SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT V. DEVELOPERS GROUP OF The RTC decided in favor of respondent.
RTC decided in favor of respondent. It observed that PYCNOGENOL and PCO-GENOLS have
COMPANIES
FACTS:
Respondent DGCI applied for and was granted registration of the ‘Shangri-La’ mark and ‘S’ logo
in its restaurant business. Petitioner Shangri-La, chain of hotels and establishments owned by
the Kuok family worldwide, moved to cancel the registration of the mark on the ground that it
was illegally and fraudulently obtained and appropriated by respondents. Petitioner also moved
to register the mark and logo in its own name. Later, respondent DGCI filed before the trial
court a complaint for infringement against petitioner alleging that DGCI had been the prior
exclusive user and the registered owner in the Philippines of said mark and logo. Petitioner
Shangri-La argued that respondent had no right to apply for the registration because it did not
have prior actual commercial use thereof. The trial court found for respondent. CA affirmed.
ISSUE:
Whether or not respondent’s prior use of the mark is a requirement for its registration.
RULING: YES.
While the present law on trademarks has dispensed with the requirement of prior actual use at
the time of registration, the law in force at the time of registration must be applied. Under the
provisions of the former trademark law, R.A. No. 166, as amended, hence, the law in force at
the time of respondent’s application for registration of trademark, the root of ownership of a
trademark is actual use in commerce. Section 2 of said law requires that before a trademark
can be registered, it must have been actually used in commerce and service for not less than
two months in the Philippines prior to the filing of an application for its registration. Trademark
is a creation of use and therefore actual use is a pre-requisite to exclusive ownership and its
registration with the Philippine Patent Office is a mere administrative confirmation of the
existence of such right.
While the petitioners may not have qualified under Section 2 of R.A. No. 166 as a registrant,
neither did respondent DGCI, since the latter also failed to fulfill the 2-month actual use
requirement. What is worse, DGCI was not even the owner of the mark. For it to have been the
owner, the mark must not have been already appropriated (i.e., used) by someone else. At the
time of respondent DGCI’s registration of the mark, the same was already being used by the
petitioners, albeit abroad, of which DGCI’s president was fully aware.
PROSOURCE INTERNATIONAL, INC. V. HORPHAG RESEARCH MANAGEMENT SA.
FACTS:
Respondent is a corporation and owner of trademark PYCNOGENOL, a food. Respondent later
discovered that petitioner was also distributing a similar food supplement using the mark PCO-
GENOLS since 1996. This prompted respondent to demand that petitioner cease and desist
from using the aforesaid mark.
Respondent filed a Complaint for Infringement of Trademark with Prayer for Preliminary
Injunction against petitioner, in using the name PCO-GENOLS for being confusingly similar.
Petitioner appealed otherwise.
the same suffix "GENOL" which appears to be merely descriptive and thus open for trademark
registration by combining it with other words and concluded that the marks, when read, sound
similar, and thus confusingly similar especially since they both refer to food supplements.
On appeal to the CA, petitioner failed to obtain a favorable decision. The appellate court
explained that under the Dominancy or the Holistic Test, PCO-GENOLS is deceptively similar to
PYCNOGENOL.
ISSUE: Whether the names are confusingly similar.
RULING: Yes. There is confusing similarity and the petition is denied. Jurisprudence developed
two test to prove such.
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 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 to deceive purchasers. 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 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. Not only on the
predominant words should be the focus but also on the other features appearing on both labels
in order that the observer may draw his conclusion whether one is confusingly similar to the
other.
SC applied the Dominancy Test.Both the words 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. 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 products’ name
in 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.
SUPERIOR COMMERCIAL ENTERPRISES INC. V. KUNNAN ENTERPRISES LTD. AND
SPORTS CONCEPT & DISTRBUTOR, INC.
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.”
Superior’s President and General Manager misled Kunnan’s 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 Bulletin’s 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 principal’s
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 plaintiff’s mark;
b. The plaintiff’s 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.
SOCIETE DES PRODUITS NESTLE V. DY, JR.
FACTS:
Petitioner Nestle, a Swiss corporation, owns the ‘NAN’ trademark for its line of infant powdered
milk products in the Philippines. Respondent Dy, Jr. on the other hand, owner of 5M Enterprises,
imports and repacks powdered milk for adults bearing the mark ‘NANNY.’ Petitioner Nestle filed
before the trial court an infringement complaint against respondent. The trial court held that
respondent’s trademark is an infringement to petitioner’s mark because it would imply that
respondent’s ‘NANNY’ product came from petitioner. CA reversed and held that the two marks
are not confusingly similar thus respondent cannot be held liable for infringement.
ISSUE:
Whether or not respondent is liable for trademark infringement.
RULING: YES.
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) The trademark is used for
identical or similar goods; and (d) Such 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: (a) The
trademark being infringed is registered in the Intellectual Property Office; however, in
infringement of trade name, the same need not be registered; (b) The trademark or trade name
is reproduced, counterfeited, copied, or colorably imitated by the infringer; (c) 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; (d) 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 (e) It is without the consent of the trademark or trade
name owner or the assignee thereof.
Among the elements, the element of likelihood of confusion is the gravamen of trademark
infringement. 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-N-OUT BURGER, INC. V. SEHWANI INC., ET. AL
FACTS:
Petitioner IN-N-OUT BURGER, INC., is a business entity incorporated under the laws of
California. It is a signatory to the Convention of Paris on Protection of Industrial Property and
the TRIPS Agreement. It is engaged mainly in the restaurant business, but it has never engaged
in business in the Philippines.
FIRST ISSUE: Yes, the IPO (an administrative body) has jurisdiction in cases involving
provisions of the IPC (e.g. unfair competition) due to the following reasons:
 Section 10 of the Intellectual Property Code specifically identifies the
functions of the Bureau of Legal Affairs, thus:
Section 10. The Bureau of Legal Affairs.“The Bureau of Legal Affairs shall have the following
functions:
10.1 Hear and decide opposition to the application for registration of marks; cancellation of
trademarks; subject to the provisions of Section 64, cancellation of patents and utility models,
and industrial designs; and petitions for compulsory licensing of patents;
10.2 (a) Exercise original jurisdiction in administrative complaints for violations of
laws involving intellectual property rights; Provided, That its jurisdiction is limited to
complaints where the total damages claimed are not less than Two hundred thousand
pesos (P200,000): Provided, futher, That availment of the provisional remedies may
be granted in accordance with the Rules of Court. Xxx
Xxx
(vi) The cancellation of any permit, license, authority, or registration which may have
been granted by the Office, or the suspension of the validity thereof for such period of time
as the Director of Legal Affairs may deem reasonable which shall not exceed one (1) year;
Xxx

Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations organized in the (viii) The assessment of damages;
Philippines. Sometime in 1991, Sehwani filed with the BPTTT an application for the registration
Unquestionably, petitioner’s complaint, which seeks the cancellation of the disputed
of the mark “IN N OUT (the inside of the letter “O” formed like a star). Its application was
mark in the name of respondent Sehwani, Incorporated, and damages for violation of
approved and a certificate of registration was issued in its name on 1993. In 2000, Sehwani,
petitioner’s intellectual property rights, falls within the jurisdiction of the IPO
Incorporated and Benita Frites, Inc. entered into a Licensing Agreement, wherein the former
Director of Legal Affairs.
entitled the latter to use its registered mark, “IN N OUT.”

Sometime in 1997, In-N-Out Burger filed trademark and service mark applications with the
Bureau of Trademarks for the “IN-N-OUT” and “IN-N-OUT Burger & Arrow Design. In 2000, In-
 While Section 163 thereof vests in civil courts jurisdiction over cases of unfair
N-Out Burger found out that Sehwani, Incorporated had already obtained Trademark
competition, nothing in the said section states that the regular courts have
Registration for the mark “IN N OUT (the inside of the letter “O” formed like a star).” Also in
sole jurisdiction over unfair competition cases, to the exclusion of
2000, In-N-Out Burger sent a demand letter directing Sehwani, Inc. to cease and desist from
administrative bodies.
claiming ownership of the mark “IN-N-OUT” and to voluntarily cancel its trademark registration.
Sehwani Inc. did not accede to In-N-Out Burger’s demand but it expressed its willingness to
 Sections 160 and 170, which are also found under Part III of the Intellectual
surrender its registration for a consideration. Property Code, recognize the concurrent jurisdiction of civil courts and the
In 2001 In-N-Out Burger filed before the Bureau of Legal Affairs an administrative complaint IPO over unfair competition cases.
against the Sehwani, Inc. and Benita Frites, Inc. for unfair competition and cancellation of
These two provisions read:
trademark registration.
Section 160. Right of Foreign Corporation to Sue in Trademark or Service Mark
ISSUES: Enforcement Action. Any foreign national or juridical person who meets the requirements of
Section 3 of this Act and does not engage in business in the Philippines may bring a civil
 Whether or not the Intellectual Property Office (an administrative body) have
or administrative action hereunder for opposition, cancellation, infringement, unfair
jurisdiction of cases involving provisions of the IPC (e.g. unfair competition).[1]
competition, or false designation of origin and false description, whether or not it is licensed to
do business in the Philippines under existing laws.
 Whether or not there was unfair competition.

RULING:
Section 170. Penalties. Independent of the civil and administrative sanctions imposed by
law, a criminal penalty of imprisonment from two (2) years to five (5) years and a fine ranging
from Fifty thousand pesos (P50,000) to Two hundred thousand pesos (P200,000), shall be
imposed on any person who is found guilty of committing any of the acts mentioned in Section
155, Section168, and Subsection169.1.
Based on the foregoing discussion, the IPO Director of Legal Affairs had jurisdiction
to decide the petitioner’s administrative case against respondents and the IPO
Director General had exclusive jurisdiction over the appeal of the judgment of the IPO
Director of Legal Affairs.
SECOND ISSUE: Yes. The evidence on record shows that Sehwani Inc. and Benita Frites were
not using their registered trademark but that of In-n-Out Burger. Sehwani and Benita Frites are
also giving their products the general appearance that would likely influence the purchasers to
believe that their products are that of In-N-Out Burger. The intention to deceive may be inferred
from the similarity of the goods as packed and offered for sale, and, thus, an action will lie to
restrain unfair competition. The respondents’ frauduulent intention to deceive purchasers is
also apparent in their use of the In-N-Out Burger in business signages.
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.
The confusing similarity may or may not result from similarity in the marks, but may result
from other external factors in the packaging or presentation of the goods. The intent to deceive
and defraud may be inferred from the similarity of the appearance of the goods as offered for
sale to the public. Actual fraudulent intent need not be shown.
DEL MONTE V. COURT OF APPEALS AND SUNSHINE SAUCE
FACTS: Del Monte Corporation is an American corporation which is not engaged in business in
the Philippines. Though not engaging business here, it has given authority to Philippine Packing
Corporation (Philpack) the right to manufacture, distribute and sell in the Philippines various
agricultural products, including catsup, under the Del Monte trademark and logo. In 1965, Del
Monte also authorized Philpack to register with the Patent Office the Del Monte catsup bottle
configuration. Philpack was issued a certificate of trademark registration under the
Supplemental Register.
Later, Del Monte and Philpack learned that Sunshine Sauce Manufacturing was using Del Monte
bottles in selling its products and that Sunshine Sauce’s logo is similar to that of Del Monte.
The RTC of Makati as well as the Court of Appeals ruled that there was no infringement because
the trademarks used between the two are different in designs and that the use of Del Monte
bottles by Sunshine Sauce does not constitute unfair competition because as ruled in Shell
Company vs Insular Petroleum: “selling oil in containers of another with markings erased,
without intent to deceive, was not unfair competition.”
ISSUE: Whether or not there is unfair competition and infringement in the case at bar.
RULING: Yes. The Supreme Court recognizes that there really are distinctions between the
designs of the logos or trademarks of Del Monte and Sunshine Sauce. However, it has been
that side by side comparison is not the final test of similarity. Sunshine Sauce’s logo is
a colorable imitation of Del Monte’s trademark. The word “catsup” in both bottles is printed in
white and the style of the print/letter is the same. Although the logo of Sunshine is not a
tomato, the figure nevertheless approximates that of a tomato. The person who infringes a
trade mark does not normally copy out but only makes colorable changes, employing enough
points of similarity to confuse the public with enough points of differences to confuse the courts.
What is undeniable is the fact that when a manufacturer prepares to package his product, he
has before him a boundless choice of words, phrases, colors and symbols sufficient to
distinguish his product from the others. When as in this case, Sunshine chose, without a
reasonable explanation, to use the same colors and letters as those used by Del Monte though
the field of its selection was so broad, the inevitable conclusion is that it was done deliberately
to deceive.
The Supreme Court also ruled that Del Monte does not have the exclusive right to use Del Monte
bottles in the Philippines because Philpack’s patent was only registered under the Supplemental
Register and not with the Principal Register. Under the law, registration under the Supplemental
Register is not a basis for a case of infringement because unlike registration under the Principal
Register, it does not grant exclusive use of the patent. However, the bottles of Del Monte do
say in embossed letters: “Del Monte Corporation, Not to be Refilled”. And yet Sunshine Sauce
refilled these bottles with its catsup products. This clearly shows the Sunshine Sauce’s bad faith
and its intention to capitalize on the Del Monte’s reputation and goodwill and pass off its own
product as that of Del Monte.
GEORGE YAO V. COURT OF APPEALS
DOCTRINE: Faithful adherence to the requirements of Sec. 14, Art. 8 is a paramount
component of due process and fair play. It also informs the losing party why he lost, so he may
appeal to the higher court, if permitted. Lastly, it is an assurance that, in reaching judgment,
the judge did so through legal reasoning.
CASE SUMMARY: PEMCO filed a case against Yao for unfair competition before the MeTC,
which ruled in favor of PEMCO. Yao appealed before the RTC, which dismissed the case but
merely quoted the dispositive portion of the MeTC decision. Yao, then appealed to CA, which
also dismissed the petition due to procedural issues. Lastly, Yao appealed to the SC, which
granted the petition because the RTC decision did not comply with CONST, art. 8, sec. 14.
FACTS:
 Philippine Electrical Manufacturing Company (PEMCO) is the only local subsidiary of
GE-USA. It is also the only accredited distributor of GE lamp starters. In June 1990,
PEMCO noticed the proliferation of GE lamp starter despite no GE started was locally
manufactured or imported since 1983. Thus, it conducted a market research and found
out that Tradeway Commercial Corporation (TCC) was the source of the GE lamp
starter. They filed charges for unfair competition before MeTC Caloocan against George
Yao, the President and General Manager of TCC, and Roxas, who was acquitted
eventually. PEMCO alleged that the GE lamps starters were counterfeit.
 MeTC ruled in favor of PEMCO and convicted Yao of unfair competition and sentenced
him of imprisonment.
 Yao appealed to the RTC Caloocan, who ordered Yao and the prosecution to file their
respective memorandum. Without waiting for the memorandum of the prosecution,
RTC promulgated a decision, where in the judge merely quoted the dispositive
portion of the MeTC and stated that after “going over the evidence on record,
the Court finds no cogent reason to disturb the findings of the Metropolitan
Trial Court.”
  Yao appealed before the CA, which dismissed the petition on procedural grounds (e.g.,
the appellant has not yet filed the brief and the MR on the RTC decision was only filed
in September while the decision was promulgated in July).
 Yao filed the instant petition for review on certiorari with the following arguments:
1. Entry of judgment was improvidently issued in the absence of a final resolution
specifically dismissing the appeal
2. Procedural infirmity (i.e., MR was filed beyond the period allowable) has been
cured
3. CA denied him due process
ISSUE: W/N CA erred in dismissing the case and remanded the same to the RTC for execution?
YES, but because RTC was at fault
RULING:
 The RTC decision affirming the conviction of Yao palpably transgressed CONST, art. 8,
sec. 14, which provides “No decision shall be rendered by any court without expressing
therein clearly and distinctly the facts and the law which it is based. xxx”
 SC has sustained decisions of lower courts despite some of them lacking in terms of
clarity, coherence and comprehensibility as long as they eventually set out the facts
and the law. SC also sanctioned the use of memorandum decisions, a specie of
succinctly written decision by appellate courts on the grounds of expediency,
practicality, convenience and docket status.
 In Francisco v. Permskul, the SC held that memo decision to be valid, cannot
incorporate the findings and the conclusions of law of the lower court only by remote
reference – the challenged decision is not easily and immediately available. It should
actually embody the findings of fact and conclusions of law of the lower court in an
annex attached to and made an indispensable part of the decision.
 In the instant case, the RTC decision failed miserably.
 Faithful adherence to the requirements of Sec. 14, Art. 8 is a paramount component
of due process and fair play. It also informs the losing party why he lost, so he
may appeal to the higher court, if permitted. Lastly, it is an assurance that, in
reaching judgment, the judge did so through legal reasoning.
 Hence, the RTC decision in question is struck down.
DISPOSITION: Petition granted, resolution set aside. Case remanded to trial court for further
proceedings and rendition of judgment.
NOTES:
 Since the right to appeal is neither a natural right nor a part of due process, it may be
exercised only in the manner and in accordance with the provision of law. Its
requirements must be strictly complied with.
MIGHTY CORPORATION V. E.J. GALLOW WINERY
FACTS: E. & J. Gallo Winery and The Andresons Group, Inc. sued Mighty Corporation and La
Campana Fabrica De Tabaco, Inc. in the Makati RTC for trademark and tradename infringement
and unfair competition, with a prayer for damages and preliminary injunction.
Respondents charged petitioners with violating Article 6bis of the Paris Convention for the
Protection of Industrial Property (Paris Convention) and RA 166 (Trademark Law), specifically,
Sections 22 and 23 (for trademark infringement), 29 and 30 (for unfair competition and false
designation of origin) and 37 (for tradename infringement). They claimed that petitioners
adopted the GALLO trademark to ride on Gallo Winerys 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 &
JULIO GALLO trademarks with Gallo Winerys wines. Respondents prayed for the issuance of a
writ of preliminary injunction and ex parte restraining order, plus P2 million as actual and
compensatory damages, at least P500,000 as exemplary and moral damages, and at
least P500,000 as attorney’s fees and litigation expenses.
In their answer, petitioners alleged, among other affirmative defenses, that:
· GALLO cigarettes and Gallo Winerys wines were totally unrelated products;
· Gallo Winerys GALLO trademark registration certificate covered wines only, not
cigarettes;
· GALLO cigarettes and GALLO wines were sold through different channels of trade;
· GALLO cigarettes, sold at P4.60 for GALLO filters and P3 for GALLO menthols, were low-
cost items compared to Gallo Winerys high-priced luxury wines which cost between P98
to P242.50;
· the target market of Gallo Winerys wines was the middle or high-income bracket with at
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 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;
· by their inaction and conduct, respondents were guilty of laches and estoppel; and
petitioners acted with honesty, justice and good faith in the exercise of their right to
manufacture and sell GALLO cigarettes.
The Makati RTC held petitioners liable for, and permanently enjoined them from, committing
trademark infringement and unfair competition with respect to the GALLO trademark. Makati
RTC granted respondents motion for partial reconsideration and increased the award of actual
and compensatory damages. On appeal, the CA affirmed the Makati RTC decision and
subsequently denied petitioners motion for reconsideration.
ISSUES:
· Whether or not CA did not follow prevailing laws and jurisprudence when it held that [a]
RA 8293 (Intellectual Property Code of the Philippines [IP Code]) was applicable in this case;
· Whether or not GALLO cigarettes and GALLO wines were identical, similar or related
goods for the reason alone that they were purportedly forms of vice;and
· Whether or not petitioners were liable for trademark infringement, unfair competition
and damages.
RULING:
1. Yes.
Respondents sued petitioners on March 12, 1993 for trademark infringement and unfair
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 aforesaid governing laws but also under the IP Code which took effect only on January
1, 1998, or about five years after the filing of the complaint
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. 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. There are only a few instances when laws may be given
retroactive effect, none of which is present in this case.
The IP Code, repealing the Trademark Law, 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 filing of the complaint.
2. No.
In resolving whether goods are related, several factors come into play:
(a) the business (and its location) to which the goods belong
(b) the class of product to which the goods belong
(c) the product's quality, quantity, or size, including the nature of the package, wrapper or
container
(d) the nature and cost of the articles
(e) the descriptive properties, physical attributes or essential characteristics with reference to
their form, composition, texture or quality
(f) the purpose of the goods
(g) whether the article is bought for immediate consumption, that is, day-to-day household
items
(h) the fields of manufacture
(i) the conditions under which the article is usually purchased and
(j) the channels of trade through which the goods flow, how they are distributed, marketed,
displayed and sold.
A very important circumstance is whether there exists a likelihood that an appreciable number
of ordinarily prudent purchasers will be misled, or simply confused, as to the source of the
goods in question. The purchaser is not the completely unwary consumer but is the ordinarily
intelligent buyer considering the type of product involved. He is accustomed to buy, and
therefore to some extent familiar with, the goods in question. The test of fraudulent simulation
is to be found in the likelihood of the deception of some persons in some measure acquainted
with an established design and desirous of purchasing the commodity with which that design
has been associated. The test is not found in the deception, or the possibility of deception, of
the person who knows nothing about the design which has been counterfeited, and who must
be indifferent between that and the other. The simulation, in order 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.
Hence, in the adjudication of trademark infringement, we give due regard to the goods usual
purchasers character, attitude, habits, age, training and education.
Applying these legal precepts to the present case, petitioners 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 cigarettes or both as to the identity of the goods, their source and
origin, or identity of the business of petitioners and respondents.
Obviously, wines and cigarettes are not identical or competing products. Neither do they belong
to the same class of goods. Respondents GALLO wines belong to Class 33 under Rule 84[a]
Chapter III, Part II of the Rules of Practice in Trademark Cases while petitioners GALLO
cigarettes fall under Class 34.
We are mindful that product classification alone cannot serve as the decisive factor in the
resolution of whether or not wines and cigarettes are related goods. Emphasis should be on the
similarity of the products involved and not on the arbitrary classification or general description
of their properties or characteristics. But the mere fact that one person has adopted and used
a particular trademark for his goods does not prevent the adoption and use of the same
trademark by others on articles of a different description.
Both the Makati RTC and the CA held that wines and cigarettes are related products because:
(1) they are related forms of vice, harmful when taken in excess, and used for pleasure and
relaxation and (2) they are grouped or classified in the same section of supermarkets and
groceries.
We find these premises patently insufficient and too arbitrary to support the legal conclusion
that wines and cigarettes are related products within the contemplation of the Trademark Law
and the Paris Convention.
First, anything - not only wines and cigarettes ― can be used for pleasure and relaxation and
can be harmful when taken in excess. Indeed, it would be a grave abuse of discretion to treat
wines and 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.
Second, it is common knowledge that supermarkets sell an infinite variety of wholly unrelated
products and the goods here involved, wines and cigarettes, have nothing whatsoever in
common with respect to their essential characteristics, quality, quantity, size, including the
nature of their packages, wrappers or containers.
Accordingly, the U.S. patent office and courts have consistently held that the mere fact that
goods are sold in one store under the same roof does not automatically mean that buyers are
likely to be confused as to the goods respective sources, connections or sponsorships. The fact
that different products are available in the same store is an insufficient standard, in and of
itself, to warrant a finding of likelihood of confusion.
Wines and cigarettes are non-competing and are totally unrelated products not likely to cause
confusion vis--vis the goods or the business of the petitioners and respondents.
Wines are bottled and consumed by drinking while cigarettes are packed in cartons or packages
and smoked. There is a whale of a difference between their descriptive properties, physical
attributes or essential characteristics like form, composition, texture and quality.
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, fishermen, laborers and other low-income workers. Indeed, the big price difference of
these two products is an important factor in proving that they are in fact unrelated and that
they travel in different channels of trade. There is a distinct price segmentation based on vastly
different social classes of purchasers.
GALLO cigarettes and GALLO wines are not sold through the same channels of trade. GALLO
cigarettes are Philippine-made and petitioners neither claim nor pass off their goods as imported
or emanating from Gallo Winery. GALLO cigarettes are distributed, marketed and sold through
ambulant and sidewalk vendors, small local sari-sari stores and grocery stores in Philippine
rural areas, mainly in Misamis Oriental, Pangasinan, Bohol, and Cebu. On the other hand,
GALLO wines are imported, distributed and sold in the Philippines through Gallo Winerys
exclusive contracts with a domestic entity, which is currently Andresons. By respondents own
testimonial evidence, GALLO wines are sold in hotels, expensive bars and restaurants, and high-
end grocery stores and supermarkets, not through sari-sari stores or ambulant vendors.
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.
3. No, petitioners are not liable for trademark infringement and unfair competition.
Trademark Infringement
Each trademark infringement case presents a unique problem which must be answered by
weighing the conflicting interests of the litigants.
Respondents claim that GALLO wines and GALLO cigarettes flow through the same channels of
trade, that is, retail trade. If respondent’s 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 respondent’s 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.
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, 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. 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.
MCDONALD’S CORPORATION V. L.C. BIG MAK BURGER, INC.
FACTS:
Petitioner McDonald’s Corporation is a corporation organized under the laws of Delaware, United
States. McDonald’s operates a global chain of fast-food restaurants. McDonald’s own a family
of marks including the “Big Mac” mark for its double-decker hamburger sandwich.
McDonald’s registered this trademark with the United States 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 then then Philippine Bureau of Patents, Trademarks and
Technology (PBPTT) – now the Intellectual Property Office (IPO).
Pending approval of its application, McDonald’s introduced its “Big Mac” hamburger sandwiches
in the Philippine market in September 1981. On 18 July 1985, the PBPTT allowed registration
of the “Big Mac” mark in the Philippine Register based on its Home Registration in the United
States. From 1982 to 1990, McDonald’s spent P10.5 million in advertisement for “Big
Mac” hamburger sandwiches alone.
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. Its 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.
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.
ISSUES:
1. Is the respondent guilty of trademark infringement and unfair competition?
2. Is the “Big Mac” mark valid and does McDonald’s have rightful ownership to the same?
RULING:
1. YES.
Trademark Infringement
RA 166 defines trademark infringement as “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 use is likely to CAUSE CONFUSION or
otherwise 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.”
Clearly, there is cause for confusion in the case at bar. By using the “Big Mak” mark on the
same goods, i.e. hamburger sandwiches, that petitioners’ “Big Mac” mark is used, they have
unjustly created the impression that its business is approved and sponsored by, or affiliated
with plaintiffs.
Furthermore, using the dominancy test (rather than the holistic test), wherein the dominant
features in the competing marks are considered, Big Mak failed to show that there could be no
confusion. The Court found 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.
Unfair Competition
With regard to unfair competition, RA 166, Section 29 defines the same as 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.
Unfair competition is broader than trademark infringement and includes passing off goods with
or without trademark infringement. Trademark infringement is a form of unfair competition.
Trademark infringement constitutes unfair competition when there is not merely likelihood of
confusion, but also actual or probable deception on the public because of the general
appearance of the goods.
L.C. Big Mak tried to pass off their goods as though it were connected to “Big Mac.” The
mark “B[ig] M[ac]” is used by plaintiff McDonald’s to identify its double decker hamburger
sandwich. The packaging material is a styrofoam box with the McDonald’s logo and trademark
in red with block capital letters printed on it. All letters of the “B[ig] M[ac]” mark are also in red
and block capital letters. On the other hand, defendants’ “B[ig] M[ak]” script print is in orange
with only the letter “B”and “M” being capitalized and the packaging material is plastic wrapper.
x x x x Further, plaintiffs’logo and mascot are the umbrella “M” and “Ronald
McDonald’s,” respectively, compared to the mascot of defendant Corporation which is a chubby
boy called “Macky” displayed or printed between the words “Big” and “Mak.”(Emphasis
supplied)
Respondents point to these dissimilarities as proof that they did not give their hamburgers the
general appearance of petitioners’ “Big Mac” hamburgers.
The dissimilarities in the packaging are minor compared to the stark similarities in the
words that give respondents’ “Big Mak” hamburgers the general appearance of petitioners’ “Big
Mac”hamburgers. Section 29(a) expressly provides that the similarity in the general appearance
of the goods may be in the “devices or words” used on the wrappings. Respondents have
applied on their plastic wrappers and bags almost the same words that petitioners use on their
styrofoam box. What attracts the attention of the buying public are the words “Big Mak” which
are almost the same, aurally and visually, as the words “Big Mac.” The dissimilarities in the
material and other devices are insignificant compared to the glaring similarity in the words used
in the wrappings.
2. YES.
A mark is valid if it is “distinctive” and thus not barred from registration under Section 4 of RA
166. However, once registered, not only the mark’s validity but also the registrant’s ownership
of the mark is prima facie presumed.
Respondents contend that of the two words in the “Big Mac” mark, it is only the word “Mac” that
is valid because the word “Big” is generic and descriptive (proscribed under Section 4[e]), and
thus “incapable of exclusive appropriation.”
The contention has no merit. The “Big Mac” mark, which should be treated in its entirety and
not dissected word for word,is neither generic nor descriptive.
MCDONALD’S CORPORATION V. MACJOY FASTFOOD CORPORATION
FACTS: 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). McDonald’s opposed the application as it alleged that
MacJoy closely resembles McDonald’s 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
McDonald’s restaurant services and food products, thus, constituting a fraud upon the general
public and further cause the dilution of the distinctiveness of McDonald’s registered and
internationally recognized McDonald’S marks to its prejudice and irreparable damage.
The IPO ruled in favor of McDonald’s. 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 McDonald’s, there are no real
similarities between the two trademarks. “MacJoy” is written in round script while “McDonald’s”
is written in thin gothic. “MacJoy” is accompanied by a picture of a (cartoonish) chicken while
“McDonald’s” is accompanied by the arches “M”. The color schemes between the two are also
different. “MacJoy” is in deep pink while “McDonald’s” is in gold color.
ISSUE: Whether or not MacJoy infringed upon the trademark of McDonald’s.
RULING: 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 “McDonald’s” 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 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.
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 MacJoy’s president whom he said was the basis of the
trademark MacJoy. By reason of the MacJoy’s 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 McDonald’s
marks, which, as applied to its restaurant business and food products, is undoubtedly beyond
question.
PHILIP MORRIS, INC. V. FORTUNE TOBACCO CORPORATION
FACTS:
Petitioner Philip Morris, Inc. a corporation organized under the laws of the state of Virginia,
USA, is the registered owner of the trademark MARK VII for cigarettes. Benson and Hedges
(Canada), Inc., a subsidiary of Philip Morris, Inc., is the registered owner of the trademark
MARK TEN for cigarettes. Another subsidiary of Philip Morris, Inc. the Swiss Company
Fabriques de Tabac Reunies, S.A., is the assignee of the trademark LARK. All are evidenced by
Trademark Certificate of Registration. On the other hand, Fortune Tobacco Corporation, a
company organized in the Philippines, manufactures and sells cigarettes using the trademark
MARK.
Philip Morris, Inc. filed a complaint for trademark infringement and damages against Fortune
Tobacco Corporation. The complaint was dismissed by the RTC Pasig City in its decision dated
January 21, 2003.
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 but CA affirmed the trial court’s
decision. The CA found that MARK VII, MARK TEN and LARK do not qualify as well-known marks
entitled to protection even without the benefit of actual use in the local market and that the
similarities in the trademarks in question are insufficient as to cause deception or confusion
tantamount to infringement.
With the motion for reconsideration denied in the CA, the petitioners filed a petition for review
with the Supreme Court.
ISSUES:
1.) Whether or not petitioners, as Philippine registrants of trademarks, are entitled to
enforce trademark rights in the country.
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.
RULING:
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. Inarguably,
trademark deserves protection. It is for this reason that the petitioner’s recourse for their
entitlement to enforce trademark rights in this country and also the right to sue for trademark
infringement in Philippine courts and be accorded protection against unauthorized use of the
Philippine-registered trademarks is understandable. Their standing to sue in Philippine courts
had been recognized by the CA but such right to sue does not necessarily mean protection of
their trademarks in the absence of actual use in the Philippines.
But the petitioners are still foreign corporations. They may not sue on that basis alone
of their respective certificates of registration of trademarks unless their country grants similar
rights and privileges to Filipino citizens pursuant to Section 21-A of R.A. No. 166. This
reciprocity requirement is a condition to file a suit by a foreign corporation as ruled in Leviton
Industries v. Salvador.
The respective home country of the petitioner, namely, the United States, Switzerland
and Canada, together with the Philippines are members of the Paris Union. Philippines
adherence to the Paris Convention obligates the country to honor and enforce its provisions,
however, this does not automatically entitle petitioners to the protection of their trademark in
our country without actual use of the marks in local commerce and trade because any protection
accorded has to be made subject to the limitations of Philippine laws.
Significantly, registration in the Philippines of trademarks does not convey an absolute
right or exclusive ownership thereof. In Shangri-la v. Development Group of Companies, the
Court emphasized that trademark is a creation of use and, therefore, actual use is a prerequisite
to exclusive ownership; registration is only an administrative confirmation of the existence of
the right of ownership of the mark, but does not perfect such right.
 With the foregoing perspective, it may be stated right off that the registration of a
trademark unaccompanied by actual use in the country accords the registrants only the
standing to sue for infringements in Philippine Courts but entitlement to protection of such
trademark in the country is entirely different matter.
On the main issue of infringement, the court, relying on the holistic test ruled against
the likelihood of confusion resulting in infringement arising from the respondent’s use of the
trademark MARK for its particular cigarette product. The striking dissimilarities are significant
enough to warn any purchaser that one is different from the other. This is upon considering the
entire marking as a whole
For lack of convincing proof on the part of the petitioners of actual use of their
registered trademark prior to respondents use of its mark and for petitioners failure to
demonstrate confusing similarity between said trademarks, the dismissal of their basic
complaint of infringement and the plea for damages are affirmed.
The petition is denied. The assailed decision and resolution of the Court of Appeals are
affirmed.
ESPIRITU V. PETRON CORPORATION
FACTS:
Petron Corporation sold and distributed LPG in cylinder tanks that carried its trademark “GASUL”
and Carmen Dolorias owned and operated Kristina Patricia Enterprises, the exclusive distributor
of Gasul LPG in the whole Sorsogon.
On the hand, Bicol Gas was also in the business of selling and distributing LPG in Sorsogon but
theirs carried the trademark “Bicol Savers Gas”.
In the course of trade and competition, any given distributor of LPGs at times acquired
possession of LPG cylinder tanks belonging to other distributors operating in the same
area. They called these “captured cylinders.” What KPE is doing is that they swap the cylinder
tanks with Bicol Gas involving 30 tanks of Gasul with the permission of the Bicol Gas owners.
While doing such transaction, KPE’s Manager noticed that Bicol Gas still has a number of Gasul
tanks in its yard. It requested that those tanks be returned. But the latter refused because
those tanks will be sent to Batangas.
However, during the day to day delivery of Bicol Gas in the town of Sorsogon, KPE’s Manager
noticed that the truck carrying mostly of Bicol Savers LPG tanks has one unsealed 50-kg Gasul
and one 50-kg Shellane tank. When Jose, KPE’s Manager, inquired, the driver said that it was
empty but when it was checked, it was not. As a result, Petron and KPE filed a complaint for
violation of RA 623 (illegally filing up registered cylinder tanks) , section 155 (infringement of
trademarks) and section 169.1 (unfair competition) of the Intellectual Property Code.
ISSUES:
Whether or not the facts of the case warranted the filing of charges against the Bicol Gas people
for:
a) Filing up the LPG tanks registered to another manufacturer without the latter’s consent
in violation of RA 623 as amended
b) Trademark infringement consisting in Bicol Gas use of trademark that is confusingly
similar to Petron’s registered “Gasul” trademark in violation of Section 155 of RA 8293
c) Unfair competition consisting in passing off Bicol Gas- produced LPGs fro Petron –
produced Gasul LPG in violation of Section 168.3 of RA 8293
RULING:
a) The complaint adduced at the preliminary investigation shows that one 50 kg Petron
Gasul LPG found in the Bicol Gas truck belonged to their customer who had the same filled up
by Bicol Gas. RA 623 as amended punishes any person who without the written consent of the
manufacturer or seller of gases contained in duly registered steel cylinder tanks, fills the steel
cylinder or tanks for the purpose of sale, disposal or trafficking, other than the purpose for
which the manufacturer or seller registered the same. Consequently, they may be prosecuted
for that purpose.
b) But as for the crime of trademark infringement, section 155 of RA 8293 provides its
enumeration. However, KPE and Petron failed to prove that Bicol Gas painted on its own tanks
Petron’s Gasul trademark or confusingly similar version to deceive its customers and cheat
Petron.
c) As for the charge of unfair competition under section 168.3 of RA 8293, there is no
showing that Bicol has been giving its LPG tanks the general appearance of the tanks of Petron’s
Gasul. As already stated, the truck full of Bicol Gas tank that the KPE manager apprehended on
the road in Sorsogon just have mixed up with the one authentic Gasul tank that belong to
Petron.
Lastly, Bicol Gas is a Corporation. It is an entity separate and distinct from persons of its officer,
directors and stockholders. It has been held however, that corporate officers and employees
through whose act, default or omission of the crime, they will be held answerable for the crime
but respondents failed to show that Bicol Gas officers and stockholders participated in the crime.
CATERPILLAR INC. V. SAMSON
FACTS:
Petitioner Caterpillar, Inc. is a foreign corporation engaged in the business of manufacturing
shoes, clothing items, among others. Search warrant applications were filed against Manolo
Samson (herein after referred to as Samson) for violations of unfair competition provided under
Section 168.3(a) in relation to Sections 131.3, 123(e) and 170 of Republic Act No. 8293,
otherwise known as the Intellectual Property Code. Search warrants were then issued against
respondent Samson and his other business establishments (Itti Shoes Corporation, Kolm’s
Manufacturing, and Caterpillar Boutique and General Merchandise). Pursuant to the search
warrants various merchandise garments, footwear, bags, wallets, deodorant sprays, shoe
cleaners and accessories, all bearing the trademarks "CAT," "CAT AND DESIGN,"
"CATERPILLAR," "CATERPILLAR AND DESIGN," "WALKING MACHINES" and/or "Track-type
Tractor and Design" were seized. Respondent Samson filed a motion to quash the search
warrants but was denied. However, the Court ordered the release of the articles that were
seized since there was no criminal action filed against the respondent. Petitioner then filed
Motion for Partial Reconsideration but was denied by the TC. CA also denied the petition after
noting that all the criminal complaints that were filed against the respondent were dismissed
by the investigating prosecutor and that the respondent never denied the existence of the said
items.
ISSUES:
1) W/N CA erred in upholding the immediate release of the seized items on the ground that
there was no criminal action for unfair competition filed against the respondent?
2) W/N the CA erred in ruling that the subsequent dismissal of the investigating State
Prosecutor of the criminal complaints against respondent justifies the return of the seized
items?
RULING:
1) NO. The Joint Resolution of the DOJ has become final; therefore no criminal case was filed
against the respondent in relation with the five search warrants that were issued by the Trial
Court. There was also no criminal case filed against the articles that were seized. With these,
the seized articles should be immediately released. Also, the numerous articles of clothing,
footwear and accessories, among others, that were seized had little, if any, evidentiary value
for the criminal action of unfair competition.
An action for unfair competition is based on the proposition that no dealer in merchandise
should be allowed to dress his goods in simulation of the goods of another dealer, so that
purchasers desiring to buy the goods of the latter would be induced to buy the goods of the
former. The most usual devices employed in committing this crime are the simulation of labels
and the reproduction of form, color and general appearance of the package used by the pioneer
manufacturer or dealer. In the case at hand the respondent already admitted the existence of
the seized articles. The Court therefore ruled that the admissions of the respondent in the case
at hand are already suffiecient to establish that he used such trademarks in order to sell
merchandise at a commercial scale and that the actual products manufactured by the
respondent need not be presented to prove such fact. Also, there were already available
samples from the purchases as well as photographs of the particular parts of the merchandise
where the trademark in dispute were attached or used, therefore there is no more need for the
court to take custody of the countless articles that were seized.
2) NO. In the case at hand there is no criminal action that has been filed. The Court therefore
was left with no custody of the highly depreciable merchandise that were seized. More
importantly, these highly depreciable articles would have been superfluous if presented as
evidence for the following reasons: (1) the respondent had already admitted that he is the
owner of the merchandise seized, which made use of the trademarks in dispute; (2) the court
required the respondent to execute an undertaking to produce the articles seized when the
court requires and had already in its possession a complete inventory of the items seized as
secondary evidence; (3) actual samples of the respondent’s merchandise are in the possession
of the police officers who had applied for the search warrant, and photographs thereof had been
made part of the records, and respondent did not dispute that these were obtained from his
stores. Where the purpose of presenting as evidence the articles seized is no longer served,
there is no justification for severely curtailing the rights of a person to his property. Hence,
petition denied.
LEVI STRAUSS (PHILS.), INC., V. TONY LIM
FACTS:
Petitioner Levi Strauss (Phils.), Inc. Is a duly-registered domestic corporation. It is a wholly-
owned subsidiary of Levi Strauss & Co. (LS & Co.) A Delaware,USA company. In 1972, LS &
Co. Granted petitioner a non-exclusive license to use its registered trademarks and trade
names for the manufacture and sale of various garment products, primarily pants, jackets, and
shirts, in the Philippines. Presently, it is the only company that has authority to manufacture,
distribute, and sell products bearing the LEVI’S trademarks or to use such trademarks in
the Philippines. These trademarks are registered in over 130 countries, including
the Philippines, and were first used in commerce in the Philippines in 1946.
Sometime in 1995, petitioner lodged a complaint before the Inter-Agency Committee on
Intellectual Property Rights, alleging that a certain establishment owned by respondent Tony
Lim, doing business under the name Vogue Traders Clothing Company, was engaged in the
manufacture, sale, and distribution of products similar to those of petitioner and under the
brand name “LIVE’S,” and was granted the filing of an information against respondent.
Respondent then filed his own motion for reconsideration of the Bello resolution, the DOJ then
ordered the dismissal of the complaint.. Dissatisfied with the DOJ rulings, petitioner sought
recourse with the CA via a petition for review under Rule 43 of the 1997 Rules of Civil
Procedure. On October 17, 2003, the appellate court affirmed the dismissal of the unfair
competition complaint. The CA pointed out that to determine the likelihood of confusion,
mistake or deception, all relevant factors and circumstances should be taken into consideration,
such as the circumstances under which the goods are sold, the class of purchasers, and the
actual occurrence or absence of confusion.
Thus, the existence of some similarities between LIVE’S jeans and LEVI’S garments would
not ipso facto equate to fraudulent intent on the part of respondent. The CA noted that
respondent used affirmative and precautionary distinguishing features in his products for
differentiation. The appellate court considered the spelling and pronunciation of the marks; the
difference in the designs of the back pockets; the dissimilarity between the carton tickets; and
the pricing and sale of petitioner’s products in upscale exclusive specialty shops. The CA also
disregarded the theory of post-sale confusion propounded by petitioner, relying instead on the
view that the probability of deception must be determined at the point of sale.
ISSUES:
Petitioner submits that the CA committed the following errors:
I. The court of appeals gravely erred in ruling that actual confusion is necessary to
sustain a charge of unfair competition, and that there must be direct evidence or
proof of intent to deceive the public.
II. The court of appeals gravely erred in ruling that respondent’s live’s jeans do not
unfairly compete with levi’s ® jeans and/or that there is no possibility that the
former will be confused for the latter, considering that respondent’s live’s jeans
blatantly copy or colorably imitate no less than six (6) trademarks of levi’s jeans.
RULING:
Generally, unfair competition consists in employing deception or any other means contrary to
good faith by which any person 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 goodwill, or
committing any acts calculated to produce such result. The elements of unfair competition under
Article 189(1) of the Revised Penal Code are:
(a) That the offender gives his goods the general appearance of the goods of another
manufacturer or dealer;
(b) That the general appearance is shown in the (1) goods themselves, or in the (2)
wrapping of their packages, or in the (3) device or words therein, or in (4) any other feature of
their appearance;
(c) That the offender offers to sell or sells those goods or gives other persons a chance or
opportunity to do the same with a like purpose; and
(d) That there is actual intent to deceive the public or defraud a competitor.
All these elements must be proven. In finding that probable cause for unfair
competition does not exist, the investigating prosecutor and Secretaries Guingona and Cuevas
arrived at the same conclusion that there is insufficient evidence to prove all the elements of
the crime that would allow them to secure a conviction. Secretary Guingona discounted the
element of actual intent to deceive by taking into consideration the differences in spelling,
meaning, and phonetics between “LIVE’S” and “LEVI’S,” as well as the fact that respondent
had registered his own mark. While it is true that there may be unfair competition even if the
competing mark is registered in the Intellectual Property Office, it is equally true that the same
may show prima facie good faith. Indeed, registration does not negate unfair competition
where the goods are packed or offered for sale and passed off as those of
complainant. However, the mark’s registration, coupled with the stark differences between the
competing marks, negate the existence of actual intent to deceive, in this particular case.
Petitioner argues that the element of intent to deceive may be inferred from the
similarity of the goods or their appearance. The argument is specious on two fronts. First,
where the similarity in the appearance of the goods as packed and offered for sale is
so striking, intent to deceive may be inferred. However, as found by the investigating
prosecutor and the DOJ Secretaries, striking similarity between the competing goods is not
present. Second, the confusing similarity of the goods was precisely in issue during the
preliminary investigation. As such, the element of intent to
deceive could not arise without the investigating prosecutor’s or the DOJ
Secretary’s finding that such confusing similarity exists. Since confusing similarity was not
found, the element of fraud or deception could not be inferred.
We cannot sustain Secretary Bello’s opinion that to establish probable cause, “it is
enough that the respondent gave to his product the general appearance of the product of
petitioner. It bears stresing that that is only one element of unfair competition. All others must
be shown to exist. More importantly, the likelihood of confusion exists not only if there is
confusing similarity. It should also be likely to cause confusion or mistake or deceive
purchasers. Thus, the CA correctly ruled that the mere fact that some resemblance can be
pointed out between the marks used does not in itself prove unfair competition. To reiterate,
the resemblance must be such as is likely to deceive the ordinary purchaser exercising ordinary
care.
The consumer survey alone does not equate to actual confusion. We note that the
survey was made by showing the interviewees actual samples of petitioner’s and respondent’s
respective products, approximately five feet away from them. From that distance, they
were asked to identify the jeans’ brand and state the reasons for thinking so. This method
discounted the possibility that the ordinary intelligent buyer would be able to closely scrutinize,
and even fit, the jeans to determine if they were “LEVI’S” or not. It also ignored that a
consumer would consider the price of the competing goods when choosing a brand of jeans. It
is undisputed that “LIVE’S” jeans are priced much lower than “LEVI’S.”
We find no reason to go beyond the point of sale to determine if there is probable cause
for unfair competition. WHEREFORE, the petition is DENIED and the appealed Decision of the
Court of Appeals AFFIRMED. SO ORDERED.
SKECHERS, U.S.A., INC., V. INTER PACIFIC INDUSTRIAL TRADING CORP., et al
FACTS:
Skechers (petitioner) filed with RTC Manila application for issuance of search warrants
against an outlet or warehouse operated by respondents for infringement of trademark.
Petitioner has registered the trademark “Skechers” and the trademark “S” (within an oval
design) with the IPO.
Respondents moved to quash the search warrants, arguing that there was no confusing
similarity between petitioner’s Skechers rubber shoes and its “Strong”rubber shoes.
RTC – agreed with respondents
CA – affirmed RTC’s ruling
ISSUE: Whether or not there was trademark infringement.
RULING: Yes.
The essential element of infringement under R.A. No. 8293 is that the infringing mark
is likely to cause confusion. In determining similarity and likelihood of confusion, jurisprudence
has developed tests: the Dominancy Test and the Holistic or Totality Test. The Dominancy Test
focuses on the similarity of the prevalent or dominant features of the competing trademarks
that might cause confusion, mistake, and deception in the mind of the purchasing public. Given
more consideration are the aural and visual impressions created by the marks on the buyers.
In contrast, the Holistic or Totality Test necessitates a consideration of the entirety of the marks
as applied to the products, including the labels and packaging, in determining confusing
similarity.
Applying the Dominancy Test to the case at bar, the Court held that the use of the
stylized “S” by respondent in its Strong rubber shoes infringes on the mark already registered
by petitioner with the IPO. While it is undisputed that petitioner’s stylized “S” is within an oval
design, the dominant feature of the trademark is the stylized “S,” as it is precisely the stylized
“S” which catches the eye of the purchaser. Thus, even if respondent did not use an oval
design, the mere fact that it used the same stylized “S”, the same being the dominant feature
of petitioner’s trademark, already constitutes infringement under the Dominancy Test.
Comparing petitioner’s Energy model and respondent’s Strong rubber shoes,
respondent also used the color scheme of blue, white and gray utilized by petitioner. Even the
design and “wavelike” pattern of the midsole and outer sole of respondent’s shoes are very
similar to petitioner’s shoes, if not exact patterns thereof. The protection of trademarks as
intellectual property is intended not only to preserve the goodwill and reputation of the business
established on the goods bearing the mark through actual use over a period of time, but also
to safeguard the public as consumers against confusion on these goods.
GEMMA ONG A.K.A. MARIA TERESA GEMMA CATACUTAN V. PEOPLE OF THE
PHILIPPINES
FACTS:
On September 2003, the Regional Trial Court of Manila convicted Gemma Ong for Infringement
under Sec. 155 in relation to Sec. 170 of Republic Act. No. 8293 or the Intellectual Property
Code. This decision was assailed based on facts established that Gemma Ong was engaged in
the distribution, sale and offering for sale of counterfeit Marlboro cigarettes which caused
confusion and deception to public and without permit or authority from the Telengtan Brothers
and Sons Inc., the exclusive manufacturer of Malboro cigarette in the Philippines and from the
Philip Morris Products, Inc. (PMPI) which is the registered owner and proprietor of the
MARLBORO trademark.
The decision of the RTC Manila was affirmed by the Court of Appeals and hence this
appeal by certiorari by Gemma Ong praying that the decision of RTC and CA to be set aside
and reverse.
ISSUE:
Whether or not Gemma Ong, setting aside the issue of alleged mistaken identity, is guilty
beyond reasonable doubt of Infringement under the Intellectual Property Code.
RULING:
The Supreme Court AFFIRMED the decision of Court of Appeals.
In McDonald’s Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger,
Inc., Supreme Court held:
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.
A mark is valid if it is distinctive and not barred from registration. Once registered, not only the
mark’s validity, but also the registrant’s ownership of the mark is prima facie presumed.
Anent the element of confusion, both the RTC and the Court of Appeals have correctly held that
the counterfeit cigarettes seized from Gemma’s possession were intended to confuse and
deceive the public as to the origin of the cigarettes intended to be sold, as they not only bore
PMPI’s mark, but they were also packaged almost exactly as PMPI’s products.
The prosecution was able to establish that the trademark "Marlboro" was not only valid for
being neither generic nor descriptive, it was also exclusively owned by PMPI, as evidenced by
the certificates of registration issued by the Intellectual Property Office of the Department of
Trade and Industry.
DIAZ V. PEOPLE OF THE PHILIPPINES
FACTS: Levi Strauss Philippines, Inc. (Levi’s Philippines) is a licensee of Levi’s. After receiving
information that Diaz was selling counterfeit LEVI’S 501 jeans in his tailoring shops in Almanza
and Talon, Las Piñas City, Levi’s Philippines hired a private investigation group to verify the
information. Surveillance and the purchase of jeans from the tailoring shops of Diaz established
that the jeans bought from the tailoring shops of Diaz were counterfeit or imitations of LEVI’S
501. Levi’s Philippines then sought the assistance of the National Bureau of Investigation (NBI)
for purposes of applying for a search warrant against Diaz to be served at his tailoring shops.
The search warrants were issued in due course. Armed with the search warrants, NBI agents
searched the tailoring shops of Diaz and seized several fake LEVI’S 501 jeans from them. Levi’s
Philippines claimed that it did not authorize the making and selling of the seized jeans; that
each of the jeans were mere imitations of genuine LEVI’S 501 jeans by each of them bearing
the registered trademarks, like the arcuate design, the tab, and the leather patch; and that the
seized jeans could be mistaken for original LEVI’S 501 jeans due to the placement of the
arcuate, tab, and two-horse leather patch. Diaz stated that he did not manufacture Levi’s jeans,
and that he used the label “LS Jeans Tailoring” in the jeans that he made and sold; that the
label “LS Jeans Tailoring” was registered with the Intellectual Property Office; that his shops
received clothes for sewing or repair; that his shops offered made-to-order jeans, whose styles
or designs were done in accordance with instructions of the customers; that since the time his
shops began operating in 1992, he had received no notice or warning regarding his operations;
that the jeans he produced were easily recognizable because the label “LS Jeans Tailoring,” and
the names of the customers were placed inside the pockets, and each of the jeans had an
“LSJT” red tab; that “LS” stood for “Latest Style;” and that the leather patch on his jeans had
two buffaloes, not two horses.
ISSUE: Whether or not Diaz is liable for trademark infringement.
RULING: No. Section 155 of R.A. No. 8293 defines the acts that constitute infringement of
trademark, viz:
Remedies; Infringement. — Any person who shall, without the consent of the owner of the
registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a
registered mark or the same container or a dominant feature thereof in connection with the
sale, offering for sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or services on or in connection
with which such use is likely to cause confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant
feature thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended to be used in
commerce upon or in connection with the sale, offering for sale, distribution, or advertising of
goods or services on or in connection with 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 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.
The elements of the offense of trademark infringement under the Intellectual Property Code
are, therefore, the following:
 The trademark being infringed is registered in the Intellectual Property Office;
 The trademark is reproduced, counterfeited, copied, or colorably imitated by the
infringer;
  The infringing mark is used in connection with the sale, offering for sale, or advertising
of any goods, business or services; or the infringing mark 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;
 The use or application of the infringing mark 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
 The use or application of the infringing mark is without the consent of the trademark
owner or the assignee thereof.
As can be seen, the likelihood of confusion is the gravamen of the offense of trademark
infringement. There are two tests to determine likelihood of confusion, namely: the dominancy
test, and the holistic test. The contrasting concept of these tests was explained in Societes Des
Produits Nestle, S.A. v. Dy, Jr., thus:
x x x. 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.
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.
The holistic test is applicable here considering that the herein criminal cases also involved
trademark infringement in relation to jeans products. Accordingly, the jeans trademarks of
Levi’s Philippines and Diaz must be considered as a whole in determining the likelihood of
confusion between them. The maong pants or jeans made and sold by Levi’s Philippines, which
included LEVI’S 501, were very popular in the Philippines. The consuming public knew that the
original LEVI’S 501 jeans were under a foreign brand and quite expensive. Such jeans could be
purchased only in malls or boutiques as ready-to-wear items, and were not available in tailoring
shops like those of Diaz’s as well as not acquired on a “made-to-order” basis. Under the
circumstances, the consuming public could easily discern if the jeans were original or fake
LEVI’S 501, or were manufactured by other brands of jeans.
Given the foregoing, it should be plain that there was no likelihood of confusion between the
trademarks involved. Thereby, the evidence of guilt did not satisfy the quantum of proof
required for a criminal conviction, which is proof beyond reasonable doubt. According to Section
2, Rule 133 of the Rules of Court, proof beyond a reasonable doubt does not mean such a
degree of proof as, excluding possibility of error, produces absolute certainty. Moral certainty
only is required, or that degree of proof which produces conviction in an unprejudiced mind.
Consequently, Diaz should be acquitted of the charges.
DIAMOND V. CHAKRABARTY
BRIEF FACT SUMMARY:
Chakrabarty (Plaintiff) sought to patent a live, man-made microorganism.
SYNOPSIS OF RULE OF LAW:
A live, man-made microorganism is a non-naturally occurring composition and therefore may
be patented.
FACTS:
Chakrabarty (Plaintiff) developed a new species of bacterium capable of metabolizing
hydrocarbons in a manner unknown in naturally occurring organisms using recombinant DNA
processes. The microorganisms exhibited great promise in the treatment of oil spills. Plaintiff
applied for a patent, which was denied by the Patent Office (Defendant) on the basis that the
microorganisms were products of nature and therefore unpatentable. The Board of Appeals
affirmed. The Court of Customs and Patent Appeals reversed, and the United States Supreme
Court granted review.
ISSUE:
May a live, man-made microorganism be patented?
RULING:
(Burger, C.J.) Yes. A live, man-made microorganism is a non-naturally occurring composition
and therefore may be patented. Resolution of this issue is, regardless of its philosophical
implications, strictly a matter of statutory construction. The relevant statute here, 35 U.S.C. §
101, defines as patentable any new and useful “manufacture”� or “composition of matter,”�
among other things. It is a basic rule of construction that words are given their natural,
ordinary meanings. There can be little doubt that microorganisms produced by recombinant
DNA technology may be said to be manufactured and to be compositions of matter. For
purposes of patent law, the fact they are alive is not relevant. Although it is true that naturally-
occurring products may not be patented, a genetically-engineered microorganism is not
naturally occurring. While this Court recognizes that recombinant DNA technology is a
controversial field, it is ill-equipped to balance the competing values and interests manifested
therein; this is a task for Congress. Since the patent laws clearly include materials such as are
at issue here within their scope, and no specific law exists to exclude it, the only appropriate
holding is that recombinant DNA-produced microorganisms are patentable. Affirmed.
Dissent
(Brennan, J.) Congress, in enacting the Plant Patent Act in 1930 and the Plant Variety
Protection Act in 1970, has indicated that bacteria are excluded from patentability. Patent
protection must not be extended further than Congress intended. Congress has not left a
legislative vacuum regarding the type of patent at issue. The Plant Patent Act gives patent
protection to developers of certain asexually reproduced plants. The Plant Variety Protection
Act extends protection to certain new plant varieties capable of sexual reproduction. Therefore,
contrary to the majority’s assertion, the patent at issue does not pose the problem of
“unanticipated inventions.”� In these two Acts, Congress has addressed the general problem
of patenting animate inventions and has chosen carefully limited language granting protection
to some kinds of discoveries, but specifically excluding others. These Acts show strong
evidence of a congressional limitation that excludes bacteria from patentability. The Acts
evidence Congress’s understanding, at least since 1930, that §101 does not include living
organisms. If newly developed living organisms not naturally occurring had been patentable
under §101, the plants included in the scope of the 1930 and 1970 Acts could have been
patented without new legislation. Therefore, Congress believed that it had to legislate in order
to make agricultural “human-made inventions”� patentable, and, because the legislation
Congress enacted is limited, it follows that Congress never intended to make items outside the
scope of the legislation patentable.
DISCUSSION:
The general rule is that things occurring naturally in the universe may not be patented. Neither
a type of plant occurring naturally nor a natural principal could be patented. The laws of motion
could not have been patented by Newton. This legal principle appears straightforward, but as
demonstrated by this case, modern science has made it less so.
ROSAIRE V. NATIONAL LEAD CO.
BRIEF FACT SUMMARY: National Lead Co. (Defendant) claimed that Rosaire’s (Plaintiff)
patents were invalidated by a prior reduction to practice the same method and therefore
Defendant had had not infringed on Plaintiff’s patents.
SYNOPSIS OF RULE OF LAW: An invention that was known or used by others in this country
before the patentee’s invention is not patentable.
FACTS: Rosaire (Plaintiff) claimed to have invented a new method for oil prospecting and held
two patents that National Lead Co. (Defendant) had allegedly infringed. Defendant argued that
the patents were invalidated because Teplitz for Gulf Oil had known and used the alleged
inventions extensively before the date that Plaintiff first conceived the invention. Plaintiff
claimed that Teplitz’s work was a failed experiment that was not published or patented and
therefore did not give the public the benefit of the experimental work. The trial court found that
the work by Teplitz was a successful and adequate field trial of the prospecting method involved
and a reduction to practice of that method. The trial court therefore held that the two patents
involved in the litigation were invalid and void and that there had been no infringement by
National Lead (Defendant). Rosaire (Plaintiff) appealed.
ISSUE: May an invention that was known or used by others in this country before the
patentee’s invention be patentable?
RULING: (Tuttle, J.) No. An invention that was known or used by others in this country before
the patentee’s invention is not patentable. The lack of publication of Teplitz’s work did not keep
the alleged infringer, National Lead (Defendant), from claiming prior use as a defense. The work
was done openly and in the ordinary course of the activities of the employer, a large producing
company in the oil industry, and therefore no further affirmative act was required to bring the
work public’s attention at large. Affirmed.
DISCUSSION: The non-secret use of a claimed process in the usual course of producing
articles for commercial purposes is considered a public use. “Public”� in this case would seem
to mean “not secret.”� Those who criticized this expansive view would require that the
invention be generally known or used before creating a statutory bar.
AGUAS V. DE LEON
FACTS:
This is a petition for certiorari to review the decision of the Court of Appeals.
On April 14, 1962, respondent Conrado de Leon filed in the CFI of Rizal at Quezon City a
complaint for infringement of patent against petitioner Domiciano Aguas and F.H. Aquino and
Sons alleging among others that being the original first and sole inventor of certain new and
useful improvements in the process of making mosaic pre-cast tiles, and thereafter lawfully
acquired from the Philippine Patent Office, Patent No. 658, the latter infringed the same by
making, using and selling tiles embodying said patent invention. A writ of Preliminary Injuction
was subsequently issued.
Petitioner Aguas, in his answer, denied the allegations and instead averred inter alia that
respondent De Leon is neither the original first nor sole inventor of the improvements in the
process of making mosaic pre-cast tiles, the same having been used by several tile-making
factories both here and abroad years before the alleged invention by De Leon; hence, it is not
patentable.
The trial court and the Court of Appeals, upon appeal rendered judgment in favor of respondent
de Leon. Thus, this petition.
ISSUE: Whether or not the alleged invention or discovery of respondent is patentable.
RULING: Yes.
It should be noted that the private respondent does not claim to be the discoverer or inventor
of the old process of tile-making. He only claims to have introduced an improvement of said
process. In fact, Letters Patent No. 658 was issued by the Philippine Patent Office to the private
respondent Conrado G. De Leon, to protect his rights as the inventor of “ an alleged new and
useful improvement in the process of making pre-cast tiles.” Indeed, section 7, Republic Act
No. 165, as amended provides: “ Any invention of a new and useful machine, manufactured
product or substance, process, or an improvement of the foregoing, shall be patentable.”
BRENNER V. MANSON
BRIEF FACT SUMMARY:
Manson (Plaintiff) sought to patent a chemical process whose only demonstrable utility was to
aid in research.
SYNOPSIS OF RULE OF LAW:
A process whose only demonstrable utility is to aid in research is not patentable.
FACTS:
Manson (Plaintiff) sought to patent a chemical process for synthesizing certain steroidal
compounds. Although these compounds were not in themselves beneficial, they were useful in
cancer research. The Patent Office (Defendant) denied the application on the basis that the
process was not useful. The Court of Customs and Patent Appeals reversed, and the United
States Supreme Court granted review.
ISSUE:
Is a process whose only demonstrable utility is to aid in research patentable?
RULING:
(Fortas, J.) No. A process whose only demonstrable utility is to aid in research is not
patentable. It has been the rule since the inception of patent law that, for an invention to be
patentable, it must be useful. An invention must not only be harmless, it must also not be
frivolous or insignificant. The question therefore presents itself as to whether a product or
process is useful if, rather than being useful in itself, it is the subject of serious scientific
inquiry. While the Patent Act is silent on this issue, an examination of the purposes of the
patent law reveals that the answer must be no. The basis quid pro quo of patent law is that a
monopoly is granted in exchange for a finished thing with substantial utility. A product or
process that is useful as the subject of research does not fit this requirement. Further, to allow
a monopoly on the research stage of innovation might well inhibit such innovation, in direct
contravention to the purposes of patent law. In this case, the process in question is capable
only of synthesizing products suitable for research, not useful in themselves. The process is
therefore not patentable. Reversed.
Dissent
(Harlan, J.) The Court’s policy arguments against the patentability of processes that are useful
in generating objects of study are not convincing. Further, decisional history tends to support
such patentability.
Concurrence.
(Harlan, J.) The Court’s policy arguments against the patentability of processes that are useful
in generating objects of study are not convincing. Further, decisional history tends to support
such patentability.
RULING: [Judge not stated in casebook excerpt.] No. The post-mix dispenser does not lack
utility. The Patent Act provides that whoever invents any useful machine may obtain a patent
for it. An invention is useful if it is capable of providing some identifiable benefit. Although
inventions that are harmful to the well-being of society are considered unpatentable, the
principle that inventions are invalid if they are mainly designed to serve immoral purposes has
not recently been applied broadly. The district court’s reliance on the cases of Rickard v. Du
Bon, 103 F. 868 (2d Cir. 1900), and Scott & Williams v. Aristo Hosiery Co., 7 F.2d 1003 (2d
Cir. 1925), is therefore misplaced as they fail to represent the correct view of the doctrine of
utility under the Patent Act of 1952. The statutory requirement of utility is satisfied if one
product can be altered to make it resemble another, because that in and of itself is a benefit.
It is common for a product to be designed to appear to viewers to be something that it is not
and there are many patents directed at making one product imitate another. The value of such
products is that they appear to be something that they are not. Here, the post-mix dispenser
has utility because it embodies the features of a post-mix dispenser while imitating the visual
appearance of a pre-mix dispenser. Just because consumers ma believe that they are receiving
fluid directly from the display tank does not mean the invention does not have utility. Even if it
was considered deceptive, that does not mean it is unpatentable. Other agencies, and not the
Patent and Trademark Office, are delegated the task of protecting customers from fraud and
deception in the sale of food products. Furthermore, it is the task of Congress to declare
particular types of inventions unpatentable. Reversed and remanded.

DISCUSSION:
Utility is one of the basic requirements of patent law. Indeed, it is one of the characteristics
relating to patents described in Art. I, § 8 of the Constitution. Congress, in its first Patent Act
(enacted in 1790), mandated this requirement. It is now codified at 35 U.S.C. § 101.
DISCUSSION: This case centered on the reasoning that the invention was useful in and of
itself because it was able to create more sales by fooling consumers into believing that it was
getting a certain product when it was really getting something else. The real utility of the
product was that it was increasing sales by providing customers with the appearance of the
product without the required cleaning and maintenance involved in creating the actual product.

JUICY WHIP, INC. V. ORANGE BANG, INC.

BRIEF FACT SUMMARY: Juicy Whip, Inc. (Plaintiff) sued Orange Bang, Inc. (Defendant),
claiming infringement on its beverage-dispensing patent. Defendant argued the dispenser
lacked utility and was therefore unpatentable.

SYNOPSIS OF RULE OF LAW: The statutory requirement of utility is satisfied if one product
can be altered to resemble another product because that in and of itself is a benefit. An
invention does not lack utility for patent purposes just because it uses imitation to fool the
public in a way that is designed to increase product sales.

FACTS: Juice Whip, Inc. (Plaintiff) has a patent for a post-mix beverage dispenser that is
intended to look like a pre-mix beverage dispenser. A post-mix dispenser stores beverage syrup
concentrate and water in separate locations until the beverage is ready to be dispensed. On the
other hand, a pre-mix beverage dispenser pre-mixes the syrup concentrate and water and the
beverage is stored in a display reservoir bowl until it is ready for dispensing. A pre-mix
dispenser’s display bowl stimulates impulse buying. However, this process also creates the need
to clean the bowl frequently due to bacteria building up. The patented dispenser therefore has
the appearance of a pre-mix dispenser but functions as a post-mix dispenser, which decreases
maintenance. Plaintiff sued Orange Bang, Inc. (Defendant) alleging it was infringing on the
patent. The district court granted Defendant’s motion for summary judgment and held the
patent invalid due to lack of utility.

ISSUE: Does the post-mix dispenser that looks like a pre-mix dispenser lack utility?