likely to
cause confusion or mistake or to deceive purchasers or others as to the goods
or services themselves or as to the source or origin of such goods or services
or the identity of such business; and
(5) It is without the consent of the trademark or trade name owner or the
assignee thereof. 10 (Emphasis supplied)
Clearly, a trade name need not be registered with the IPO before an infringement suit may be filed
by its owner against the owner of an infringing trademark. All that is required is that the trade name
is previously used in trade or commerce in the Philippines. 11 SCETHa
Section 22 of Republic Act No. 166, 12 as amended, required registration of a trade name as a
condition for the institution of an infringement suit, to wit:
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)
However, RA 8293, which took effect on 1 January 1998, has dispensed with the registration
requirement. Section 165.2 of RA 8293 categorically states that trade names shall be protected, even
prior to or without registration with the IPO, against any unlawful act including any subsequent use
of the trade name by a third party, whether as a trade name or a trademark likely to mislead the
public. Thus:
SEC. 165.2 (a) Notwithstanding any laws or regulations providing for
any obligation to register trade names, such names shall be protected,
even prior to or without registration, against any unlawful act committed
by third parties.
(b) In particular, any subsequent use of a trade name by a third party,
whether as a trade name or a mark or collective mark, or any such use of a
similar trade name or mark, likely to mislead the public, shall be deemed
unlawful. (Emphasis supplied)
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It is the likelihood of confusion that is the gravamen of infringement. But there is no absolute
standard for likelihood of confusion. Only the particular, and sometimes peculiar, circumstances of
each case can determine its existence. Thus, in infringement cases, precedents must be evaluated in
the light of each particular case. 13
In determining similarity and likelihood of confusion, our jurisprudence has developed two tests: the
dominancy test and the holistic test. The dominancy test focuses on the similarity of the prevalent
features of the competing trademarks that might cause confusion and deception, thus constituting
infringement. If the competing trademark contains the main, essential, and dominant features of
another, and confusion or deception is likely to result, infringement occurs. Exact duplication or
imitation is not required. The question is whether the use of the marks involved is likely to cause
confusion or mistake in the mind of the public or to deceive consumers. 14 THIAaD
In contrast, the holistic test entails a consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity. 15 The discerning
eye of the observer must focus not only on the predominant words but also on the other features
appearing on both marks in order that the observer may draw his conclusion whether one is
confusingly similar to the other. 16
Applying either the dominancy test or the holistic test, petitioner's "SAN FRANCISCO COFFEE"
trademark is a clear infringement of respondent's "SAN FRANCISCO COFFEE & ROASTERY,
INC." trade name. The descriptive words "SAN FRANCISCO COFFEE" are precisely the dominant
features of respondent's trade name. Petitioner and respondent are engaged in the same business of
selling coffee, whether wholesale or retail. The likelihood of confusion is higher in cases where the
business of one corporation is the same or substantially the same as that of another corporation. In
this case, the consuming public will likely be confused as to the source of the coffee being sold at
petitioner's coffee shops. Petitioner's argument that "San Francisco" is just a proper name referring
to the famous city in California and that "coffee" is simply a generic term, is untenable. Respondent
has acquired an exclusive right to the use of the trade name "SAN FRANCISCO COFFEE &
ROASTERY, INC." since the registration of the business name with the DTI in 1995. Thus,
respondent's use of its trade name from then on must be free from any infringement by similarity. Of
course, this does not mean that respondent has exclusive use of the geographic word "San
Francisco" or the generic word "coffee." Geographic or generic words are not, per se, subject to
exclusive appropriation. It is only the combination of the words "SAN FRANCISCO COFFEE,"
which is respondent's trade name in its coffee business, that is protected against infringement on
matters related to the coffee business to avoid confusing or deceiving the public.
In Philips Export B.V. v. Court of Appeals, 17 this Court held that a corporation has an exclusive
right to the use of its name. The right proceeds from the theory that it is a fraud on the corporation
which has acquired a right to that name and perhaps carried on its business thereunder, that another
should attempt to use the same name, or the same name with a slight variation in such a way as to
induce persons to deal with it in the belief that they are dealing with the corporation which has given
a reputation to the name. 18
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This Court is not just a court of law, but also of equity. We cannot allow petitioner to profit by the
name and reputation so far built by respondent without running afoul of the basic demands of fair
play. Not only the law but equity considerations hold petitioner liable for infringement of
respondent's trade name.
The Court of Appeals was correct in setting aside the 22 October 2003 Decision of the Office of the
Director General-Intellectual Property Office and in reinstating the 14 August 2002 Decision of the
Bureau of Legal Affairs-Intellectual Property Office.
WHEREFORE, we DENY the petition for review. We AFFIRM the 15 June 2005 Decision and 1
September 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 80396.
Costs against petitioner. IaHAcT
SO ORDERED.
||| (Coffee Partners, Inc. v. San Francisco Coffee & Roastery, Inc., G.R. No. 169504, [March 3, 2010],
628 PHIL 13-26)
12. Superior Commercial Enterprises, Inc. v. Kunan Enterprises Ltd., G.R. No. 169974, April 20,
2010
FACTS: Kunnan appointed Superior as its exclusive distributor in the Philippines under a
Distributorship Agreement which states that Kunnan intends to acquire ownership of the Kennex
Trademark registered by Superior Commercial in the Philippines. Superior Commercial is desirious of
being appointed as the sole distributor of Kunnan products in the Philippines. Superiors President
and General Manager misled Kunnans Officers into believing that Kunnan could not acquire trademark
rights in the Philippines. Thus, Kunnan decided to assign its applications to register Pro Kennex as a
trademark to Superior, on condition that Superior acknowledged that Kunnan was still the real owner of
the mark and agreed to return to it to Kunnan on request. Upon termination of distributorship
agreement with Superior, Kunnan appointed Sports Concept as its new distributor. Kunnan caused
the publication of a Notice and Warning in the Manila Bulletins issue, stating that (1) it is the owner of
the disputed trademarks; (2) it terminated its Distributorship Agreement with Superior; and (3) it
appointed Sports Concept as its exclusive distributor. This notice prompted Superior to file its
Complaint for Infringement of Trademark and Unfair Competition against Kunnan. Prior to and
during the pendency of the infringement and unfair competition case before the RTC, Kunnan filed with
the Bureau of Patents, Trademarks and Technology Transfer separate Petitions for the Cancellation of
Registration Trademarks involving the Kennex and Pro Kennex trademarks. Kunna filed the petition
on the ground that Superior fraudulently registered and appropriated the disputed trademarks as mere
distributor and not as lawful owner. Both the trial court and the Court of Appeals ruled in favor of
Kunnan.
ISSUES: WON Superior, as a distributor, has true ownership over the trademarks.
RULING: No. An exclusive distributor does not acquire any proprietary interest in the principals
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trademark and cannot register it, unless the owner has assigned the right. 1. To establish trademark
infringement, the following elements must be proven: a. The validity of the plaintiffs mark; b. The
plaintiffs ownership of the mark; and c. The use of the mark or its colorable imitation by the alleged
infringer results in likelihood confusion. Based on these elements, the Court found it immediately
obvious that the second element was what the Registration Cancellation Case decided with finality. On
this element depended the validity of the registrations that, on their own, only gave rise to the
presumption of, but was not conclusive on, the issue of ownership. In no certain terms, the appellate
court in the Registration Cancellation Case ruled that Superior was a mere distributor and could not
have been the owner, and was thus an invalid registrant of the disputed trademarks. The right to
register a trademark is based on ownership, and therefore only the owner can register it. Gabriel v.
Perez provided that a mere distributor of a product bearing a trademark, even if permitted to use said
trademark has no right to and cannot register the said trademark. 2. Unfair competition has been defined
as the passing off or attempting to pass off upon the public of the goods and business of one person as
the goods or business of another with the end and probable effect of deceiving the public. The essential
elements of unfair competition are: a. Confusing similarity in the general appearance of the goods; and
b. Intent to deceive the public and defraud the competitor. The True Test of Unfair Competition:
Whether the acts of the defendant have the intent of deceiving or are calculated to deceive the ordinary
buyer making his purchases under the ordinary conditions of the particular trade to which the
controversy relates. In the hereby case, no evidence exist showing that Kunnan ever attempted to
pass off goods it sold as those of Superior and that there is no bad faith or fraud imputable to Kunnan in
using the disputed trademarks. Superior failed to adduce any evidence to show that Kunnan by the
above-cited acts intended to deceive the public as to the identity of the goods sold or of the
manufacturer of the goods sold.
[G.R. No. 169974. April 20, 2010.]
SUPERIOR COMMERCIAL ENTERPRISES, INC., petitioner, vs. KUNNAN
ENTERPRISES LTD. AND SPORTS CONCEPT & DISTRIBUTOR,
INC., respondents.
We review in this petition for review on certiorari 1 the (1) decision 2 of the Court of Appeals (CA)
in CA-G.R. CV No. 60777 that reversed the ruling of the Regional Trial Court of Quezon City,
Branch 85 (RTC), 3 and dismissed the petitioner Superior Commercial Enterprises, Inc.'s
(SUPERIOR) complaint for trademark infringement and unfair competition (with prayer for
preliminary injunction) against the respondents Kunnan Enterprises Ltd. (KUNNAN) and Sports
Concept and Distributor, Inc. (SPORTS CONCEPT); and (2) the CA resolution 4 that denied
SUPERIOR's subsequent motion for reconsideration. The RTC decision that the CA reversed found
the respondents liable for trademark infringement and unfair competition, and ordered them to pay
SUPERIOR P2,000,000.00 in damages, P500,000.00 as attorney's fees, and costs of the suit.
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THE FACTUAL ANTECEDENTS
On February 23, 1993, SUPERIOR 5 filed a complaint for trademark infringement and unfair
competition with preliminary injunction against KUNNAN 6 and SPORTS CONCEPT 7 with the
RTC, docketed as Civil Case No. Q-93014888.
In support of its complaint, SUPERIOR first claimed to be the owner of the trademarks, trading
styles, company names and business names 8 "KENNEX", 9 "KENNEX & DEVICE", 10 "PRO
KENNEX" 11 and "PRO-KENNEX" (disputed trademarks). 12 Second, it also asserted its prior use
of these trademarks, presenting as evidence of ownership the Principal and Supplemental
Registrations of these trademarks in its name. Third, SUPERIOR also alleged that it extensively sold
and advertised sporting goods and products covered by its trademark registrations.Finally,
SUPERIOR presented as evidence of its ownership of the disputed trademarks the preambular
clause of the Distributorship Agreement dated October 1, 1982 (Distributorship Agreement) it
executed with KUNNAN, which states: HCIaDT
Whereas, KUNNAN intends to acquire the ownership of KENNEX trademark
registered by the [sic] Superior in the Philippines. Whereas, the [sic] Superior is
desirous of having been appointed [sic] as the sole distributor by KUNNAN in the
territory of the Philippines." [Emphasis supplied.] 13
In its defense, KUNNAN disputed SUPERIOR's claim of ownership and maintained
thatSUPERIOR as mere distributor from October 6, 1982 until December 31, 1991
fraudulently registered the trademarks in its name. KUNNAN alleged that it was incorporated in
1972, under the name KENNEX Sports Corporation for the purpose of manufacturing and selling
sportswear and sports equipment; it commercially marketed its products in different countries,
including the Philippines since 1972. 14 It created and first used "PRO KENNEX," derived from its
original corporate name, as a distinctive trademark for its products in 1976. KUNNAN also alleged
that it registered the "PRO KENNEX" trademark not only in the Philippines but also in 31 other
countries, and widely promoted the "KENNEX" and "PRO KENNEX" trademarks through
worldwide advertisements in print media and sponsorships of known tennis players.
On October 1, 1982, after the expiration of its initial distributorship agreement with another
company, 15 KUNNAN appointed SUPERIOR as its exclusive distributor in the Philippines under a
Distributorship Agreement whose pertinent provisions state: 16
Whereas, KUNNAN intends to acquire ownership of KENNEX trademark
registered by the Superior in the Philippines. Whereas, the Superior is desirous
of having been appointed [sic] as the sole distributor by KUNNAN in the
territory of the Philippines.
Now, therefore, the parties hereto agree as follows:
1. KUNNAN in accordance with this Agreement, will appoint
the sole distributorship right to Superior in the Philippines,
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and this Agreement could be renewed with the consent of both
parties upon the time of expiration. aTcIEH
2. The Superior, in accordance with this Agreement, shall
assign the ownership of KENNEX trademark, under the
registration of Patent Certificate No. 4730 dated 23 May 1980
to KUNNAN on the effects [sic] of its ten (10) years contract of
distributorship, and it is required that the ownership of the said
trademark shall be genuine, complete as a whole and without any
defects.
3. KUNNAN will guarantee to the Superior that no other third
parties will be permitted to supply the KENNEX PRODUCTS in
the Philippines except only to the Superior. If KUNNAN violates
this stipulation, the transfer of the KENNEX trademark shall be
null and void.
4. If there is a necessity, the Superior will be appointed, for the
protection of interest of both parties, as the agent in the Philippines
with full power to exercise and granted the power of attorney, to
pursue any case of Pirating, Infringement and Counterfeiting the
[sic] KENNEX trade mark in the Philippine territory.
5. The Superior will be granted from [sic] KUNNAN's approval
before making and selling any KENNEX products made in the
Philippines and the other countries, and if this is the situation,
KUNNAN is entitled to have a royalty of 5%-8% of FOB as the
right. SIcEHC
6. Without KUNNAN's permission, the Superior cannot procure
other goods supply under KENNEX brand of which are not
available to supply [sic] by KUNNAN. However, in connection
with the sporting goods, it is permitted that the Superior can
procure them under KENNEX brand of which are not available to
be supplied by KUNNAN. [Emphasis supplied.]
Even though this Agreement clearly stated that SUPERIOR was obligated to assign the ownership of
the KENNEX trademark to KUNNAN, the latter claimed that the Certificate of Registration for the
KENNEX trademark remained with SUPERIOR because Mariano Tan Bon Diong (Mr. Tan Bon
Diong), SUPERIOR's President and General Manager, misled KUNNAN's officers into believing
that KUNNAN was not qualified to hold the same due to the "many requirements set by the
Philippine Patent Office" that KUNNAN could not meet. 17 KUNNAN further asserted that
SUPERIOR deceived it into assigning its applications for registration of the "PRO KENNEX"
trademark in favor of SUPERIOR, through an Assignment Agreement dated June 14, 1983 whose
pertinent provisions state: 18
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1. In consideration of the distributorship relationship between KUNNAN
and Superior, KUNNAN, who is the seller in the distributorship
relationship, agrees to assign the following trademark applications
owned by itself in the Philippines to Superior who is the buyer in the
distributorship relationship.
Trademark Application Number Class
PROKENNEX 49999 28
PROKENNEX 49998 25
PROKENNEX 49997 18
2. Superior shall acknowledge that KUNNAN is still the real and
truthful owner of the abovementioned trademarks, and shall agree that
it will not use the right of the abovementioned trademarks to do
anything which is unfavourable or harmful to KUNNAN.
3. Superior agrees that it will return back the abovementioned
trademarks to KUNNAN without hesitation at the request of KUNNAN
at any time. KUNNAN agrees that the cost for the concerned assignment of
the abovementioned trademarks shall be compensated by
KUNNAN. TAHIED
4. Superior agrees that the abovementioned trademarks when requested by
KUNNAN shall be clean and without any incumbency.
5. Superior agrees that after the assignment of the abovementioned
trademarks, it shall have no right to reassign or license the said trademarks
to any other parties except KUNNAN. [Emphasis supplied]
Prior to and during the pendency of the infringement and unfair competition case before the
RTC, KUNNAN filed with the now defunct Bureau of Patents, Trademarks and Technology
Transfer 19 separate Petitions for the Cancellation of Registration Trademark Nos. 41032, SR
6663, 40326, 39254, 4730 and 49998, docketed as Inter Partes Cases Nos. 3709, 3710, 3811, 3812,
3813 and 3814, as well as Opposition to Application Serial Nos. 84565 and 84566, docketed as
Inter Partes Cases Nos. 4101 and 4102 (Consolidated Petitions for Cancellation) involving the
KENNEX and PRO KENNEX trademarks. 20 In essence, KUNNAN filed the Petition for
Cancellation and Opposition on the ground that SUPERIOR fraudulently registered and
appropriated the disputed trademarks; as mere distributor and not as lawful owner, it obtained the
registrations and assignments of the disputed trademarks in violation of the terms of the
Distributorship Agreement and Sections 2-A and 17 of Republic Act No. 166, as amended. 21
On December 3, 1991, upon the termination of its distributorship agreement with SUPERIOR,
KUNNAN appointed SPORTS CONCEPT as its new distributor. Subsequently, KUNNAN also
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caused the publication of a Notice and Warning in the Manila Bulletin's January 29, 1993 issue,
stating that (1) it is the owner of the disputed trademarks; (2) it terminated its Distributorship
Agreement with SUPERIOR; and (3) it appointed SPORTS CONCEPT as its exclusive distributor.
This notice prompted SUPERIOR to file its Complaint for Infringement of Trademark and Unfair
Competition with Preliminary Injunction against KUNNAN. 22
The RTC Ruling
On March 31, 1998, the RTC issued its decision 23 holding KUNNAN liable for trademark
infringement and unfair competition. The RTC also issued a writ of preliminary injunction enjoining
KUNNAN and SPORTS CONCEPT from using the disputed trademarks. DaCTcA
The RTC found that SUPERIOR sufficiently proved that it was the first user and owner of the
disputed trademarks in the Philippines, based on the findings of the Director of Patents in Inter
Partes Case No. 1709 and 1734 that SUPERIOR was "rightfully entitled to register the mark
'KENNEX' as user and owner thereof." It also considered the "Whereas clause" of the
Distributorship Agreement, which categorically stated that "KUNNAN intends to acquire ownership
of [the] KENNEX trademark registered by SUPERIOR in the Philippines." According to the RTC,
this clause amounts to KUNNAN's express recognition of SUPERIOR's ownership of the KENNEX
trademarks. 24
KUNNAN and SPORTS CONCEPT appealed the RTC's decision to the CA where the appeal was
docketed as CA-G.R. CV No. 60777. KUNNAN maintained that SUPERIOR was merely its
distributor and could not be the owner of the disputed trademarks. SUPERIOR, for its part, claimed
ownership based on its prior use and numerous valid registrations.
Intervening Developments:
The IPO and CA Rulings
In the course of its appeal to the CA, KUNNAN filed on December 19, 2003 a Manifestation and
Motion praying that the decision of the Bureau of Legal Affairs (BLA) of the Intellectual
Property Office (IPO), dated October 30, 2003, in the Consolidated Petitions for Cancellation
be made of record and be considered by the CA in resolving the case. 25 The BLA ruled in this
decision
In the case at bar, Petitioner-Opposer (Kunnan) has overwhelmingly and
convincingly established its rights to the mark "PRO KENNEX". It was proven
that actual use by Respondent-Registrant is not in the concept of an owner but as a
mere distributor (Exhibits "I", "S" to "S-1", "P" and "P-1" and "Q" and "Q-2") and
as enunciated in the case of Crisanta Y. Gabriel vs. Dr. Jose R. Perez, 50 SCRA
406, "a mere distributor of a product bearing a trademark, even if permitted to use
said trademark has no right to and cannot register the said trademark." EAcCHI
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WHEREFORE, there being sufficient evidence to prove that the Petitioner-
Opposer (KUNNAN) is the prior user and owner of the trademark "PRO-
KENNEX", the consolidated Petitions for Cancellation and the Notices of
Opposition are hereby GRANTED. Consequently, the trademark "PRO-
KENNEX" bearing Registration Nos. 41032, 40326, 39254, 4730, 49998 for the
mark PRO-KENNEX issued in favor of Superior Commercial Enterprises, Inc.,
herein Respondent-Registrant under the Principal Register and SR No. 6663 are
hereby CANCELLED. Accordingly, trademark application Nos. 84565 and
84566, likewise for the registration of the mark PRO-KENNEX are
hereby REJECTED.
Let the file wrappers of PRO-KENNEX subject matter of these cases be forwarded
to the Administrative Finance and Human Resources Development Services
Bureau (AFHRDSB) for appropriate action in accordance with this Decision and a
copy thereof be furnished the Bureau of Trademarks (BOT) for information and
update of its record. 26
On February 4, 2005, KUNNAN again filed another Manifestation requesting that the IPO Director
General's decision on appeal dated December 8, 2004, denying SUPERIOR's appeal, be given
weight in the disposition of the case. 27 The dispositive portion of the decision reads: 28
WHEREFORE, premises considered, there is no cogent reason to disturb Decision
No. 2003-35 dated 30 October 2003 rendered by the Director of the Bureau of
Legal Affairs. Accordingly, the instant appeal is DENIED and the appealed
decision is hereby AFFIRMED.
We take judicial notice that SUPERIOR questioned the IPO Director General's ruling before the
Court of Appeals on a petition for review under Rule 43 of the Rules of Court, docketed as CA-G.R.
SP No. 87928 (Registration Cancellation Case). On August 30, 2007, the CA rendered its decision
dismissing SUPERIOR's petition. 29 On December 3, 2007, the CA decision was declared final
and executory and entry of judgment was accordingly made. Hence,SUPERIOR's registration of
the disputed trademarks now stands effectively cancelled.
The CA Ruling
On June 22, 2005, the CA issued its decision in CA-G.R. CV No. 60777, reversing and setting aside
the RTC's decision of March 31, 1998. 30 It dismissed SUPERIOR's Complaint for Infringement of
Trademark and Unfair Competition with Preliminary Injunction on the ground that SUPERIOR
failed to establish by preponderance of evidence its claim of ownership over the KENNEX and PRO
KENNEX trademarks. The CA found the Certificates of Principal and Supplemental Registrations
and the "whereas clause" of the Distributorship Agreement insufficient to support SUPERIOR's
claim of ownership over the disputed trademarks. cEaDTA
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The CA stressed that SUPERIOR's possession of the aforementioned Certificates of Principal
Registration does not conclusively establish its ownership of the disputed trademarks as dominion
over trademarks is not acquired by the fact of registration alone; 31 at best, registration merely raises
a presumption of ownership that can be rebutted by contrary evidence. 32 The CA further
emphasized that the Certificates of Supplemental Registration issued in SUPERIOR's name do not
even enjoy the presumption of ownership accorded to registration in the principal register; it does
not amount to a prima facie evidence of the validity of registration or of the registrant's exclusive
right to use the trademarks in connection with the goods, business, or services specified in the
certificate. 33
In contrast with the failure of SUPERIOR's evidence, the CA found that KUNNAN presented
sufficient evidence to rebut SUPERIOR's presumption of ownership over the trademarks. KUNNAN
established that SUPERIOR, far from being the rightful owner of the disputed trademarks, was
merely KUNNAN's exclusive distributor. This conclusion was based on three pieces of evidence
that, to the CA, clearly established that SUPERIOR had no proprietary interest over the disputed
trademarks.
First, the CA found that the Distributorship Agreement, considered in its entirety, positively
confirmed that SUPERIOR sought to be the KUNNAN's exclusive distributor. The CA based this
conclusion on the following provisions of the Distributorship Agreement:
(1) that SUPERIOR was "desirous of [being] appointed as the sole
distributor by KUNNAN in the territory of the Philippines;" IHAcCS
(2) that "KUNNAN will appoint the sole distributorship right to Superior in
the Philippines;" and
(3) that "no third parties will be permitted to supply KENNEX PRODUCTS
in the Philippines except only to Superior."
The CA thus emphasized that the RTC erred in unduly relying on the first whereas clause, which
states that "KUNNAN intends to acquire ownership of [the] KENNEX trademark registered by
SUPERIOR in the Philippines" without considering the entirety of the Distributorship Agreement
indicating that SUPERIOR had been merely appointed by KUNNAN as its distributor.
Second, the CA also noted that SUPERIOR made the express undertaking in the Assignment
Agreement to "acknowledge that KUNNAN is still the real and truthful owner of the [PRO
KENNEX] trademarks," and that it "shall agree that it will not use the right of the abovementioned
trademarks to do anything which is unfavourable or harmful to KUNNAN." To the CA, these
provisions are clearly inconsistent with SUPERIOR's claim of ownership of the disputed
trademarks. The CA also observed that although the Assignment Agreement was a private document,
its authenticity and due execution was proven by the similarity of Mr. Tan Bon Diong's signature in
the Distributorship Agreement and the Assignment Agreement.
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Third, the CA also took note of SUPERIOR's Letter dated November 12, 1986 addressed to Brig.
Gen. Jose Almonte, identifying itself as the "sole and exclusive licensee and distributor in the
Philippines of all its KENNEX and PRO-KENNEX products." Attached to the letter was an
agreement with KUNNAN, identifying the latter as the "foreign manufacturer of all KENNEX
products." The CA concluded that in this letter, SUPERIOR acknowledged its status as a distributor
in its dealings with KUNNAN, and even in its transactions with third persons.
Based on these reasons, the CA ruled that SUPERIOR was a mere distributor and had no right to the
registration of the disputed trademarks since the right to register a trademark is based on ownership.
Citing Section 4 of Republic Act No. 166 34 and established jurisprudence,35 the CA held that
SUPERIOR as an exclusive distributor did not acquire any proprietary interest in the
principal's (KUNNAN's) trademark. SaIEcA
The CA denied SUPERIOR's motion for reconsideration for lack of merit in its Resolution dated
October 4, 2005.
THE PETITION
In the present petition, SUPERIOR raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT
PETITIONER SUPERIOR IS NOT THE TRUE AND RIGHTFUL OWNER OF
THE TRADEMARKS "KENNEX" AND "PRO-KENNEX" IN THE
PHILIPPINES
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT PETITIONER SUPERIOR IS A MERE DISTRIBUTOR OF
RESPONDENT KUNNAN IN THE PHILIPPINES
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
REVERSING AND SETTING ASIDE THE DECISION OF THE REGIONAL
TRIAL COURT OF QUEZON CITY IN CIVIL CASE NO. Q-93-14888, LIFTING
THE PRELIMINARY INJUNCTION ISSUED AGAINST RESPONDENTS
KUNNAN AND SPORTS CONCEPT AND DISMISSING THE COMPLAINT
FOR INFRINGEMENT OF TRADEMARK AND UNFAIR COMPETITION
WITH PRELIMINARY INJUNCTION
THE COURT'S RULING
We do not find the petition meritorious.
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On the Issue of Trademark Infringement
We first consider the effect of the final and executory decision in the Registration Cancellation Case
on the present case. This decision rendered after the CA decision for trademark infringement and
unfair competition in CA-G.R. CV No. 60777 (root of the present case) states:
As to whether respondent Kunnan was able to overcome the presumption of
ownership in favor of Superior, the former sufficiently established the fraudulent
registration of the questioned trademarks by Superior. The Certificates of
Registration No. SR-4730 (Supplemental Register) and 33487 (Principal Register)
for the KENNEX trademark were fraudulently obtained by petitioner Superior.
Even before PROKENNEX products were imported by Superior into the
Philippines, the same already enjoyed popularity in various countries and had been
distributed worldwide, particularly among the sports and tennis enthusiasts since
1976. Riding on the said popularity, Superior caused the registration thereof in the
Philippines under its name when it knew fully well that it did not own nor did it
manufacture the PROKENNEX products. Superior claimed ownership of the
subject marks and failed to disclose in its application with the IPO that it was
merely a distributor of KENNEX and PROKENNEX products in the
Philippines. CacHES
While Superior accepted the obligation to assign Certificates of Registration Nos.
SR-4730 and 33487 to Kunnan in exchange for the appointment by the latter as its
exclusive distributor, Superior however breached its obligation and failed to assign
the same to Kunnan. In a letter dated 13 February 1987, Superior, through Mr. Tan
Bon Diong, misrepresented to Kunnan that the latter cannot own trademarks in the
Philippines. Thus, Kunnan was misled into assigning to Superior its (Kunnan's)
own application for the disputed trademarks. In the same assignment document,
however. Superior was bound to ensure that the PROKENNEX trademarks under
Registration Nos. 40326, 39254, and 49998 shall be returned to Kunnan clean and
without any incumbency when requested by the latter.
In fine, We see no error in the decision of the Director General of the IPO which
affirmed the decision of the Director of the Bureau of Legal Affairs canceling the
registration of the questioned marks in the name of petitioner Superior and denying
its new application for registration, upon a finding that Superior is not the rightful
owner of the subject marks.
WHEREFORE, the foregoing considered, the petition is DISMISSED.
The CA decided that the registration of the "KENNEX" and "PRO KENNEX" trademarks
should be cancelled because SUPERIOR was not the owner of, and could not in the first place
have validly registered these trademarks. Thus, as of the finality of the CA decision on December
3, 2007, these trademark registrations were effectively cancelled and SUPERIOR was no longer the
registrant of the disputed trademarks. HICSTa
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Section 22 of Republic Act No. 166, as amended ("RA 166"), 36 the law applicable to this case,
defines trademark infringement as follows:
Section 22. Infringement, what constitutes. Any person who
[1] shall use, without the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation ofany 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 [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. [Emphasis supplied]
Essentially, Section 22 of RA 166 states that only a registrant of a mark can file a case for
infringement. Corollary to this, Section 19 of RA 166 provides that any right conferred upon the
registrant under the provisions of RA 166 37 terminates when the judgment or order of cancellation
has become final, viz.:
Section 19. Cancellation of registration. If the Director finds that a case
for cancellation has been made out he shall order the cancellation of the
registration. The order shall not become effective until the period for appeal
has elapsed, or if appeal is taken, until the judgment on appeal becomes
final. When the order or judgment becomes final, any right conferred by
such registration upon the registrant or any person in interest of record
shall terminate. Notice of cancellation shall be published in the Official
Gazette. [Emphasis supplied.]
Thus, we have previously held that the cancellation of registration of a trademark has the effect of
depriving the registrant of protection from infringement from the moment judgment or order of
cancellation has become final. 38
In the present case, by operation of law, specifically Section 19 of RA 166, the trademark
infringement aspect of SUPERIOR's case has been rendered moot and academic in view of the
finality of the decision in the Registration Cancellation Case. In short, SUPERIOR is left without
any cause of action for trademark infringement since the cancellation of registration of a trademark
deprived it of protection from infringement from the moment judgment or order of cancellation
became final. To be sure, in a trademark infringement, title to the trademark is indispensable to a
valid cause of action and such title is shown by its certificate of registration. 39 With its certificates
of registration over the disputed trademarks effectively cancelled with finality, SUPERIOR's case
for trademark infringement lost its legal basis and no longer presented a valid cause of
action. HEASaC
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Even assuming that SUPERIOR's case for trademark infringement had not been rendered moot and
academic, there can be no infringement committed by KUNNAN who was adjudged with finality to
be the rightful owner of the disputed trademarks in the Registration Cancellation Case. Even prior to
the cancellation of the registration of the disputed trademarks, SUPERIOR as a mere distributor
and not the owner cannot assert any protection from trademark infringement as it had no right in
the first place to the registration of the disputed trademarks. In fact, jurisprudence holds that in the
absence of any inequitable conduct on the part of the manufacturer, an exclusive distributor who
employs the trademark of the manufacturer does not acquire proprietary rights of the manufacturer,
and a registration of the trademark by the distributor as such belongs to the manufacturer,
provided the fiduciary relationship does not terminate before application for registration is
filed. 40 Thus, the CA in the Registration Cancellation Case correctly held:
As a mere distributor, petitioner Superior undoubtedly had no right to register the
questioned mark in its name. Well-entrenched in our jurisdiction is the rule that the
right to register a trademark should be based on ownership. 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. 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. An exclusive distributor does not acquire any proprietary interest in the
principal's trademark and cannot register it in his own name unless it is has been
validly assigned to him.
In addition, we also note that the doctrine of res judicata bars SUPERIOR's present case for
trademark infringement. The doctrine of res judicata embraces two (2) concepts: the first is "bar by
prior judgment" under paragraph (b) of Rule 39, Section 47, and the second is "conclusiveness of
judgment" under paragraph (c) thereof.
In the present case, the second concept conclusiveness of judgment applies. Under the concept
of res judicata by conclusiveness of judgment, a final judgment or decree on the merits by a court
of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on
points and matters determined in the former suit. 41 Stated differently, facts and issues actually
and directly resolved in a former suit cannot again be raised in any future case between the same
parties, even if the latter suit may involve a different cause of action. 42 This second branch of the
principle of res judicata bars the re-litigation of particular facts or issues in another litigation
between the same parties on a different claim or cause of action. 43 acCTIS
Because the Registration Cancellation Case and the present case involve the same parties, litigating
with respect to and disputing the same trademarks, we are bound to examine how one case would
affect the other. In the present case, even if the causes of action of the Registration Cancellation
Case (the cancellation of trademark registration) differs from that of the present case (the improper
or unauthorized use of trademarks), the final judgment in the Registration Cancellation Case is
nevertheless conclusive on the particular facts and issues that are determinative of the present case.
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To establish trademark infringement, the following elements must be proven: (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." 44
Based on these elements, we find it immediately obvious that the second element the plaintiff's
ownership of the mark was what the Registration Cancellation Case decided with finality. On this
element depended the validity of the registrations that, on their own, only gave rise to the
presumption of, but was not conclusive on, the issue of ownership. 45
In no uncertain terms, the appellate court in the Registration Cancellation Case ruled that
SUPERIOR was a mere distributor and could not have been the owner, and was thus an
invalid registrant of the disputed trademarks. Significantly, these are the exact terms of the ruling
the CA arrived at in the present petition now under our review. Thus, whether with one or the other,
the ruling on the issue of ownership of the trademarks is the same. Given, however, the final and
executory ruling in the Registration Cancellation Case on the issue of ownership that binds us and
the parties, any further discussion and review of the issue of ownership although the current CA
ruling is legally correct and can stand on its own merits becomes a pointless academic
discussion. DaScHC
On the Issue of Unfair Competition
Our review of the records shows that the neither the RTC nor the CA made any factual findings with
respect to the issue of unfair competition. In its Complaint, SUPERIOR alleged that: 46
17. In January 1993, the plaintiff learned that the defendant Kunnan
Enterprises, Ltd., is intending to appoint the defendant Sports Concept and
Distributors, Inc. as its alleged distributor for sportswear and sporting goods
bearing the trademark "PRO-KENNEX." For this reason, on January 20,
1993, the plaintiff, through counsel, wrote the defendant Sports Concept and
Distributor's, Inc. advising said defendant that the trademark "PRO-
KENNEX" was registered and owned by the plaintiff herein.
18. The above information was affirmed by an announcement made by the
defendants in The Manila Bulletin issue of January 29, 1993, informing the
public that defendant Kunnan Enterprises, Ltd. has appointed the defendant
Sports Concept and Distributors, Inc. as its alleged distributor of sportswear
and sporting goods and equipment bearing the trademarks "KENNEX and
"PRO-KENNEX" which trademarks are owned by and registered in the
name of plaintiff herein as alleged hereinabove.
xxx xxx xxx
27. The acts of defendants, as previously complained herein, were designed
to and are of the nature so as to create confusion with the commercial
activities of plaintiff in the Philippines and is liable to mislead the public as
77
Atty. Busmente
to the nature and suitability for their purposes of plaintiff's business and the
defendant's acts are likely to discredit the commercial activities and future
growth of plaintiff's business.
From jurisprudence, unfair competition has been defined as the passing off (or palming off) or
attempting to pass off upon the public of the goods or business of one person as the goods or
business of another with the end and probable effect of deceiving the public. The essential elements
of unfair competition 47 are (1) confusing similarity in the general appearance of the goods; and (2)
intent to deceive the public and defraud a competitor. 48
Jurisprudence also formulated the following "true test" of unfair competition: whether the acts of the
defendant have the intent of deceiving or are calculated to deceive the ordinary buyer making his
purchases under the ordinary conditions of the particular trade to which the controversy relates. One
of the essential requisites in an action to restrain unfair competition is proof of fraud; the intent to
deceive, actual or probable must be shown before the right to recover can exist. 49 DTSIEc
In the present case, no evidence exists showing that KUNNAN ever attempted to pass off the goods
it sold (i.e., sportswear, sporting goods and equipment) as those of SUPERIOR. In addition, there is
no evidence of bad faith or fraud imputable to KUNNAN in using the disputed trademarks.
Specifically, SUPERIOR failed to adduce any evidence to show that KUNNAN by the above-cited
acts intended to deceive the public as to the identity of the goods sold or of the manufacturer of the
goods sold. In McDonald's Corporation v. L.C. Big Mak Burger, Inc., 50 we held that there can be
trademark infringement without unfair competition such 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. In this case, no issue of
confusion arises because the same manufactured products are sold; only the ownership of the
trademarks is at issue. Furthermore, KUNNAN's January 29, 1993 notice by its terms prevents the
public from being deceived that the goods originated from SUPERIOR since the notice clearly
indicated that KUNNAN is the manufacturer of the goods bearing the trademarks "KENNEX" and
"PRO KENNEX." This notice states in full: 51
NOTICE AND WARNING
Kunnan Enterprises Ltd. is the owner and first user of the internationally-renowned
trademarks KENNEX and PRO KENNEX for sportswear and sporting goods and
equipment. Kunnan Enterprises Ltd. has registered the trademarks KENNEX and
PRO KENNEX in the industrial property offices of at least 31 countries worldwide
where KUNNAN Enterprises Ltd. has been selling its sportswear and sporting
goods and equipment bearing the KENNEX and PRO KENNEX trademarks.
Kunnan Enterprises Ltd. further informs the public that it had terminated its
Distributorship Agreement with Superior Commercial Enterprises, Inc. on
December 31, 1991. As a result,Superior Commercial Enterprises, Inc. is no
longer authorized to sell sportswear and sporting goods and equipment
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COMMERCIAL LAW REVIEW (Law on Intellectual Property) Atty. Busmente

manufactured by Kunnan Enterprises Ltd. and bearing the trademarks

KENNEX and PRO KENNEX.
xxx xxx xxx
In its place, KUNNAN has appointed SPORTS CONCEPT AND
DISTRIBUTORS, INC. as its exclusive Philippine distributor of sportswear and
sporting goods and equipment bearing the trademarks KENNEX and PRO
KENNEX. The public is advised to buy sporting goods and equipment bearing
these trademarks only from SPORTS CONCEPT AND DISTRIBUTORS,
INC. to ensure that the products they are buying are manufactured by
Kunnan Enterprises Ltd. [Emphasis supplied.] CcAESI

Finally, with the established ruling that KUNNAN is the rightful owner of the trademarks of the
goods that SUPERIOR asserts are being unfairly sold by KUNNAN under trademarks registered in
SUPERIOR's name, the latter is left with no effective right to make a claim. In other words, with the
CA's final ruling in the Registration Cancellation Case, SUPERIOR's case no longer presents a valid
cause of action. For this reason, the unfair competition aspect of the SUPERIOR's case likewise
falls.

WHEREFORE, premises considered, we DENY Superior Commercial Enterprises, Inc.'s petition

for review on certiorari for lack of merit. Cost against petitioner Superior Commercial Enterprises,
Inc. TacESD
SO ORDERED.
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