-Shangri-La v. Developers Group of Companies, Inc.

-Nature:
Petition for review under Rule 45 of the Rules of Court
Petitioners Shangri-La International Hotel Management, Ltd. (SLIHM) assail to set aside
Court of Appeals (CA) decision on 15 May 2003 and resolution on 15 September 2003

-Facts:
On 18 October 1982, Developers Group of Companies, Inc. (DGCI) filed with the Bureau of
Patents, Trademarks, and Technology Transfer (BPTTT) for registration covering the Shangri-
La mark and S logo
On 31 May 1983, BPTTT issued in favor of DGCI, Registration No. 31904
DGCI has used the S logo since then
But as far back as 1962, the Kuok Group of Companies has adopted the name Shangri-La in all
Shangri-La hotels and hotel-related establishments worldwide (SLIHM)
In February 1975, William Lee, a Singaporean design artist commissioned to design the logo of
Shangri-La hotels, launched the stylized S logo
SLIHM has used the name Shangri-La and the S logo since then
Shangri-La Hotel and Resort, Inc. was incorporated in the RP beginning 1987 when the Kuok
Group put up two hotels in Mandaluyong and Makati
On 21 June 1988, SLIHM filed with the BPTTT a petition, praying for the cancellation of the
Registration No. 31904 and for the registration of the mark and logo in their own name
DGCI filed a complaint for Infringement and Damages with the RTC of Quezon City against
SLIHM because they have been using the mark and the logo for the last eight years
SLIHM pointed to the Paris Convention for the Protection of Industrial Property and
further claimed that they have used the mark and logo since 1975
On 8 March 1996, RTC ruled in favor of DGCI
Therefrom, SLIHM went on appeal to the CA, but the affirmed the lower courts decision with
the modification of deleting the award of attorneys fees
SLIHM moved a motion for reconsideration, but was also denied

-Issue:
What constitutes trademark ownership?

-Decision:
Petition is granted and the assailed decision and resolution of the CA is set aside
SC ruled in favor of SLIHM

-Ratio
RA No. 166 (law in force at the time of DGCIs application)
The root of ownership of a trademark is actual use in commerce
Section 2 of RA No. 166 requires that before a trademark can be registered, it must have
been actually used in commerce and service for not less than two months in the
Philippines prior to the filing of an application for its registration
Moreover, registration does not confer upon the registrant an absolute right to the registered
mark
The certificate of registration is merely a prima facie proof that the registrant is the
owner of the registered mark or trade name
Evidence of prior and continuous use of the mark or trade name by another can
overcome the presumptive ownership of the registrant and may very well entitle the
former to be declared owner in an appropriate case
In other words, registration is not a mode of acquiring ownership
The actual use in commerce or business is a pre-requisite to the acquisition of the right
of ownership

In his testimony, Ramon Synhunliong, stated that the alleged jeepney signboard artist
commissioned to create the mark and logo submitted his design only in December 1982
That was two-and-a-half months after the filing of the respondents trademark
application
Ramon Synhunliong has been a guest at SLIHMs hotel before causing the registration of
the trademark, which gave rise to the allegation that he must have copied the idea there

Section 2 of RA No. 166 provides for what is registerable, containing the clause actually in use
in commerce in services not less than two months in the Philippines
But Section 2-A sets out how ownership is acquired
Under Section 2-A it states:
The actual use in commerce is the test of ownership
The mark must not have been so appropriated by another
Whether or not the actual use of the trademark is in the Philippines
DGCI did not fulfill the requirements of ownership under Section 2-A

International Law
The Paris Convention mandates that protection should be afforded to internationally
known marks as signatory to the Paris Convention, without regard as to whether the
foreign corporation is registered, licensed or doing business in the Philippines
The said convention runs afoul to Republic Act No. 166, which requires the actual use in
commerce in the Philippines of the subject mark or devise
The conflict was settled by the Supreme Court:
"Following universal acquiescence and comity, our municipal law on trademarks
regarding the requirement of actual use in the Philippines must subordinate an
international agreement inasmuch as the apparent clash is being decided by a
municipal tribunal (Mortensen vs. Peters, Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions 93; Paras, International Law and World Organization, 1971
Ed., p. 20)
Withal, the fact that international law has been made part of the law of the land does
not by any means imply the primacy of international law over national law in the
municipal sphere
Under the doctrine of incorporation as applied in most countries, rules of
international law are given a standing equal, not superior, to national legislative
enactments (Salonga and Yap, Public International Law, Fourth ed., 1974, p. 16)








SOCIETE DES PRODUITS NESTLE, S.A., Petitioner, vs. MARTIN T. DY, JR., Respondent.
G.R. No. 172276 - August 8, 2010 - CARPIO, J.:
Facts
Martin Dy Jr., imports and repackages Sunny Powdered Milk from Australia and sells them under the name NANNY. NANNY retails
primarily in parts of Visayas and Mindanao.
Nestle, is a foreign corporation organized under the laws of Switzerland and owns the trademark NAN for its line of infant formula.
Nestle allocates a substantial amount of resources for the production and promotion of the NAN product line.
Nestle wrote a letter to Dy Jr. asking him to stop using the name NANNY, they allege that it infringes upon the trademark ownership of
Nestle over the trademark NAN. He refused to recognize Nestles request and continued using the name NANNY.
Nestle filed a case with the RTC of Dumaguete City. The case was dismissed and elevated to the CA, the appellate court remanded the
case to the trial court fo adjudication. It was assigned to the RTC-Cebu Special Commercial Court.
The Commercial Court found Dy Jr., liable for trademark infringement on the grounds that even though it is not apparent in the
packaging of NANNY, the name itself relates to a childs nurse, which is closely related to the product line of NAN catering to infants.
The case was then raised to the CA, which reversed the RTCs ruling. It stated that even though there is similarity in the products, the
lower price range of NANNY cautions and reminds the purchaser that it is different from NAN, which is more expensive. This does not
create confusion as to the consumers because the apparent difference in price shows that they are two different products.

Issue

W/N the product name NANNY infringes upon the trademark of Nestles NAN.

Held

Yes, the decision of the RTC is reinstated. There is no question that the product will cause confusion within the consuming public. The
primary test that should be used in determining trademark infringement in this case is the dominancy test. It is apparent that upon first glance or
even at close inspection that there is confusing similarity between NAN and NANNY. This is sufficient to establish trademark infringement.
The dominancy test states:
-- xx --
This Court x x x 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. 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.
-- xx --
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.
It is incorrect to consider the prices, which the CA utilized in its determination. It is enough that if both products were placed in front of
the consumer, confusion will most likely arise. From this either similarities or differences in the logo or design are immaterial to the fact that co-
relation and subsequently confusion, has been created in the minds of the consumer.
-- xx --
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.




Case Digest: McDonald's Corporation v. L.C. Big Mak Burger, Inc.
MCDONALD'S CORPORATION and MCGEORGE FOOD INDUSTRIES, INC., petitioners, vs.L.C. BIG MAK
BURGER, INC., FRANCIS B. DY, EDNA A. DY, RENE B. DY, WILLIAM B. DY, JESUS AYCARDO, ARACELI
AYCARDO, and GRACE HUERTO, respondents.

G.R. No. 143993, August 18, 2004.

CARPIO, J.:

Petitioner McDonald's Corporation ("McDonald's") is a US corporation that operates a global chain of fast-food
restaurants, with Petitioner McGeorge Food Industries ("McGeorge"), as the Philippine franchisee.

McDonald's owns the "Big Mac" mark for its "double-decker hamburger sandwich." with the US Trademark Registry on
16 October 1979.

Based on this Home Registration, McDonald's applied for the registration of the same mark in the Principal Register of
the then Philippine Bureau of Patents, Trademarks and Technology ("PBPTT") (now IPO). On 18 July 1985, the
PBPTT allowed registration of the "Big Mac."

Respondent L.C. Big Mak Burger, Inc. is a domestic corporation which operates fast-food outlets and snack vans in
Metro Manila and nearby provinces. Respondent corporation's menu includes hamburger sandwiches and other food
items.

On 21 October 1988, respondent corporation applied with the PBPTT for the registration of the "Big Mak" mark for its
hamburger sandwiches, which was opposed by McDonald's. McDonald's also informed LC Big Mak chairman of its
exclusive right to the "Big Mac" mark and requested him to desist from using the "Big Mac" mark or any similar mark.

Having received no reply, petitioners sued L.C. Big Mak Burger, Inc. and its directors before Makati RTC Branch 137
("RTC"), for trademark infringement and unfair competition.

RTC rendered a Decision finding respondent corporation liable for trademark infringement and unfair competition. CA
reversed RTC's decision on appeal.

1ST ISSUE:W/N respondent corporation is liable for trademark infringement and unfair competition.

Ruling: Yes
Section 22 of Republic Act No. 166, as amended, 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 [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.
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.

1st element:

A mark is valid if it is distinctive and not merely generic and descriptive.

The "Big Mac" mark, which should be treated in its entirety and not dissected word for word, is neither generic nor
descriptive. Generic marks are commonly used as the name or description of a kind of goods, such as "Lite" for beer.
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, such as "Arthriticare" for arthritis medication. On the contrary, "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. As such, it is highly distinctive and thus valid.

2nd element:

Petitioners have duly established McDonald's exclusive ownership of the "Big Mac" mark. Prior valid registrants of the
said mark had already assigned his rights to McDonald's.

3rd element:

Section 22 covers two types of confusion arising from the use of similar or colorable imitation marks, namely,
confusion of goods (confusion in which the ordinarily prudent purchaser would be induced to purchase one product in
the belief that he was purchasing the other) and confusion of business (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).

There is confusion of goods in this case since respondents used the "Big Mak" mark on the same goods, i.e.
hamburger sandwiches, that petitioners' "Big Mac" mark is used.

There is also confusion of business due to Respondents' use of the "Big Mak" mark in the sale of hamburgers, the
same business that petitioners are engaged in, also results in confusion of business. 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 registered trademark owner enjoys
protection in product and market areas that are the normal potential expansion of his business.

Furthermore, In determining likelihood of confusion, the SC has relied on the dominancy test (similarity of the
prevalent features of the competing trademarks that might cause confusion) over the holistic test (consideration of the
entirety of the marks as applied to the products, including the labels and packaging).

Applying the dominancy test, Respondents' use of the "Big Mak" mark results in likelihood of confusion. 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.

Lastly, since Section 22 only requires the less stringent standard of "likelihood of confusion," Petitioners' failure to
present proof of actual confusion does not negate their claim of trademark infringement.

2ND ISSUE: W/N Respondents committed Unfair Competition

Ruling: Yes.
Section 29 ("Section 29")73 of RA 166 defines unfair competition, thus:
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.
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.

In the case at bar, Respondents have applied on their plastic wrappers and bags almost the same words that
petitioners use on their styrofoam box. Further, Respondents' goods are hamburgers which are also the goods of
petitioners. Moreover, there is actually no notice to the public that the "Big Mak" hamburgers are products of "L.C. Big
Mak Burger, Inc." This clearly shows respondents' intent to deceive the public.










MCDONALDS CORPORATION vs MACJOY
Intellectual Property Law Law on Trademarks, Service Marks and Trade Names Dominancy Test
vs HolisticTest
Since 1987, MacJoy Devices had been operating in Cebu. MacJoy is a fast food restaurant which sells fried
chicken, chicken barbeque, burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo and steaks. In 1991,
MacJoy filed its application for trademark before the Intellectual Property Office (IPO). McDonalds opposed the
application as it alleged that MacJoy closely resembles McDonalds corporate logo such that when used on
identical or related goods, the trademark applied for would confuse or deceive purchasers into believing that the
goods originate from the same source or origin that the use and adoption in bad faith of the MacJoy and
Device mark would falsely tend to suggest a connection or affiliation with McDonalds restaurant services and
food products, thus, constituting a fraud upon the general public and further cause the dilution of the
distinctiveness of McDonalds registered and internationally recognized McDonaldS marks to its prejudice and
irreparable damage.
The IPO ruled in favor of McDonalds. MacJoy appealed before the Court of Appeals and the latter ruled in favor
of MacJoy. The Court of Appeals, in ruling over the case, actually used the holistic test (which is a test
commonly used in infringement cases). The holistic test looks upon the visual comparisons between the two
trademarks. In this case, the Court of Appeals ruled that other than the letters M and C in the words MacJoy
and McDonalds, there are no real similarities between the two trademarks. MacJoy is written in round script
while McDonalds is written in thin gothic. MacJoy is accompanied by a picture of a (cartoonish) chicken while
McDonalds is accompanied by the arches M. The color schemes between the two are also different.
MacJoy is in deep pink while McDonalds is in gold color.
ISSUE: Whether or not MacJoy infringed upon the trademark of McDonalds.
HELD: Yes. The Supreme Court ruled that the proper test to be used is the dominancy test. The dominancy test
not only looks at the visual comparisons between two trademarks but also the aural impressions created by the
marks in the public mind as well as connotative comparisons, giving little weight to factors like prices, quality,
sales outlets and market segments. In the case at bar, the Supreme Court ruled that McDonalds and MacJoy
marks are confusingly similar with each other such 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. The first letter M in both marks puts emphasis on the prefixes Mc and/or
Mac by the similar way in which they are depicted i.e. in an arch-like, capitalized and stylized manner. For sure,
it is the prefix Mc, an 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 MCDONALDS marks which all use the prefixes Mc and/or
Mac. Besides and most importantly, both trademarks are used in the sale of fastfood products.
Further, the owner of MacJoy provided little explanation why in all the available names for a restaurant he chose
the prefix Mac to be the dominant feature of the trademark. The prefix Mac and Macjoy has no relation or
similarity whatsoever to the name Scarlett Yu Carcel, which is the name of the niece of MacJoys president
whom he said was the basis of the trademark MacJoy. By reason of the MacJoys implausible and insufficient
explanation as to how and why out of the many choices of words it could have used for its trade-name and/or
trademark, it chose the word Macjoy, the only logical conclusion deducible therefrom is that the MacJoy would
want to ride high on the established reputation and goodwill of the McDonalds marks, which, as applied to its
restaurant business and foodproducts, is undoubtedly beyond question.








In-N-Out Burger, Inc vs Sehwani, Inc
G.R. No. 179127 : December 24, 2008
Facts: Petitioner IN-N-OUT BURGER, INC., a business entity incorporated under the laws of US, which is a signatory to the Convention of Paris on Protection of
Industrial Property and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). Petitioner is engaged mainly in the restaurant business,
but it has never engaged in business in the Philippines. Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations organized in the Philippines.
On 2 June 1997, petitioner filed trademark and service mark applications with the Bureau of Trademarks (BOT) of the IPO for "IN-N-OUT" and "IN-N-OUT Burger
& Arrow Design." Petitioner later found out, through the Official Action Papers issued by the IPO on 31 May 2000, that respondent Sehwani, Incorporated had
already obtained Trademark Registration for the mark "IN N OUT (the inside of the letter "O" formed like a star)." Petitioner eventually filed on 4 June 2001
before the Bureau of Legal Affairs (BLA) of the IPO an administrative complaint against respondents for unfair competition and cancellation of trademark
registration. Respondents asserted therein that they had been using the mark "IN N OUT" in the Philippines since 15 October 1982. Respondent then filed with
the BPTTT an application for the registration of the mark. BPTTT approved its application and issued the corresponding certificate of registration in favor of the
respondent.
On Dec 22, 2003, IPO Director of Legal Affairs rendered a decision in favor of petitioner stating petitioner had the right to use its tradename and mark in the
Philippines to the exclusion of others. However, the decision also includes that respondent is not guilty of unfair competition. Upon appeal by petitioner, the
new IPO Director General declared that respondents were guilty of unfair competition on December 23, 2005. On 18 July 2006, the Court of Appeals
promulgated a Decision reversing the Decision dated 23 December 2005 of the IPO Director General. The appellate court declared that Section 163 of the
Intellectual Property Code specifically confers upon the regular courts, and not the BLA-IPO, sole jurisdiction to hear and decide cases involving provisions of the
Intellectual Property Code, particularly trademarks. Hence, the present petition.
Issue: (1) Whether the IPO (administrative bodies) have jurisdiction to cases involving unfair competition
(2) Whether respondent Sehwani is liable of unfair competition
Held: (1) Yes. Sec. 160 and 170, which are found under Part III of the IP Code, recognize the concurrent jurisdiction of civil courts and the IPO over unfair
competition cases. Therefore, the IPO Director of Legal Affairs have jurisdiction to decide the petitioner's administrative case against respondents and the IPO
Director General have exclusive jurisdiction over the appeal of the judgment of the IPO Director of Legal Affairs.
(2) Yes. The evidence on record shows that the respondents were not using their registered trademark but that of the petitioner. Further, respondents are giving
their products the general appearance that would likely influence purchasers to believe that these products are those of the petitioner. The intention to deceive
may be inferred from the similarity of the goods as packed and offered for sale, and, thus, action will lie to restrain such unfair competition. Also, respondents
use of IN-N-OUT BURGER in busineses signages reveals fraudulent intent to deceive purchasers.
N.B.
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.

SEHWANI, INCORPORATED and/or BENITA'S FRITES, INC., vs IN-N-OUT BURGER, INC
Petitioners
Petitioner Sehwani, Inc. alleged that respondent lack the legal capacity to sue because it was not doing
business in the Philippines and that it has no cause of action because its mark is not registered or used
in the Philippines. They claimed that as the registered owner of the "IN-N-OUT" mark, it enjoys the
presumption that the same was validly acquired and that it has the exclusive right to use the mark.
Moreover, petitioners argued that other than the bare allegation of fraud in the registration of the
mark, respondent failed to show the existence of any of the grounds for cancellation thereof under the
IP Code.

Respondents contended that petitioners committed a violation of intellectual property rights when
they refused to accede to the demand in desisting from claiming ownership of the mark "IN-N-OUT"
and to voluntarily cancelling its Trademark Registration. They argued that they have been the owner of
the tradename "IN-N-OUT" and trademarks "IN-N-OUT," "IN-N-OUT Burger & Arrow Design" and "IN-
N-OUT Burger Logo," which are used in its business since 1948 up to the present. These tradename
and trademarks were registered in the United States as well as in other parts of the world
issue W/n respondent has the legal capacity to sue for the protection of its trademarks, albeit it is not
doing business in the Philippines
held
YES.Section 160 in relation to Section 3 of R.A. No. 8293, provides for the Right of Foreign Corporation
to Sue in Trademark or Service Mark Enforcement Action. In addition, Articles 6
bis
and 8 of The Paris
Convention, wherein both the United States and the Philippines are signatories. state that "A
tradename shall be protected in all countries of the Union without the obligation of filing or registration
whether or not it forms part of a trademark."
Article 6bis which governs the protection of well-known trademarks, is a self-executing provision and
does not require legislative enactment to give it effect in the member country. The question of whether
or not respondents trademarks are considered "well-known" is factual in nature. Considering the
factual findings of the BLA-IPO, the SC is inclined to favor the declaration of the mark "IN-N-OUT" as
an internationally well-known mark on the basis of "registrations in various countries around the world
and its comprehensive advertisements therein." The fact that respondents marks are neither
registered nor used in the Philippines is of no moment.



PHILIP MORRIS, INC. VS. FORTUNE TOBACCO CORPORATION (Equal Standing of International Law and Municipal
Law)

Penned by: GARCIA, J.:

Petition for review under Rule 45 of the Rules of Court, petitioners Philip Morris, Inc., Benson & Hedges (Canada)
Inc., and Fabriques de Tabac Reunies, S.A. (now Philip Morris Products S.A.) seek the reversal and setting aside of
the following issuances of the Court of Appeals (CA) in CA-G.R. CV No. 66619: PETITION DENIED

1. Decision dated January 21, 20031 affirming an earlier decision of the Regional Trial Court of Pasig City, Branch
166, in its Civil Case No. 47374
Dismissed the complaint for trademark infringement and damages thereat commenced by the petitioners
against respondent Fortune Tobacco Corporation; and
2. Resolution dated May 30, 20032 denying petitioners motion for reconsideration.

FACTS OF THE CASE:
Petitioner Philip Morris, Inc., a corporation (State of Virginia, U.S.A), is the registered owner of the
trademark MARK VII for cigarettes. (per Certificate of Registration No. 18723 issued on April 26, 1973 by
the Philippine Patents Office (PPO)
Similarly, petitioner Benson & Hedges (Canada), Inc., a subsidiary of Philip Morris, Inc., is the registered
owner of the trademark MARK TEN for cigarettes (PPO Certificate of Registration No. 11147)
Fabriques de Tabac Reunies, S.A. (Swiss company), another subsidiary of Philip Morris, Inc., is the assignee
of the trademark LARK, (Trademark Certificate of Registration No. 19053) (originally registered in 1964 by
Ligget and Myers Tobacco Company)
Respondent Fortune Tobacco Corporation, a company organized in the Philippines, manufactures and sells
cigarettes using the trademark MARK.

Petitioners, on the claim that an infringement of their respective trademarks had been committed, filed, on
August 18, 1982, a Complaint for Infringement of Trademark and Damages against respondent Fortune
Tobacco Corporation, docketed as Civil Case No. 47374 of the Regional Trial Court of Pasig, Branch 166.
The decision under review summarized what happened next, as follows:
o Prayer for the issuance of a preliminary injunction, [petitioners] alleged that they are foreign corporations not doing business in the Philippines and
are suing on an isolated transaction.
o Countries in which they are domiciled grant to corporate or juristic persons of the Philippines the privilege to bring action for
infringement, without need of a license to do business in those countries.
o *Petitioners+ likewise manifested *being registered owners of the trademark MARK VII and MARK TEN
o registered the trademarks in their respective countries of origin
by virtue of the long and extensive usage of the same, these trademarks have already gained international fame and
acceptance
[respondent], without any previous consent from any of the [petitioners], manufactured and sold cigarettes bearing the
identical and/or confusingly similar trademark MARK
have caused and is likely to cause confusion or mistake, or would deceive purchasers and the public in general into buying
these products under the impression and mistaken belief that they are buying [petitioners+ products.
o Invoked provisions of the Paris Convention for the Protection of Industrial and Intellectual Property (Paris Convention)
o Philippines is a signatory, [petitioners] pointed out that upon the request of an interested party, a country of the Union may prohibit the
use of a trademark which constitutes a reproduction, imitation, or translation of a mark already belonging to a person entitled to the
benefits of the said Convention. In accordance with Section 21-A in relation to Section 23 of Republic Act 166, as amended, they are
entitled to relief in the form of damages [and] the issuance of a writ of preliminary injunction which should be made permanent.
o *Respondent+ filed its Answer denying *petitioners+ material allegations and averred *among other things] that MARK is a common
word, which cannot particularly identify a product to be the product of the [petitioners]
o After the termination of the trial on the merits trial court rendered its Decision dated November 3, 1999 dismissing the complaint and counterclaim
after making a finding that the [respondent] did not commit trademark infringement against the [petitioners].
o The issue of whether or not there was infringement of the [petitioners] trademarks by the [respondent] was likewise answered in the
negative. It expounded that in order for a name, symbol or device to constitute a trademark, it must, either by itself or by association, point
distinctly to the origin or ownership of the article to which it is applied and be of such nature as to permit an exclusive appropriation by one person.




Maintaining to have the standing to sue in the local forum and that respondent has committed trademark
infringement, petitioners went on appeal to the CA. (Appellate recourse docket CA-G.R. CV No. 66619)
o CA decision on January 21, 2003 (while ruling for petitioners on the matter of their legal capacity to
sue in this country for trademark infringement) affirmed the trial courts decision on the underlying
issue of respondents liability for infringement.
Motion for reconsideration denied by the CA (Resolution of May 30, 2003)

ISSUES
Petitioners seek petition for review (Court of Appeals):
o (1) whether or not petitioners, as Philippine registrants of trademarks, are entitled to enforce
trademark rights in this country;
o (2) whether or not respondent has committed trademark infringement against petitioners by its use
of the mark MARK for its cigarettes, hence liable for damages.
Respondent: issue the propriety of the petition as it allegedly raises questions of fact.
The petition is bereft of merit.
Petition raises both questions of fact and law
o question of law exists when the doubt or difference arises as to what the law is on a certain state of facts
o question of fact when the doubt or difference arises as to the truth or falsity of alleged facts
Court is not the proper venue to consider factual issues as it is not a trier of facts
Unless the factual findings of the appellate court are mistaken, absurd, speculative, conflicting, tainted with
grave abuse of discretion, or contrary to the findings culled by the court of origin, we will not disturb them
Petitioners: contentions should be treated as purely legal since they are assailing erroneous conclusions deduced from a set of
undisputed facts

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 in by others.
o A trademark deserves protection.

PETITIONER:
Petitioners assert that, as corporate nationals of member-countries of the Paris Union, they can sue
before Philippine courts for infringement of trademarks, or for unfair competition, without need of
obtaining registration or a license to do business in the Philippines, and without necessity of actually doing
business in the Philippines.
o Right and mechanism are accorded by
Section 21-A of Republic Act (R.A.) No. 166 or the Trademark Law, as amended
Article 2 of the Paris Convention for the Protection of Industrial Property, aka Paris
Convention.
Not doing business in the Philippines does not mean that cigarettes bearing their trademarks are not
available and sold locally. Citing Converse Rubber Corporation v. Universal Rubber Products, Inc., such
availability and sale may be effected through the acts of importers and distributors.
Entitlement to protection even in the absence of actual use of trademarks in the country
o Philippines adherence to the Trade Related Aspects of Intellectual Property Rights or the TRIPS
Agreement
o enactment of R.A. No. 8293, or the Intellectual Property Code (IP Code)
o fame of a trademark may be acquired through promotion or advertising with no explicit requirement
of actual use in local trade or commerce
Before discussing petitioners claimed entitlement to enforce trademark rights in the Philippines, it must be
emphasized that their standing to sue in Philippine courts had been recognized, and rightly so, by the CA
o such right to sue does not necessarily mean protection of their registered marks in the absence of
actual use in the Philippines.

Thus clarified, what petitioners now harp about is their entitlement to protection on the strength of registration of
their trademarks in the Philippines.

HELD/RATIO:

As we ruled in G.R. No. 91332,18 :

1. RECIPROCITY REQUIREMENT
Registration of a trademark gives the registrant (petitioners) advantages denied non-registrants or
ordinary users (respondent)
o validity of the registration
o ownership and the exclusive right to use the registered marks
they may not successfully sue on the basis alone of their respective certificates of registration of
trademarks.
o Petitioners: still foreign corporations
o condition to availment of the rights and privileges & their trademarks in this country:
On top of Philippine registration, their country grants substantially similar rights and
privileges to Filipino citizens pursuant to Section 21-A20 of R.A. No. 166.
In Leviton Industries v. Salvador
o Court: reciprocity requirement is a condition sine qua non to filing a suit by a foreign corporation
Unless alleged in the complaint, would justify dismissal
o complainant is a national of a Paris Convention- adhering country, its allegation that it is suing
under said Section 21-A would suffice, because the reciprocal agreement between the two
countries is embodied and supplied by the Paris Convention
being considered part of Philippine municipal laws, can be taken judicial notice of in
infringement suits.

2. REGISTRATION VERSUS ACUAL USE!!

members of the Paris Union does not automatically entitle petitioners to the protection of their
trademarks in this country ABSENT ACTUAL USE OF THE MARKS IN LOCAL COMMERCE AND TRADE.

Philippines adherence to the Paris Convention effectively obligates the country to honor and enforce its
provisions( as regards the protection of industrial property of foreign nationals in this country)
o However, any protection accorded has to be made subject to the limitations of Philippine laws.
o Hence, despite Article 2 of the Paris Convention which substantially provides that:
(1) nationals of member-countries shall have in this country rights specially provided by the
Convention as are consistent with Philippine laws, and enjoy the privileges that Philippine
laws now grant or may hereafter grant to its national
(2) while no domicile requirement in the country where protection is claimed shall be
required of persons entitled to the benefits of the Union for the enjoyment of any industrial
property rights
foreign nationals must still observe and comply with the conditions imposed by
Philippine law on its nationals.

R.A. No. 166 (as amended, specifically Sections 228 and 2-A29), mandates actual use of the marks and/or
emblems in local commerce and trade before they may be registered and ownership thereof acquired
o the petitioners cannot, therefore, dispense with the element of actual use.
o Their being nationals of member-countries of the Paris Union does not alter the legal situation.

In Emerald Garment Mfg. Corporation v. Court of Appeals, the Court reiterated its rulings in Sterling
Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, Kabushi Kaisha Isetan v. Intermediate
Appellate Court, and Philip Morris v. Court of Appeals and Fortune Tobacco Corporation on the
importance of ACTUAL COMMERCIAL USE OF A TRADEMARK in the Philippines notwithstanding
the Paris Convention:
o The provisions of the 1965 Paris Convention relied upon by private respondent and Sec.
21-A of the Trademark Law were sufficiently expounded upon and qualified in the recent
case of Philip Morris, Inc., et. al. vs. Court of Appeals:
Following universal acquiescence and comity, our municipal law on trademarks
regarding the requirements of actual use in the Philippines must subordinate an
international agreement inasmuch as the apparent clash is being decided by a
municipal tribunal.
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.
A foreign corporation) may have the capacity to sue for infringement but 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 its trademark in commerce in the Philippines.
Such a foreign corporation may have the personality to file a suit for infringement
but it may not necessarily be entitled to protection due to absence of actual use of
the emblem in the local market.

Registration of trademark cannot be deemed conclusive as to the actual use of such trademark in local
commerce.
o registration does not confer upon the registrant an absolute right to the registered mark.
o merely constitutes prima facie evidence that the registrant is the owner of the registered mark.
o Evidence of non-usage of the mark rebuts the presumption of trademark ownership
We stress that registration in the Philippines of trademarks does not ipso facto convey an absolute right or
exclusive ownership thereof.
o Shangri-La International Hotel Management, Ltd. v. Development Group of Companies, Inc.
Trademark is a creation of use
Actual use is a pre-requisite to exclusive ownership
Registration is only an administrative confirmation of the existence of the right of ownership
of the mark
does not perfect such right; actual use thereof is the perfecting ingredient.

Petitioners reliance on Converse Rubber Corporation is quite misplaced
o different factual milieu
o foreign owner of a Philippine trademark, albeit not licensed to do, and not so engaged in, business in the
Philippines, may actually earn reputation or goodwill for its goods in the country.
o But unlike in the instant case, evidence of actual sales of Converse rubber shoes, such as sales invoices,
receipts and the testimony of a legitimate trader, was presented in Converse.
This Court also finds the IP Code and the TRIPS Agreement to be inapplicable
o the infringement complaint filed in August 1982 and tried under the aegis of R.A. No. 166, as
amended.
o The IP Code (January 1, 1998) no provision on retroactivity; TRIPS Agreement (December 16, 1994)
registration of a trademark unaccompanied by actual use thereof in the country accords the registrant only
the standing to sue for infringement in Philippine courts. Entitlement to protection of such trademark in
the country is entirely a different matter.