Ang Tibay v.
Teodoro (74 Phil 50) sapatos" or "sapatos ang tibay" to mean "durable shoes," but "matibay na sapatos"
Petitioner has appealed to this Court by certiorari to reverse the judgment of the
Court of Appeals reversing that of the Court of First Instance of Manila and directing
the Director of Commerce to cancel the registration of the trade-mark "Ang Tibay" in
favor of said petitioner, and perpetually enjoining the latter from using said trade-
mark on goods manufactured and sold by her.
Respondent Toribio Teodoro, at first in partnership with Juan Katindig and later as
sole proprietor, has continuously used "Ang Tibay," both as a trade-mark and as a
trade-name, in the manufacture and sale of slippers, shoes, and indoor baseballs
since 1910. He formally registered it as trade-mark on September 29, 1915, and as
trade-name on January 3, 1933. The growth of his business is a thrilling epic of
Filipino industry and business capacity. Starting in an obscure shop in 1910 with a
modest capital of P210 but with tireless industry and unlimited perseverance, Toribio
Teodoro, then an unknown young man making slippers with his own hands but now
a prominent business magnate and manufacturer with a large factory operated with
modern machinery by a great number of employees, has steadily grown with his
business to which he has dedicated the best years of his life and which he has
expanded to such proportions that his gross sales from 1918 to 1938 aggregated
P8,787,025.65. His sales in 1937 amounted to P1,299,343.10 and in 1938,
P1,133,165.77. His expenses for advertisement from 1919 to 1938 aggregated
P210,641.56.
Petitioner (defendant below) registered the same trade-mark "Ang Tibay" for pants
and shirts on April 11, 1932, and established a factory for the manufacture of said
articles in the year 1937. In the following year (1938) her gross sales amounted to
P422,682.09. Neither the decision of the trial court nor that of the Court of Appeals
shows how much petitioner has spent or advertisement. But respondent in his brief
says that petitioner "was unable to prove that she had spent a single centavo
advertising "Ang Tibay" shirts and pants prior to 1938. In that year she advertised
the factory which she had just built and it was when this was brought to the
attention of the appellee that he consulted his attorneys and eventually brought the
present suit."
The trial court (Judge Quirico Abeto) presiding absolved the defendant from the
complaint, with costs against the plaintiff, on the grounds that the two trademarks
are dissimilar and are used on different and non-competing goods; that there had
been no exclusive use of the trade-mark by the plaintiff; and that there had been no
fraud in the use of the said trade-mark by the defendant because the goods on which
it is used are essentially different from those of the plaintiff. The second division of
the Court of Appeals, composed of Justices Bengson, Padilla, Lopez Vito, Tuason, and
Alex Reyes, with Justice Padilla as ponente, reversed that judgment, holding that by
uninterrupted an exclusive use since 191 in the manufacture of slippers and shoes,
respondent's trade-mark has acquired a secondary meaning; that the goods or
articles on which the two trade-marks are used are similar or belong to the same
class; and that the use by petitioner of said trade-mark constitutes a violation of
sections 3 and 7 of Act No. 666. The defendant Director of Commerce did not appeal
from the decision of the Court of Appeals.
First. Counsel for the petitioner, in a well-written brief, makes a frontal sledge-
hammer attack on the validity of respondent's trade-mark "Ang Tibay." He contends
that the phrase "Ang Tibay" as employed by the respondent on the articles
manufactured by him is a descriptive term because, "freely translate in English," it
means "strong, durable, lasting." He invokes section 2 of Act No. 666, which provides
that words or devices which related only to the name, quality, or description of the
merchandise cannot be the subject of a trade-mark. He cites among others the case
of Baxter vs. Zuazua (5 Phil., 16), which involved the trade-mark "Agua de Kananga"
used on toilet water, and in which this Court held that the word "Kananga," which is
the name of a well-known Philippine tree or its flower, could not be appropriated as a
trade-mark any more than could the words "sugar," "tobacco," or "coffee." On the
other hand, counsel for the respondent, in an equally well-prepared and exhaustive
brief, contend that the words "Ang Tibay" are not descriptive but merely suggestive
and may properly be regarded as fanciful or arbitrary in the legal sense. The cite
several cases in which similar words have been sustained as valid trade-marks, such
as "Holeproof" for hosiery, 1 "ideal for tooth brushes, 2 and "Fashionknit" for neckties
and sweaters. 3
We find it necessary to go into the etymology and meaning of the Tagalog words
"Ang Tibay" to determine whether they are a descriptive term, i.e., whether they
relate to the quality or description of the merchandise to which respondent has
applied them as a trade-mark. The word "ang" is a definite article meaning "the" in
English. It is also used as an adverb, a contraction of the word "anong" (what or
how). For instance, instead of saying, "Anong ganda!" ("How beautiful!"), we
ordinarily say, "Ang ganda!" Tibay is a root word from which are derived the
verb magpatibay (to strenghten; the nouns pagkamatibay (strength,
durability), katibayan (proof, support, strength), katibay-tibayan (superior strength);
and the adjectives matibay (strong, durable, lasting), napakatibay (very
strong), kasintibay or magkasintibay (as strong as, or of equal strength). The phrase
"Ang Tibay" is an exclamation denoting administration of strength or durability. For
instance, one who tries hard but fails to break an object exclaims, "Ang tibay!" (How
strong!") It may also be used in a sentence thus, "Ang tibay ng sapatos mo!" (How
durable your shoes are!") The phrase "ang tibay" is never used adjectively to define
or describe an object. One does not say, "ang tibay sapatos" or "sapatos ang tibay" is
never used adjectively to define or describe an object. One does not say, " ang tibay
or "sapatos na matibay."
From all of this we deduce that "Ang Tibay" is not a descriptive term within the
meaning of the Trade-Mark Law but rather a fanciful or coined phrase which may
properly and legally be appropriated as a trade-mark or trade-name. In this
connection we do not fail to note that when the petitioner herself took the trouble
and expense of securing the registration of these same words as a trademark of her
products she or her attorney as well as the Director of Commerce was undoubtedly
convinced that said words (Ang Tibay) were not a descriptive term and hence could
be legally used and validly registered as a trade-mark. It seems stultifying and puerile
for her now to contend otherwise, suggestive of the story of sour grapes. Counsel for
the petitioner says that the function of a trade-mark is to point distinctively, either by
its own meaning or by association, to the origin or ownership of the wares to which it
is applied. That is correct, and we find that "Ang Tibay," as used by the respondent
to designate his wares, had exactly performed that function for twenty-two years
before the petitioner adopted it as a trade-mark in her own business. Ang Tibay
shoes and slippers are, by association, known throughout the Philippines as products
of the Ang Tibay factory owned and operated by the respondent Toribio Teodoro.
Second. In her second assignment of error petitioner contends that the Court of
Appeals erred in holding that the words "Ang Tibay" had acquired a secondary
meaning. In view of the conclusion we have reached upon the first assignment of
error, it is unnecessary to apply here the doctrine of "secondary meaning" in trade-
mark parlance. This doctrine is to the effect that a word or phrase originally
incapable of exclusive appropriation with reference to an article of the market,
because geographically or otherwise descriptive, might nevertheless have been used
so long and so exclusively by one producer with reference to his article that, in that
trade and to that branch of the purchasing public, the word or phrase has come to
mean that the article was his product. (G. & C. Merriam Co. vs. Salfield, 198 F., 369,
373.) We have said that the phrase "Ang Tibay," being neither geographic nor
descriptive, was originally capable of exclusive appropriation as a trade-mark. But
were it not so, the application of the doctrine of secondary meaning made by the
Court of Appeals could nevertheless be fully sustained because, in any event, by
respondent's long and exclusive use of said phrase with reference to his products and
his business, it has acquired a proprietary connotation. (Landers, Frary, and Clark vs.
Universal Cooler Corporation, 85 F. [2d], 46.)
Third. Petitioner's third assignment of error is, that the Court of Appeals erred in
holding that pants and shirts are goods similar to shoes and slippers within the
meaning of sections 3 and 7 of Act No. 666. She also contends under her fourth
assignment of error (which we deem convenient to pass upon together with the third)
that there can neither be infringement of trade-mark under section 3 nor unfair
competition under section 7 through her use of the words "Ang Tibay" in connection
with pants and shirts, because those articles do not belong to the same class of
merchandise as shoes and slippers.
The question raised by petitioner involve the scope and application of sections 3,7,
11, 13, and 20 of the Trade-Mark Law (Act No. 666.) Section 3 provides that "any
person entitled to the exclusive use of a trade-mark to designate the origin or
ownership of goods he has made or deals in, may recover damages in a civil actions
from any person who has sold goods of a similar kind, bearing such trade-mark . . .
The complaining party . . . may have a preliminary injunction, . . . and such
injunction upon final hearing, if the complainant's property in the trade-mark and the
defendant's violation thereof shall be fully established, shall be made perpetual, and
this injunction shall be part of the judgment for damages to be rendered in the same
cause." Section 7 provides that any person who, in selling his goods, shall give them
the general appearance of the goods of another either in the wrapping of the
packages, or in the devices or words thereon, or in any other feature of their
appearance, which would be likely to influence purchasers to believe that the goods
offered are those of the complainant, shall be guilty of unfair competition, and shall
be liable to an action for damages and to an injunction, as in the cases of trade-mark
infringement under section 3. Section 11 requires the applicant for registration of a
trade-mark to state, among others, " the general class of merchandise to which the
trade-mark claimed has been appropriated." Section 13 provides that no alleged
trade-mark or trade name shall be registered which is identical with a registered or
known trade-mark owned by another and appropriate to the same class of
merchandise, or which to nearly resembles another person's lawful trade-mark or
trade-name as to be likely to cause confusion or mistake in the mind of the public, or
to deceive purchasers. And section 2 authorizes the Director of Commerce to
establish classes of merchandise for the purpose of the registration of trade-marks
and to determine the particular description of articles included in each class; it also
provides that "an application for registration of a trade-mark shall be registered only
for one class of articles and only for the particular description of articles mentioned in
said application."
We have underlined the key words used in the statute: "goods of a similar kin,"
"general class of merchandise," "same class of merchandise," "classes of
merchandise," and "class of articles," because it is upon their implications that the
result of the case hinges. These phrases, which refer to the same thing, have the
same meaning as the phrase "merchandise of the same descriptive properties" used
in the statutes and jurisprudence of other jurisdictions.
The burden of petitioner's argument is that under sections 11 and 20 the registration
by respondent of the trade-mark "Ang Tibay" for shoes and slippers is no safe-guard
against its being used by petitioner for pants and shirts because the latter do not
belong to the same class of merchandise or articles as the former; that she cannot be
held guilty of infringement of trade-mark under section 3 because respondent's mark
is not a valid trade-mark, nor has it acquired a secondary meaning; that pants and
shirts do not possess the same descriptive properties as shoes and slippers; that
neither can she be held guilty of unfair competition under section 7 because the use
by her of the trade-mark "Ang Tibay" upon pants and shirts is not likely to mislead
the general public as to their origin or ownership; and that there is now showing that
she in unfairly or fraudulently using that mark "Ang Tibay" against the respondent. If
we were interpreting the statute for the first time and in the first decade of the
twentieth century, when it was enacted, and were to construe it strictly and literally,
we might uphold petitioner's contentions. But law and jurisprudence must keep
abreast with the progress of mankind, and the courts must breathe life into the
statutes if they are to serve their purpose. Our Trade-mark Law, enacted nearly forty
years ago, has grown in its implications and practical application, like a constitution,
in virtue of the life continually breathed into it. It is not of merely local application; it
has its counterpart in other jurisdictions of the civilized world from whose
jurisprudence it has also received vitalizing nourishment. We have to apply this law
as it has grown and not as it was born. Its growth or development abreast with that
of sister statutes and jurisprudence in other jurisdictions is reflected in the following
observation of a well-known author:
This fundamental change in attitude first manifested itself in the year 1915-1917.
Until about then, the courts had proceeded on the theory that the same trade-mark,
used on un-like goods, could not cause confusion in trade and that, therefore, there
could be no objection to the use and registration of a well-known mark by a third
party for a different class of goods. Since 1916 however, a growing sentiment began
to arise that in the selection of a famous mark by a third party, there was generally
the hidden intention to "have a free ride" on the trade-mark owner's reputation and
good will. (Derenberg, Trade-Mark Protection & Unfair Trading, 1936 edition, p. 409.)
In the present state of development of the law on Trade-Marks, Unfair Competition,
and Unfair Trading, the test employed by the courts to determine whether
noncompeting goods are or are not of the same class is confusion as to the origin of
the goods of the second user. Although two noncompeting articles may be classified
under two different classes by the Patent Office because they are deemed not to
possess the same descriptive properties, they would, nevertheless, be held by the
courts to belong to the same class if the simultaneous use on them of identical or
closely similar trade-marks would be likely to cause confusion as to the origin, or
personal source, of the second user's goods. They would be considered as not falling
under the same class only if they are so dissimilar or so foreign to each other as to
make it unlikely that the purchaser would think the first user made the second user's
goods.
Such construction of the law is induced by cogent reasons of equity and fair dealing.
The courts have come to realize that there can be unfair competition or unfair trading
even if the goods are non-competing, and that such unfair trading can cause injury
or damage to the first user of a given trade-mark, first, by prevention of the natural
expansion of his business and, second, by having his business reputation confused
with and put at the mercy of the second user. Then noncompetitive products are sold
under the same mark, the gradual whittling away or dispersion of the identity and
hold upon the public mind of the mark created by its first user, inevitably results. The
original owner is entitled to the preservation of the valuable link between him and the
public that has been created by his ingenuity and the merit of his wares or services.
Experience has demonstrated that when a well-known trade-mark is adopted by
another even for a totally different class of goods, it is done to get the benefit of the
reputation and advertisements of the originator of said mark, to convey to the public
a false impression of some supposed connection between the manufacturer of the
article sold under the original mark and the new articles being tendered to the public
under the same or similar mark. As trade has developed and commercial changes
have come about, the law of unfair competition has expanded to keep pace with the
times and the element of strict competition in itself has ceased to be the determining
factor. The owner of a trade-mark or trade-name has a property right in which he is
entitled to protection, since there is damage to him from confusion of reputation or
goodwill in the mind of the public as well as from confusion of goods. The modern
trend is to give emphasis to the unfairness of the acts and to classify and treat the
issue as a fraud.
A few of the numerous cases in which the foregoing doctrines have been laid down in
one form or another will now be cited: (1) In Teodoro Kalaw Ng Khe vs. Level
Brothers Company (G.R. No. 46817), decided by this Court on April 18, 1941, the
respondent company (plaintiff below) was granted injunctive relief against the use by
the petitioner of the trade-mark "Lux" and "Lifebuoy" for hair pomade, they having
been originally used by the respondent for soap; The Court held in effect that
although said articles are noncompetitive, they are similar or belong to the same
class. (2) In Lincoln Motor Co. vs. Lincoln Automobile Co. (44 F. [2d], 812), the
manufacturer of the well-known Lincoln automobile was granted injunctive relief
against the use of the word "Lincoln" by another company as part of its firm name.
(3) The case of Aunt Jemima Mills Co. vs. Rigney & Co. (247 F., 407), involved the
trade-mark "Aunt Jemima," originally used on flour, which the defendant attempted
to use on syrup, and there the court held that the goods, though different, are so
related as to fall within the mischief which equity should prevent. (4) In Tiffany & Co.,
vs. Tiffany Productions, Inc. (264 N.Y.S., 459; 23 Trade-mark Reporter, 183), the
plaintiff, a jewelry concern, was granted injunctive relief against the defendant, a
manufacturer of motion pictures, from using the name "Tiffany." Other famous cases
cited on the margin, wherein the courts granted injunctive relief, involved the
following trade-marks or trade-names: "Kodak," for cameras and photographic
supplies, against its use for bicycles. 4 "Penslar," for medicines and toilet articles,
against its use for cigars; 5 "Rolls-Royce," for automobiles. against its use for radio
tubes; 6 "Vogue," as the name of a magazine, against its use for hats; 7 "Kotex," for
sanitary napkins, against the use of "Rotex" for vaginal syringes; 8 "Sun-Maid," for
raisins, against its use for flour; 9 "Yale," for locks and keys, against its use for
electric flashlights; 10 and "Waterman," for fountain pens, against its use for razor
blades. 11lawphil.net
Against this array of famous cases, the industry of counsel for the petitioner has
enabled him to cite on this point only the following cases: (1) Mohawk Milk Products
vs. General Distilleries Corporation (95 F. [2d], 334), wherein the court held that gin
and canned milk and cream do not belong to the same class; (2) Fawcett Publications,
Inc. vs. Popular Mechanics Co. (80 F. [2d], 194), wherein the court held that the
words "Popular Mechanics" used as the title of a magazine and duly registered as a
trade-mark were not infringed by defendant's use of the words "Modern Mechanics
and Inventions" on a competitive magazine, because the word "mechanics" is merely
a descriptive name; and (3) Oxford Book Co. vs. College Entrance Book Co . (98 F.
[2d], 688), wherein the plaintiff unsuccessfully attempted to enjoin the defendant
from using the word "Visualized" in connection with history books, the court holding
that said word is merely descriptive. These cases cites and relied upon by petitioner
are obviously of no decisive application to the case at bar.
We think reasonable men may not disagree that shoes and shirts are not as
unrelated as fountain pens and razor blades, for instance. The mere relation or
association of the articles is not controlling. As may readily be noted from what we
have heretofore said, the proprietary connotation that a trade-mark or trade-name
has acquired is of more paramount consideration. The Court of Appeals found in this
case that by uninterrupted and exclusive use since 1910 of respondent's registered
trade-mark on slippers and shoes manufactured by him, it has come to indicate the
origin and ownership of said goods. It is certainly not farfetched to surmise that the
selection by petitioner of the same trade-mark for pants and shirts was motivated by
a desire to get a free ride on the reputation and selling power it has acquired at the
hands of the respondent. As observed in another case, 12 the field from which a
person may select a trade-mark is practically unlimited, and hence there is no excuse
for impinging upon or even closely approaching the mark of a business rival. In the
unlimited field of choice, what could have been petitioner's purpose in selecting "Ang
Tibay" if not for its fame?
Lastly, in her fifth assignment of error petitioner seems to make a frantic effort to
retain the use of the mark "Ang Tibay." Her counsel suggests that instead of
enjoining her from using it, she may be required to state in her labels affixed to her
products the inscription: "Not manufactured by Toribio Teodoro." We think such
practice would be unethical and unworthy of a reputable businessman. To the
suggestion of petitioner, respondent may say, not without justice though with a tinge
of bitterness: "Why offer a perpetual apology or explanation as to the origin of your
products in order to use my trade-mark instead of creating one of your own?" On our
part may we add, without meaning to be harsh, that a self-respecting person does
not remain in the shelter of another but builds one of his own.
The judgment of the Court of Appeals is affirmed, with costs against the petitioner in
the three instances. So ordered.
Mirpuri vs. CA
The Convention of Paris for the Protection of Industrial Property is a multi-lateral
treaty which the Philippines bound itself to honor and enforce in this country. As to
whether or not the treaty affords protection to a foreign corporation against a
Philippine applicant for the registration of a similar trademark is the principal issue in
this case.
On June 15, 1970, one Lolita Escobar, the predecessor-in-interest of petitioner
Pribhdas J. Mirpuri, filed an application with the Bureau of Patents for the registration
of the trademark "Barbizon" for use in brassieres and ladies undergarments. Escobar
alleged that she had been manufacturing and selling these products under the firm
name "L & BM Commercial" since March 3, 1970.
Private respondent Barbizon Corporation, a corporation organized and doing business
under the laws of New York, U.S.A., opposed the application.It claimed that:
"The mark BARBIZON of respondent-applicant is confusingly similar to the trademark
BARBIZON which opposer owns and has not abandoned.
That opposer will be damaged by the registration of the mark BARBIZON and its
business reputation and goodwill will suffer great and irreparable injury.
That the respondent-applicant's use of the said mark BARBIZON which resembles the
trademark used and owned by opposer, constitutes an unlawful appropriation of a
mark previously used in the Philippines and not abandoned and therefore a statutory
violation of Section 4 (d) of Republic Act No. 166, as amended."[1]
This was docketed as Inter Partes Case No. 686 (IPC No. 686). After filing of
the pleadings, the parties submitted the case for decision.
On June 18, 1974, the Director of Patents rendered judgment dismissing the
opposition and giving due course to Escobar's application, thus:
"WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly,
Application Serial No. 19010 for the registration of the trademark BARBIZON, of
respondent Lolita R. Escobar, is given due course.
IT IS SO ORDERED."[2]
This decision became final and on September 11, 1974, Lolita Escobar was issued a
certificate of registration for the trademark "Barbizon." The trademark was "for use in
"brassieres and lady's underwear garments like panties."[3]
Escobar later assigned all her rights and interest over the trademark to petitioner
Pribhdas J. Mirpuri who, under his firm name then, the "Bonito Enterprises," was the
sole and exclusive distributor of Escobar's "Barbizon" products.
In 1979, however, Escobar failed to file with the Bureau of Patents the Affidavit of
Use of the trademark required under Section 12 of Republic Act (R.A.) No. 166, the
Philippine Trademark Law. Due to this failure, the Bureau of Patents cancelled
Escobar's certificate of registration.
On May 27, 1981, Escobar reapplied for registration of the cancelled
trademark. Mirpuri filed his own application for registration of Escobar's
trademark. Escobar later assigned her application to herein petitioner and this
application was opposed by private respondent. The case was docketed as Inter
Partes Case No. 2049 (IPC No. 2049).
In its opposition, private respondent alleged that:
"(a) The Opposer has adopted the trademark BARBIZON (word), sometime in June
1933 and has then used it on various kinds of wearing apparel. On August 14, 1934,
Opposer obtained from the United States Patent Office a more recent registration of
the said mark under Certificate of Registration No. 316,161. On March 1, 1949,
Opposer obtained from the United States Patent Office a more recent registration for
the said trademark under Certificate of Registration No. 507,214, a copy of which is
herewith attached as Annex `A.' Said Certificate of Registration covers the following
goods-- wearing apparel: robes, pajamas, lingerie, nightgowns and slips;
(b) Sometime in March 1976, Opposer further adopted the trademark BARBIZON and
Bee design and used the said mark in various kinds of wearing apparel. On March 15,
1977, Opposer secured from the United States Patent Office a registration of the said
mark under Certificate of Registration No. 1,061,277, a copy of which is herein
enclosed as Annex `B.' The said Certificate of Registration covers the following
goods: robes, pajamas, lingerie, nightgowns and slips;
(c) Still further, sometime in 1961, Opposer adopted the trademark BARBIZON and a
Representation of a Woman and thereafter used the said trademark on various kinds
of wearing apparel. Opposer obtained from the United States Patent Office
registration of the said mark on April 5, 1983 under Certificate of Registration No.
1,233,666 for the following goods: wearing apparel: robes, pajamas, nightgowns and
lingerie. A copy of the said certificate of registration is herewith enclosed as Annex
`C.'
(d) All the above registrations are subsisting and in force and Opposer has not
abandoned the use of the said trademarks. In fact, Opposer, through a wholly-owned
Philippine subsidiary, the Philippine Lingerie Corporation, has been manufacturing the
goods covered by said registrations and selling them to various countries, thereby
earning valuable foreign exchange for the country. As a result of respondent-
applicant's misappropriation of Opposer's BARBIZON trademark, Philippine Lingerie
Corporation is prevented from selling its goods in the local market, to the damage
and prejudice of Opposer and its wholly-owned subsidiary.
(e) The Opposer's goods bearing the trademark BARBIZON have been used in many
countries, including the Philippines, for at least 40 years and has enjoyed
international reputation and good will for their quality. To protect its registrations in
countries where the goods covered by the registrations are being sold, Opposer has
procured the registration of the trademark BARBIZON in the following
countries: Australia, Austria, Abu Dhabi, Argentina, Belgium, Bolivia, Bahrain, Canada,
Chile, Colombia, Denmark, Ecuador, France, West Germany, Greece, Guatemala,
Hongkong, Honduras, Italy, Japan, Jordan, Lebanon, Mexico, Morocco, Panama, New
Zealand, Norway, Sweden, Switzerland, Syria, El Salvador, South Africa, Zambia,
Egypt, and Iran, among others;
(f) To enhance its international reputation for quality goods and to further promote
goodwill over its name, marks and products, Opposer has extensively advertised its
products, trademarks and name in various publications which are circulated in the
United States and many countries around the world, including the Philippines;
(g) The trademark BARBIZON was fraudulently registered in the Philippines by one
Lolita R. Escobar under Registration No. 21920, issued on September 11, 1974, in
violation of Article 189 (3) of the Revised Penal Code and Section 4 (d) of the
Trademark Law. Herein respondent applicant acquired by assignment the `rights' to
the said mark previously registered by Lolita Escobar, hence respondent-applicant's
title is vitiated by the same fraud and criminal act. Besides, Certificate of Registration
No. 21920 has been cancelled for failure of either Lolita Escobar or herein
respondent-applicant, to seasonably file the statutory affidavit of use. By applying for
a re-registration of the mark BARBIZON subject of this opposition, respondent-
applicant seeks to perpetuate the fraud and criminal act committed by Lolita Escobar.
(h) Opposer's BARBIZON as well as its BARBIZON and Bee Design and BARBIZON
and Representation of a Woman trademarks qualify as well-known trademarks
entitled to protection under Article 6bis of the Convention of Paris for the Protection
of Industrial Property and further amplified by the Memorandum of the Minister of
Trade to the Honorable Director of Patents dated October 25, 1983
[sic],[4] Executive Order No. 913 dated October 7, 1963 and the Memorandum of the
Minister of Trade and Industry to the Honorable Director of Patents dated October 25,
1983.
(i) The trademark applied for by respondent applicant is identical to Opposer's
BARBIZON trademark and constitutes the dominant part of Opposer's two other
marks namely, BARBIZON and Bee design and BARBIZON and a Representation of a
Woman. The continued use by respondent-applicant of Opposer's trademark
BARBIZON on goods belonging to Class 25 constitutes a clear case of commercial and
criminal piracy and if allowed registration will violate not only the Trademark Law but
also Article 189 of the Revised Penal Code and the commitment of the Philippines to
an international treaty."[5]
Replying to private respondent's opposition, petitioner raised the defense of res
judicata.
On March 2, 1982, Escobar assigned to petitioner the use of the business name
"Barbizon International." Petitioner registered the name with the Department of
Trade and Industry (DTI) for which a certificate of registration was issued in 1987.
Forthwith, private respondent filed before the Office of Legal Affairs of the DTI a
petition for cancellation of petitioner's business name.
On November 26, 1991, the DTI, Office of Legal Affairs, cancelled petitioner's
certificate of registration, and declared private respondent the owner and prior user
of the business name "Barbizon International." Thus:
"WHEREFORE, the petition is hereby GRANTED and petitioner is declared the owner
and prior user of the business name "BARBIZON INTERNATIONAL" under Certificate
of Registration No. 87-09000 dated March 10, 1987 and issued in the name of
respondent, is [sic] hereby ordered revoked and cancelled. x x x."[6]
Meanwhile, in IPC No. 2049, the evidence of both parties were received by the
Director of Patents. On June 18, 1992, the Director rendered a decision declaring
private respondent's opposition barred by res judicata and giving due course to
petitioner's application for registration, to wit:
"WHEREFORE, the present Opposition in Inter Partes Case No. 2049 is hereby
DECLARED BARRED by res judicata and is hereby DISMISSED.Accordingly,
Application Serial No. 45011 for trademark BARBIZON filed by Pribhdas J. Mirpuri is
GIVEN DUE COURSE.
SO ORDERED."[7]
Private respondent questioned this decision before the Court of Appeals in CA-G.R.
SP No. 28415. On April 30, 1993, the Court of Appeals reversed the Director of
Patents finding that IPC No. 686 was not barred by judgment in IPC No. 2049 and
ordered that the case be remanded to the Bureau of Patents for further
proceedings, viz:
"WHEREFORE, the appealed Decision No. 92-13 dated June 18, 1992 of the Director
of Patents in Inter Partes Case No. 2049 is hereby SET ASIDE; and the case is hereby
remanded to the Bureau of Patents for further proceedings, in accordance with this
pronouncement. No costs."[8]
In a Resolution dated March 16, 1994, the Court of Appeals denied reconsideration of
its decision.[9] Hence, this recourse.
Before us, petitioner raises the following issues:
"1. WHETHER OR NOT THE DECISION OF THE DIRECTOR OF PATENTS IN INTER
PARTES CASE NO. 686 RENDERED ON JUNE 18, 1974, ANNEX C HEREOF,
CONSTITUTED RES JUDICATA IN SO FAR AS THE CASE BEFORE THE DIRECTOR OF
PATENTS IS CONCERNED;
2. WHETHER OR NOT THE DIRECTOR OF PATENTS CORRECTLY APPLIED THE
PRINCIPLE OF RES JUDICATA IN DISMISSING PRIVATE RESPONDENT BARBIZON'S
OPPOSITION TO PETITIONER'S APPLICATION FOR REGISTRATION FOR THE
TRADEMARK BARBIZON, WHICH HAS SINCE RIPENED TO CERTIFICATE OF
REGISTRATION NO. 53920 ON NOVEMBER 16, 1992;
3. WHETHER OR NOT THE REQUISITE THAT A 'JUDGMENT ON THE MERITS'
REQUIRED A 'HEARING WHERE BOTH PARTIES ARE SUPPOSED TO ADDUCE
EVIDENCE' AND WHETHER THE JOINT SUBMISSION OF THE PARTIES TO A CASE
ON THE BASIS OF THEIR RESPECTIVE PLEADINGS WITHOUT PRESENTING
TESTIMONIAL OR DOCUMENTARY EVIDENCE FALLS WITHIN THE MEANING OF
'JUDGMENT ON THE MERITS' AS ONE OF THE REQUISITES TO CONSTITUTE RES
JUDICATA;
4. WHETHER A DECISION OF THE DEPARTMENT OF TRADE AND INDUSTRY
CANCELLING PETITIONER'S FIRM NAME 'BARBIZON INTERNATIONAL' AND WHICH
DECISION IS STILL PENDING RECONSIDERATION NEVER OFFERED IN EVIDENCE
BEFORE THE DIRECTOR OF PATENTS IN INTER PARTES CASE NO. 2049 HAS THE
RIGHT TO DECIDE SUCH CANCELLATION NOT ON THE BASIS OF THE BUSINESS
NAME LAW (AS IMPLEMENTED BY THE BUREAU OF DOMESTIC TRADE) BUT ON THE
BASIS OF THE PARIS CONVENTION AND THE TRADEMARK LAW (R.A. 166) WHICH
IS WITHIN THE ORIGINAL AND EXCLUSIVE JURISDICTION OF THE DIRECTOR OF
PATENTS."[10]
Before ruling on the issues of the case, there is need for a brief background on the
function and historical development of trademarks and trademark law.
A "trademark" is defined under R.A. 166, the Trademark Law, as including "any word,
name, symbol, emblem, sign or device or any combination thereof adopted and used
by a manufacturer or merchant to identify his goods and distinguish them from those
manufactured, sold or dealt in by others."[11] This definition has been simplified in
R.A. No. 8293, the Intellectual Property Code of the Philippines, which defines a
"trademark" as "any visible sign capable of distinguishing goods."[12] In Philippine
jurisprudence, the function of a trademark is to point out distinctly the origin or
ownership of the goods to which it is affixed; to secure to him, who has been
instrumental in bringing into the market a superior article of merchandise, the fruit of
his industry and skill; to assure the public that they are procuring the genuine article;
to prevent fraud and imposition; and to protect the manufacturer against substitution
and sale of an inferior and different article as his product.[13]
Modern authorities on trademark law view trademarks as performing three distinct
functions: (1) they indicate origin or ownership of the articles to which they are
attached; (2) they guarantee that those articles come up to a certain standard of
quality; and (3) they advertise the articles they symbolize.[14]
Symbols have been used to identify the ownership or origin of articles for several
centuries.[15] As early as 5,000 B.C., markings on pottery have been found by
archaeologists. Cave drawings in southwestern Europe show bison with symbols on
their flanks.[16] Archaeological discoveries of ancient Greek and Roman inscriptions
on sculptural works, paintings, vases, precious stones, glassworks, bricks, etc. reveal
some features which are thought to be marks or symbols. These marks were affixed
by the creator or maker of the article, or by public authorities as indicators for the
payment of tax, for disclosing state monopoly, or devices for the settlement of
accounts between an entrepreneur and his workmen.[17]
In the Middle Ages, the use of many kinds of marks on a variety of goods was
commonplace. Fifteenth century England saw the compulsory use of identifying
marks in certain trades. There were the baker's mark on bread, bottlemaker's marks,
smith's marks, tanner's marks, watermarks on paper, etc.[18] Every guild had its own
mark and every master belonging to it had a special mark of his own. The marks
were not trademarks but police marks compulsorily imposed by the sovereign to let
the public know that the goods were not "foreign" goods smuggled into an area
where the guild had a monopoly, as well as to aid in tracing defective work or poor
craftsmanship to the artisan.[19] For a similar reason, merchants also used
merchants' marks.Merchants dealt in goods acquired from many sources and the
marks enabled them to identify and reclaim their goods upon recovery after
shipwreck or piracy.[20]
With constant use, the mark acquired popularity and became voluntarily
adopted. It was not intended to create or continue monopoly but to give the
customer an index or guarantee of quality.[21] It was in the late 18th century when
the industrial revolution gave rise to mass production and distribution of consumer
goods that the mark became an important instrumentality of trade and
commerce.[22] By this time, trademarks did not merely identify the goods; they also
indicated the goods to be of satisfactory quality, and thereby stimulated further
purchases by the consuming public.[23] Eventually, they came to symbolize the
goodwill and business reputation of the owner of the product and became a property
right protected by law.[24] The common law developed the doctrine of trademarks
and tradenames "to prevent a person from palming off his goods as another's, from
getting another's business or injuring his reputation by unfair means, and, from
defrauding the public."[25] Subsequently, England and the United States enacted
national legislation on trademarks as part of the law regulating unfair trade.[26] It
became the right of the trademark owner to exclude others from the use of his mark,
or of a confusingly similar mark where confusion resulted in diversion of trade or
financial injury. At the same time, the trademark served as a warning against the
imitation or faking of products to prevent the imposition of fraud upon the public.[27]
Today, the trademark is not merely a symbol of origin and goodwill; it is often
the most effective agent for the actual creation and protection of goodwill. It imprints
upon the public mind an anonymous and impersonal guaranty of satisfaction,
creating a desire for further satisfaction. In other words, the mark actually sells the
goods.[28] The mark has become the "silent salesman," the conduit through which
direct contact between the trademark owner and the consumer is assured. It has
invaded popular culture in ways never anticipated that it has become a more
convincing selling point than even the quality of the article to which it refers.[29] In
the last half century, the unparalleled growth of industry and the rapid development
of communications technology have enabled trademarks, tradenames and other
distinctive signs of a product to penetrate regions where the owner does not actually
manufacture or sell the product itself. Goodwill is no longer confined to the territory
of actual market penetration; it extends to zones where the marked article has been
fixed in the public mind through advertising.[30] Whether in the print, broadcast or
electronic communications medium, particularly on the Internet,[31] advertising has
paved the way for growth and expansion of the product by creating and earning a
reputation that crosses over borders, virtually turning the whole world into one vast
marketplace.
This is the mise-en-scene of the present controversy. Petitioner brings this action
claiming that "Barbizon" products have been sold in the Philippines since
1970. Petitioner developed this market by working long hours and spending
considerable sums of money on advertisements and promotion of the trademark and
its products. Now, almost thirty years later, private respondent, a foreign corporation,
"swaggers into the country like a conquering hero," usurps the trademark and
invades petitioner's market.[32] Justice and fairness dictate that private respondent
be prevented from appropriating what is not its own. Legally, at the same time,
private respondent is barred from questioning petitioner's ownership of the
trademark because of res judicata.[33]
Literally, res judicata means a matter adjudged, a thing judicially acted upon or
decided; a thing or matter settled by judgment.[34] In res judicata, the judgment in
the first action is considered conclusive as to every matter offered and received
therein, as to any other admissible matter which might have been offered for that
purpose, and all other matters that could have been adjudged therein.[35] Res
judicata is an absolute bar to a subsequent action for the same cause; and its
requisites are: (a) the former judgment or order must be final; (b) the judgment or
order must be one on the merits; (c) it must have been rendered by a court having
jurisdiction over the subject matter and parties; (d) there must be between the first
and second actions, identity of parties, of subject matter and of causes of action.[36]
The Solicitor General, on behalf of respondent Director of Patents, has joined cause
with petitioner. Both claim that all the four elements of res judicata have been
complied with: that the judgment in IPC No. 686 was final and was rendered by the
Director of Patents who had jurisdiction over the subject matter and parties; that the
judgment in IPC No. 686 was on the merits; and that the lack of a hearing was
immaterial because substantial issues were raised by the parties and passed upon by
the Director of Patents.[37]
The decision in IPC No. 686 reads as follows:
Neither party took testimony nor adduced documentary evidence. They submitted the
case for decision based on the pleadings which, together with the pertinent records,
have all been carefully considered.
Accordingly, the only issue for my disposition is whether or not the herein opposer
would probably be damaged by the registration of the trademark BARBIZON sought
by the respondent-applicant on the ground that it so resembles the trademark
BARBIZON allegedly used and owned by the former to be `likely to cause confusion,
mistake or to deceive purchasers.'
On record, there can be no doubt that respondent-applicant's sought-to-be-registered
trademark BARBIZON is similar, in fact obviously identical, to opposer's alleged
trademark BARBIZON, in spelling and pronunciation. The only appreciable but very
negligible difference lies in their respective appearances or manner of
presentation. Respondent-applicant's trademark is in bold letters (set against a black
background), while that of the opposer is offered in stylish script letters.
It is opposer's assertion that its trademark BARBIZON has been used in trade or
commerce in the Philippines prior to the date of application for the registration of the
identical mark BARBIZON by the respondent-applicant. However, the allegation of
facts in opposer's verified notice of opposition is devoid of such material
information. In fact, a reading of the text of said verified opposition reveals an
apparent, if not deliberate, omission of the date (or year) when opposer's alleged
trademark BARBIZON was first used in trade in the Philippines (see par. No. 1, p. 2,
Verified Notice of Opposition, Rec.).Thus, it cannot here and now be ascertained
whether opposer's alleged use of the trademark BARBIZON could be prior to the use
of the identical mark by the herein respondent-applicant, since the opposer
attempted neither to substantiate its claim of use in local commerce with any proof or
evidence. Instead, the opposer submitted the case for decision based merely on the
pleadings.
On the other hand, respondent-applicant asserted in her amended application for
registration that she first used the trademark BARBIZON for brassiere (or 'brasseire')
and ladies underwear garments and panties as early as March 3, 1970. Be that as it
may, there being no testimony taken as to said date of first use, respondent-
applicant will be limited to the filing date, June 15, 1970, of her application as the
date of first use (Rule 173, Rules of Practice in Trademark Cases).
From the foregoing, I conclude that the opposer has not made out a case of probable
damage by the registration of the respondent-applicant's mark BARBIZON.
WHEREFORE, the opposition should be, as it is hereby, DISMISSED. Accordingly,
Application Serial No. 19010, for the registration of the trademark BARBIZON of
respondent Lolita R. Escobar, is given due course."[38]
The decision in IPC No. 686 was a judgment on the merits and it was error for the
Court of Appeals to rule that it was not. A judgment is on the merits when it
determines the rights and liabilities of the parties based on the disclosed facts,
irrespective of formal, technical or dilatory objections.[39] It is not necessary that a
trial should have been conducted. If the court's judgment is general, and not based
on any technical defect or objection, and the parties had a full legal opportunity to be
heard on their respective claims and contentions, it is on the merits although there
was no actual hearing or arguments on the facts of the case.[40] In the case at bar,
the Director of Patents did not dismiss private respondent's opposition on a sheer
technicality.Although no hearing was conducted, both parties filed their respective
pleadings and were given opportunity to present evidence. They, however, waived
their right to do so and submitted the case for decision based on their pleadings. The
lack of evidence did not deter the Director of Patents from ruling on the case,
particularly on the issue of prior use, which goes into the very substance of the relief
sought by the parties. Since private respondent failed to prove prior use of its
trademark, Escobar's claim of first use was upheld.
The judgment in IPC No. 686 being on the merits, petitioner and the Solicitor General
allege that IPC No. 686 and IPC No. 2049 also comply with the fourth requisite of res
judicata, i.e., they involve the same parties and the same subject matter, and have
identical causes of action.
Undisputedly, IPC No. 686 and IPC No. 2049 involve the same parties and the same
subject matter. Petitioner herein is the assignee of Escobar while private respondent
is the same American corporation in the first case. The subject matter of both cases
is the trademark "Barbizon." Private respondent counter-argues, however, that the
two cases do not have identical causes of action. New causes of action were allegedly
introduced in IPC No. 2049, such as the prior use and registration of the trademark in
the United States and other countries worldwide, prior use in the Philippines, and the
fraudulent registration of the mark in violation of Article 189 of the Revised Penal
Code. Private respondent also cited protection of the trademark under the
Convention of Paris for the Protection of Industrial Property, specifically Article
6bis thereof, and the implementation of Article 6 bis by two Memoranda dated
November 20, 1980 and October 25, 1983 of the Minister of Trade and Industry to
the Director of Patents, as well as Executive Order (E.O.) No. 913.
The Convention of Paris for the Protection of Industrial Property, otherwise known as
the Paris Convention, is a multilateral treaty that seeks to protect industrial property
consisting of patents, utility models, industrial designs, trademarks, service marks,
trade names and indications of source or appellations of origin, and at the same time
aims to repress unfair competition.[41] The Convention is essentially a compact
among various countries which, as members of the Union, have pledged to accord to
citizens of the other member countries trademark and other rights comparable to
those accorded their own citizens by their domestic laws for an effective protection
against unfair competition.[42] In short, foreign nationals are to be given the same
treatment in each of the member countries as that country makes available to its
own citizens.[43] Nationals of the various member nations are thus assured of a
certain minimum of international protection of their industrial property.[44]
The Convention was first signed by eleven countries in Paris on March 20,
1883.[45] It underwent several revisions-- at Brussels in 1900, at Washington in
1911, at The Hague in 1925, at London in 1934, at Lisbon in 1958,[46] and at
Stockholm in 1967. Both the Philippines and the United States of America, herein
private respondent's country, are signatories to the Convention. The United States
acceded on May 30, 1887 while the Philippines, through its Senate, concurred on May
10, 1965.[47] The Philippines' adhesion became effective on September 27,
1965,[48] and from this date, the country obligated itself to honor and enforce the
provisions of the Convention.[49]
In the case at bar, private respondent anchors its cause of action on the first
paragraph of Article 6bis of the Paris Convention which reads as follows:
"Article 6bis
(1) The countries of the Union undertake, either administratively if their
legislation so permits, or at the request of an interested party, to refuse or
to cancel the registration and to prohibit the use, of a trademark which
constitutes a reproduction, an imitation, or a translation, liable to create
confusion, of a mark considered by the competent authority of the country
of registration or use to be well-known in that country as being already the
mark of a person entitled to the benefits of this Convention and used for
identical or similar goods. These provisions shall also apply when the
essential part of the mark constitutes a reproduction of any such well-
known mark or an imitation liable to create confusion therewith.
(2) A period of at least five years from the date of registration shall be allowed for
seeking the cancellation of such a mark. The countries of the Union may provide for
a period within which the prohibition of use must be sought.
(3) No time limit shall be fixed for seeking the cancellation or the prohibition of the
use of marks registered or used in bad faith."[50]
This Article governs protection of well-known trademarks. Under the first
paragraph, each country of the Union bound itself to undertake to refuse or cancel
the registration, and prohibit the use of a trademark which is a reproduction,
imitation or translation, or any essential part of which trademark constitutes a
reproduction, liable to create confusion, of a mark considered by the competent
authority of the country where protection is sought, to be well-known in the country
as being already the mark of a person entitled to the benefits of the Convention, and
used for identical or similar goods.
Article 6bis was first introduced at The Hague in 1925 and amended in Lisbon in
1952.[51] It is a self-executing provision and does not require legislative enactment
to give it effect in the member country.[52] It may be applied directly by the
tribunals and officials of each member country by the mere publication or
proclamation of the Convention, after its ratification according to the public law of
each state and the order for its execution.[53]
The essential requirement under Article 6 bis is that the trademark to be protected
must be "well-known" in the country where protection is sought.The power to
determine whether a trademark is well-known lies in the "competent authority of the
country of registration or use." This competent authority would be either the
registering authority if it has the power to decide this, or the courts of the country in
question if the issue comes before a court.[54]
Pursuant to Article 6bis, on November 20, 1980, then Minister Luis Villafuerte of the
Ministry of Trade issued a Memorandum to the Director of Patents. The Minister
ordered the Director that:
"Pursuant to the Paris Convention for the Protection of Industrial Property to which
the Philippines is a signatory, you are hereby directed to reject all pending
applications for Philippine registration of signature and other world-famous
trademarks by applicants other than its original owners or users.
The conflicting claims over internationally known trademarks involve such name
brands as Lacoste, Jordache, Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian
Dior, Oscar de la Renta, Calvin Klein, Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin
and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine registrants of such
trademarks should be asked to surrender their certificates of registration, if any, to
avoid suits for damages and other legal action by the trademarks' foreign or local
owners or original users.
You are also required to submit to the undersigned a progress report on the matter.
For immediate compliance."[55]
Three years later, on October 25, 1983, then Minister Roberto Ongpin issued another
Memorandum to the Director of Patents, viz:
"Pursuant to Executive Order No. 913 dated 7 October 1983 which strengthens the
rule-making and adjudicatory powers of the Minister of Trade and Industry and
provides inter alia, that `such rule-making and adjudicatory powers should be
revitalized in order that the Minister of Trade and Industry can x x x apply more swift
and effective solutions and remedies to old and new problems x x x such as
infringement of internationally-known tradenames and trademarks x x x' and in view
of the decision of the Intermediate Appellate Court in the case of LA CHEMISE
LACOSTE, S.A., versus RAM SADWHANI [AC-G.R. SP NO. 13359 (17) June
1983][56] which affirms the validity of the MEMORANDUM of then Minister Luis R.
Villafuerte dated 20 November 1980 confirming our obligations under the PARIS
CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY to which the
Republic of the Philippines is a signatory, you are hereby directed to implement
measures necessary to effect compliance with our obligations under said Convention
in general, and, more specifically, to honor our commitment under Section
6bis[57] thereof, as follows:
1. Whether the trademark under consideration is well-known in the Philippines or is a
mark already belonging to a person entitled to the benefits of the CONVENTION, this
should be established, pursuant to Philippine Patent Office procedures in inter partes
and ex parte cases, according to any of the following criteria or any combination
thereof:
(a) a declaration by the Minister of Trade and Industry that the trademark being
considered is already well-known in the Philippines such that permission for its use by
other than its original owner will constitute a reproduction, imitation, translation or
other infringement;
(b) that the trademark is used in commerce internationally, supported by proof that
goods bearing the trademark are sold on an international scale, advertisements, the
establishment of factories, sales offices, distributorships, and the like, in different
countries, including volume or other measure of international trade and commerce;
(c) that the trademark is duly registered in the industrial property office(s) of another
country or countries, taking into consideration the date of such registration;
(d) that the trademark has long been established and obtained goodwill and
international consumer recognition as belonging to one owner or source;
(e) that the trademark actually belongs to a party claiming ownership and has the
right to registration under the provisions of the aforestated PARIS CONVENTION.
2. The word trademark, as used in this MEMORANDUM, shall include tradenames,
service marks, logos, signs, emblems, insignia or other similar devices used for
identification and recognition by consumers.
3. The Philippine Patent Office shall refuse all applications for, or cancel the
registration of, trademarks which constitute a reproduction, translation or imitation of
a trademark owned by a person, natural or corporate, who is a citizen of a country
signatory to the PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL
PROPERTY.
4. The Philippine Patent Office shall give due course to the Opposition in cases
already or hereafter filed against the registration of trademarks entitled to protection
of Section 6 bis of said PARIS CONVENTION as outlined above, by remanding
applications filed by one not entitled to such protection for final disallowance by the
Examination Division.
5. All pending applications for Philippine registration of signature and other world-
famous trademarks filed by applicants other than their original owners or users shall
be rejected forthwith. Where such applicants have already obtained registration
contrary to the abovementioned PARIS CONVENTION and/or Philippine Law, they
shall be directed to surrender their Certificates of Registration to the Philippine Patent
Office for immediate cancellation proceedings.
In the Villafuerte Memorandum, the Minister of Trade instructed the Director of
Patents to reject all pending applications for Philippine registration of signature and
other world-famous trademarks by applicants other than their original owners or
users. The Minister enumerated several internationally-known trademarks and
ordered the Director of Patents to require Philippine registrants of such marks to
surrender their certificates of registration.
In the Ongpin Memorandum, the Minister of Trade and Industry did not enumerate
well-known trademarks but laid down guidelines for the Director of Patents to
observe in determining whether a trademark is entitled to protection as a well-known
mark in the Philippines under Article 6bis of the Paris Convention. This was to be
established through Philippine Patent Office procedures in inter partes and ex
parte cases pursuant to the criteria enumerated therein. The Philippine Patent Office
was ordered to refuse applications for, or cancel the registration of, trademarks
which constitute a reproduction, translation or imitation of a trademark owned by a
person who is a citizen of a member of the Union. All pending applications for
registration of world-famous trademarks by persons other than their original owners
were to be rejected forthwith. The Ongpin Memorandum was issued pursuant to
Executive Order No. 913 dated October 7, 1983 of then President Marcos which
strengthened the rule-making and adjudicatory powers of the Minister of Trade and
Industry for the effective protection of consumers and the application of swift
solutions to problems in trade and industry.[59]
Both the Villafuerte and Ongpin Memoranda were sustained by the Supreme Court in
the 1984 landmark case of La Chemise Lacoste, S.A. v. Fernandez .[60] This court
ruled therein that under the provisions of Article 6 bis of the Paris Convention, the
Minister of Trade and Industry was the "competent authority" to determine whether
a trademark is well-known in this country.[61]
The Villafuerte Memorandum was issued in 1980, i.e., fifteen (15) years after the
adoption of the Paris Convention in 1965. In the case at bar, the first inter
partes case, IPC No. 686, was filed in 1970, before the Villafuerte Memorandum but
five (5) years after the effectivity of the Paris Convention.Article 6 bis was already in
effect five years before the first case was instituted. Private respondent, however, did
not cite the protection of Article 6bis, neither did it mention the Paris Convention at
all. It was only in 1981 when IPC No. 2049 was instituted that the Paris Convention
and the Villafuerte Memorandum, and, during the pendency of the case, the 1983
Ongpin Memorandum were invoked by private respondent.
The Solicitor General argues that the issue of whether the protection of Article 6 bis of
the Convention and the two Memoranda is barred by res judicata has already been
answered in Wolverine Worldwide, Inc. v. Court of Appeals.[62] In this case,
petitioner Wolverine, a foreign corporation, filed with the Philippine Patent Office a
petition for cancellation of the registration certificate of private respondent, a Filipino
citizen, for the trademark "Hush Puppies" and "Dog Device." Petitioner alleged that it
was the registrant of the internationally-known trademark in the United States and
other countries, and cited protection under the Paris Convention and the Ongpin
Memorandum. The petition was dismissed by the Patent Office on the ground of res
judicata. It was found that in 1973 petitioner's predecessor-in-interest filed two
petitions for cancellation of the same trademark against respondent's predecessor-in-
interest. The Patent Office dismissed the petitions, ordered the cancellation of
registration of petitioner's trademark, and gave due course to respondent's
application for registration. This decision was sustained by the Court of Appeals,
which decision was not elevated to us and became final and executory.[63]
Wolverine claimed that while its previous petitions were filed under R.A. No. 166, the
Trademark Law, its subsequent petition was based on a new cause of action, i.e., the
Ongpin Memorandum and E.O. No. 913 issued in 1983, after finality of the previous
decision. We held that the said Memorandum and E.O. did not grant a new cause of
action because it did "not amend the Trademark Law," x x x "nor did it indicate a
new policy with respect to the registration in the Philippines of world-famous
trademarks."[64] This conclusion was based on the finding that Wolverine's two
previous petitions and subsequent petition dealt with the same issue of ownership of
the trademark.[65] In other words, since the first and second cases involved the
same issue of ownership, then the first case was a bar to the second case.
In the instant case, the issue of ownership of the trademark "Barbizon" was not
raised in IPC No. 686. Private respondent's opposition therein was merely anchored
on:
(a) "confusing similarity" of its trademark with that of Escobar's;
(b) that the registration of Escobar's similar trademark will cause damage to private
respondent's business reputation and goodwill; and
(c) that Escobar's use of the trademark amounts to an unlawful appropriation of a
mark previously used in the Philippines which act is penalized under Section 4 (d) of
the Trademark Law.
In IPC No. 2049, private respondent's opposition set forth several issues summarized
as follows:
(a) as early as 1933, it adopted the word "BARBIZON" as trademark on its products
such as robes, pajamas, lingerie, nightgowns and slips;
(b) that the trademark "BARBIZON" was registered with the United States Patent
Office in 1934 and 1949; and that variations of the same trademark, i.e.,
"BARBIZON" with Bee design and "BARBIZON" with the representation of a woman
were also registered with the U.S. Patent Office in 1961 and 1976;
(c) that these marks have been in use in the Philippines and in many countries all
over the world for over forty years. "Barbizon" products have been advertised in
international publications and the marks registered in 36 countries worldwide;
(d) Escobar's registration of the similar trademark "BARBIZON" in 1974 was based on
fraud; and this fraudulent registration was cancelled in 1979, stripping Escobar of
whatsoever right she had to the said mark;
(e) Private respondent's trademark is entitled to protection as a well-known mark
under Article 6bis of the Paris Convention, Executive Order No. 913, and the two
Memoranda dated November 20, 1980 and October 25, 1983 of the Minister of Trade
and Industry to the Director of Patents;
(f) Escobar's trademark is identical to private respondent's and its use on the same
class of goods as the latter's amounts to a violation of the Trademark Law and Article
189 of the Revised Penal Code.
IPC No. 2049 raised the issue of ownership of the trademark, the first registration
and use of the trademark in the United States and other countries, and the
international recognition and reputation of the trademark established by extensive
use and advertisement of private respondent's products for over forty years here and
abroad. These are different from the issues of confusing similarity and damage in IPC
No. 686. The issue of prior use may have been raised in IPC No. 686 but this claim
was limited to prior use in the Philippines only. Prior use in IPC No. 2049 stems from
private respondent's claim as originator of the word and symbol "Barbizon,"[66] as
the first and registered user of the mark attached to its products which have been
sold and advertised worldwide for a considerable number of years prior to petitioner's
first application for registration of her trademark in the Philippines. Indeed, these are
substantial allegations that raised new issues and necessarily gave private
respondent a new cause of action. Res judicata does not apply to rights, claims or
demands, although growing out of the same subject matter, which constitute
separate or distinct causes of action and were not put in issue in the former
action.[67]
Respondent corporation also introduced in the second case a fact that did not exist at
the time the first case was filed and terminated. The cancellation of petitioner's
certificate of registration for failure to file the affidavit of use arose only after IPC No.
686. It did not and could not have occurred in the first case, and this gave
respondent another cause to oppose the second application. Res judicata extends
only to facts and conditions as they existed at the time judgment was rendered and
to the legal rights and relations of the parties fixed by the facts so
determined.[68] When new facts or conditions intervene before the second suit,
furnishing a new basis for the claims and defenses of the parties, the issues are no
longer the same, and the former judgment cannot be pleaded as a bar to the
subsequent action.[69]
It is also noted that the oppositions in the first and second cases are based on
different laws. The opposition in IPC No. 686 was based on specific provisions of the
Trademark Law, i.e., Section 4 (d)[70] on confusing similarity of trademarks and
Section 8[71] on the requisite damage to file an opposition to a petition for
registration. The opposition in IPC No. 2049 invoked the Paris Convention,
particularly Article 6bis thereof, E.O. No. 913 and the two Memoranda of the Minister
of Trade and Industry. This opposition also invoked Article 189 of the Revised Penal
Code which is a statute totally different from the Trademark Law.[72] Causes of
action which are distinct and independent from each other, although arising out of
the same contract, transaction, or state of facts, may be sued on separately, recovery
on one being no bar to subsequent actions on others.[73] The mere fact that the
same relief is sought in the subsequent action will not render the judgment in the
prior action operative as res judicata, such as where the two actions are based on
different statutes.[74] Res judicata therefore does not apply to the instant case and
respondent Court of Appeals did not err in so ruling.
Intellectual and industrial property rights cases are not simple property
cases. Trademarks deal with the psychological function of symbols and the effect of
these symbols on the public at large.[75] Trademarks play a significant role in
communication, commerce and trade, and serve valuable and interrelated business
functions, both nationally and internationally. For this reason, all agreements
concerning industrial property, like those on trademarks and tradenames, are
intimately connected with economic development.[76] Industrial property encourages
investments in new ideas and inventions and stimulates creative efforts for the
satisfaction of human needs. They speed up transfer of technology and
industrialization, and thereby bring about social and economic progress.[77] These
advantages have been acknowledged by the Philippine government itself. The
Intellectual Property Code of the Philippines declares that "an effective intellectual
and industrial property system is vital to the development of domestic and creative
activity, facilitates transfer of technology, it attracts foreign investments, and ensures
market access for our products."[78] The Intellectual Property Code took effect on
January 1, 1998 and by its express provision,[79] repealed the Trademark
Law,[80] the Patent Law,[81] Articles 188 and 189 of the Revised Penal Code, the
Decree on Intellectual Property,[82] and the Decree on Compulsory Reprinting of
Foreign Textbooks.[83] The Code was enacted to strengthen the intellectual and
industrial property system in the Philippines as mandated by the country's accession
to the Agreement Establishing the World Trade Organization (WTO).[84]
The WTO is a common institutional framework for the conduct of trade relations
among its members in matters related to the multilateral and plurilateral trade
agreements annexed to the WTO Agreement.[85] The WTO framework ensures a
"single undertaking approach" to the administration and operation of all agreements
and arrangements attached to the WTO Agreement. Among those annexed is the
Agreement on Trade-Related Aspects of Intellectual Property Rights or
TRIPs.[86] Members to this Agreement "desire to reduce distortions and impediments
to international trade, taking into account the need to promote effective and
adequate protection of intellectual property rights, and to ensure that measures and
procedures to enforce intellectual property rights do not themselves become barriers
to legitimate trade." To fulfill these objectives, the members have agreed to adhere
to minimum standards of protection set by several Conventions.[87] These
Conventions are: the Berne Convention for the Protection of Literary and Artistic
Works (1971), the Rome Convention or the International Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting Organisations,
the Treaty on Intellectual Property in Respect of Integrated Circuits, and the Paris
Convention (1967), as revised in Stockholm on July 14, 1967.[88]
A major proportion of international trade depends on the protection of intellectual
property rights.[89] Since the late 1970's, the unauthorized counterfeiting of
industrial property and trademarked products has had a considerable adverse impact
on domestic and international trade revenues.[90]The TRIPs Agreement seeks to
grant adequate protection of intellectual property rights by creating a favorable
economic environment to encourage the inflow of foreign investments, and
strengthening the multi-lateral trading system to bring about economic, cultural and
technological independence.[91]The Philippines and the United States of America
have acceded to the WTO Agreement. This Agreement has revolutionized
international business and economic relations among states, and has propelled the
world towards trade liberalization and economic globalization.[92] Protectionism and
isolationism belong to the past. Trade is no longer confined to a bilateral
system. There is now "a new era of global economic cooperation, reflecting the
widespread desire to operate in a fairer and more open multilateral trading
system."[93] Conformably, the State must reaffirm its commitment to the global
community and take part in evolving a new international economic order at the dawn
of the new millenium.
IN VIEW WHEREOF, the petition is denied and the Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 28415 are affirmed.
SO ORDERED.
Victorias Milling Co. vs. Ong Su (79 SCRA 207)
This is a petition to review the decision of the Director of Patents in Inter Partes Case
No. 304 entitled "Victorias Milling Company, Inc., petitioner, verus, Ong Su" dated
August 15, 1967 denying the petition to cancel the certificate of registration issued by
the philippines Patent Office on Jurie 20, 1961 in favor of Ong Su covering the
tradenwk "VALENTINE" and design and used on refined sugar. 1
The petitioner, Victorias Milling Company, Inc., a domestic corporation and engaged
in the manufacture and sale of refined granulated sugar is the owner of the
trademark "VICTORIAS" and d design registered in the Philippines Patent Office on
November 9, 1961.
The respondent Ong Su is engaged in the repacking and sale of refine sugar and is
the owner of the trademark "VALENTINE" and design registered in the Philippines
Patent Office on June 20, 1961.
On October 4, 1963, Victorias Mining Company, Inc. filed with the Philippine Patent
Office a petition to cancel the registration of the Ong Su trademark "Valentine."
The petitioner allied that its tradermrk "Victorias" and diamond design has distinctive
of its sugar long before the respondent used its trademark; that the registration of
"Valentine" and design has caused and will cause great damage to petitioner by
reason of mistake, confusion, or deception among the purchasers because it is similar
to its "Victorias" trademark; that registration was fradulently obtained by Ong Su and
that "Valentine" faisely suggests a connection with Saint Valentine or with an
institution or belief connected therewith. 2
In his answer to the petition the respondent averred that he is doing business under
the name and style "Valentine Packaging" and has registered the trademark
"Valentine" with a design for sugar and was issued Certificate of Registration No.
8891 dated June 20, 1961; that the trademark "Victorias" with diamond design and
the trademark "Valentine" with a design are two different marks; and that there is
absolutely no likelihood of confusion, mistake or deception to purchasers through the
concurrent use of the petitioner's mark "Victorias" with a diamond design and the
respondents' mark "Valentine" with a design in connection with sugar. 3
The petitioner's only witness, Pacifica V. Vijandre its vice-president and stockholder,
testified that Victorias Milling Company, Inc. has used since 1947 the trademark
"Victorias" and diamond design with colors of red and black on sacks of sugar having
variable weight and size of 5 lbs., 10 lbs., 25 N., 50 lbs., and 100 lbs.; that the
company had transactions on or sales of sugar with local dealers such as Kim Kee,
Chu Yu & Co., Limouan & Co., Luzon Merchandising Corp. and ARCA that the average
sale from 1958 to 1962 was P30,000,000 and for the whole year of 1962 the sale
was P46,000,000; that he came to know that the trademark "Valentine" appeared in
the market in 1962 through the report of his company's field agents; and that except
for the words "Valentine and Victorias", the design and wordings of the bags are
practically the same. 4
The respondent, Ong Su decWW that he adopted and began using his trademark
"Valentine" and design before and continuously after World War II in the Philippines,
particularly on paper bags used as containers for starch, coffee and sugar; and that
since January 1955 he continued using said trademark on repacked sugar.
Arturo Chicane a witness for the respondent, testified that he was a distribution
agent of Ong Su that he travelled a lot but he river own across an instance when the
respondent Ong Su product was mistaken for the petitioner's product; that he found
the diamond design to be quite common in combination with other words used as
trademarks as a background or to enhance their appearance, such as "DIAMOND"
and design (Exhibit "54-A"), "EAGLE" and design (Exhibit "53"), and "SUNRISE" and
design (Exhibit "55"), not belonging to the petitioner, which are also used on
repacked sugar by various sugar dealers; and that said designs and the color of the
lines on which drawn had not been regarded as trademarks but we ornamentation. 5
The Director of Patents denied the petition to cancel the certificate of registration of
the respondent Ong Su covering the trademark "Valentine" and design because:
From the facts of record, I find nothing to sustain the petition.
There is no question that as to their respective literal designation the trademarks are
different. One is VALENTINE while the other is VICTORIAS. Thus, as to sound and
connotation there is no dispute as to their dissimilarity.
However, from the evidence and pleadings, it appears that petitioner is relying
heavily on its diamond design, the color scheme, and the printing sequence or
arrangement of such legends as weight, contents and manufacturer or packer.
I am of the firm belief that the diamond Portion of petitioner's trademark hag not
bolstered its cause. Common geometric shapes such as circles, ovals, squares,
triangles, diamonds, and the like, when used as vehicles for display on word marks,
ordinarily are not retarded as indicia of origin for goods to which the marks are
applied, unless of course they have acquired secondary meaning. I have scoured the
records completely to ascertain if the petitioner has submitted satisfactory evidence
in this regard, but I find absolutely nothing to base a ruling that the triangle (sic)
design has acquired a secondary meaning with respect to its sugar business.
It is the common practice for trademark owners to register designs forming outline of
their distinguishing mark, but when the registrant of such design relies upon
registration in proceeding based upon likelihood of confusion of purchasers, he
assumes the burden of showing that the design portion of the mark has been so used
that purchasers recognize the design, standing alone, as indicating goods emanating
from the registrant. Bausch & Lomb Optical Co., v. Overseas Finance & Trading Co.,
Inc. (ComrPats) 112 USPQ 6.
Considering herein that the petitioner failed to establish that diamond design
component of its mark has acquired a secondary meaning and that the literal portion
of the marks have no similarity, there is no reasonable likelihood of purchaser
confusion resulting from registrant's use of VALENTINE within a diamond and
petitioner's use of VICTORIAS within a diamond.
As regards the colors black and red used, it is fundamental in trademark
jurisprudence that color alone, unless displayed in a distinct or arbitrary design, does
not function as a trademark, inasmuch as here, or elsewhere, the colors black and
red are not so displayed by the petitioner, and are primary colors commonly and
freely used in the printing business.
Finally, as regards the printing sequences or arrangement of such legends as weight,
contents, and manufacturer or packer, I regard it as merely a matter pertaining to
the address of the goods' — a matter involving unfair competition over which the
Patent Office has no jurisdiction. (See: Menzi & Co., Inc, vs. Andres Co Dee. No. 59
dated Oct. 31, 1952, Dir. of Patents.) And in the case of A. E. Staley Manufacturing
Co., Inc. vs. Andres Co. v. Tan Tong, citing, Gillette Safety Razor Go. v. Triangle
Mechanical Laboratories, 31 USPQ 24; Aladdin Mfg. Co. v. Mantle Lamp Co., 21 USPQ
58; and J. C. Eno (U.S.) Limited v. Deshayas 29 USPQ 179), it was held that the
tribunals of the Philippines Patent Office have no jurisdiction over questions of unfair
competition. At most, the petitioner's recourse is for it to seek relief in civil courts.
The allegations that the registration of VALENTINE was obtained fraudulently; that it
falsely suggests a connection with St. Valentine; and that it is merely descriptive or
deceptively misdescriptive of sugar have no basis in law and fact. 6
The petitioner submits that the Director of Patents committed the following errors:
I declared that the petitioner started to use its trademark only in 1947. Said trademark
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING THAT
PETITIONER'S REGISTERED DIAMOND DESIGN IS NOT AN INDEX OF ORIGIN.
IT THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING THAT
PETITIONER IS REQUIRED TO ESTABLISH THAT ITS DIAMOND DESIGN HAS
ACQUIRED A SECONDARY MEANING.
III
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING PETITIONER'S
DIAMOND DESIGN HAS NOT ACQUIRED A SECONDARY MEANING.
IV
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING THAT THE DETAILS
OF PETITIONER'S DESIGN THAT HAVE BEEN IMITATED BY RESPONDENT ONG SU
MERELY PERTAIN TO THE'DRESS OF THE GOODS.'
V portion of the diamond design.
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN CONFINING HIS
COMPARISON OF PETITIONER'S AND RESPONDENT'S RESPECTIVE TRADEMARKS TO
ONE SOLE ITEM OF THEIR DESIGN, IGNORING THE COMPLETE LABELS AS
ACTUALLY USED IN TRADE AND SEEN BY CONSUMERS.
VI
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN TAKING THE POSITION THAT
IN CASES OF TRADEMARK CANCELLATION INVOLVING, AMONG OTHERS, OBVIOUS
ACTS OF UNFAIR COMPETITION, HE NEED NOT TAKE ANY ACTION WHATSOEVER,
SINCE HE SUPPOSEDLY HAS NO JURISDICTION IN THE PREMISES.
VII
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING THAT
PETITIONER'S REGISTERED COLOR DESIGN DOES NOT FUNCTION AS A
TRADEMARK.
VIII
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING THAT BECAUSE THE
LITERAL PORTIONS OF THE RESPECTIVE TRADEMARKS IN QUESTION, NAMELY,
THE RESPECTIVE NAMES 'VICTORIAS' AND 'VALENTINE', HAVE NO SIMILARITY,
THERE IS NO REASONABLE LIKELIHOOD OF PURCHASER CONFUSION.
IX
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN ASSUMING THAT PETITIONER,
OR THE OWNER OF ANY IMITATED OR INFRINGED TRADEMARK FOR THAT MATTER,
MUST ESTABLISH ACTUAL PURCHASER CONFUSION.
X respondent are of the same size; that the letter 'V' in Victorias and the letter "V" in
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN PREVENTING THE
TESTIMONIES OF RESPONDENT ONG SU AND WITNESS ERNESTO DURAN AS
REBUTTAL WITNESSES FOR PETITIONER, SAID RULINGS OF RESPONDENT
DIRECTOR CONSTITUTING REVERSIBLE ERROR AND THE DENIAL OF PROCEDURAL
DUE PROCESS.
XI
THE RESPONDENT DIRECTOR OF PATENTS ERRED IN HOLDING THAT THE
REGISTRATION OF THE VALENTINE TRADEMARK BY RESPONDENT ONG SU WAS
NOT PRUDULENTLY OBTAINED.
XII
THE RESPONDENT DIRECTOR OF PATENTS, ACTING TfIROUGH HEARING OFFICER
AMANDO MARQUEZ, ERRED IN ADMITTING RESPONDENT ONG SU'S EXHIBITS
PERTAINING TO ONE 'MARIANO ANG SAID NAME NOT HAVING BEEN CLEARLY
ESTABLISHED AS AN ALIAS, ALHTHOUGH ADMITTEDLY UNAUTHORIZED, OF
RESPONDENT ONG SU. 7
The contention of petitioner that the diamond design in its trademark is an index of
origin has no merit. The petitioner has not shown that the design portion of the mark
has been so used that purchasers recognize the design, standing alone, as indicating
goods coming from the registrant. As correctly stated by the Director of Patents,
common geometric shapes such as diamonds ordinarily are not regarded as indicia of
origin for goods to which the remarks are applied unless they have acquired a
secondary meaning. And there is no evidence that the diamond design in the
trademark of the petitioner has acquired a secondary meaning with respect to its
sugar business. The word "Victorias" is what Identifies the sugar contained in the bag
as the product of the petitioner. Indeed, the petitioner has advertised its sugar in
bags marked "Victorias" with oval, hexagor. and other designs.
The evidence is that Ong Su has been using his trademark since prior to the last
World War and he obtained the registration thereof on June 20, 1961. Vijandre
was registered on November 9, 1961. It cannot be said, therefore, that the
respondent Ong Su imitated the trademark of the petitioner.
The petitioner avers that purchasers of sugar are likely to confuse petitioner's
"Victorias" trademark and respondent Ong Su's "Valentine" trademark because of the
following similarities:
1. Both trademarks have the same diamond design with the slight modification that
the lines of the "VALENTINE" diamond design are a little protruding at the ends.
2. The lines forming the diamond design in both trademarks consist of two lines,
namely, the outer portion and the inner portion.
3. The outer portion of the diamond design of both trademarks has the color black as
shown in the specimens (Exhibits "A" and "B"). The, inner line of the diamond design
in both trademarks has the color red.
4. In both trade marks, the word "PURE" in black print appears inside of the upper
5. In both trade marks, the word "VICTORIAS" and the word VALENTINE' placed
within the diamond design are conspicuously colored red.
6. The letter "V" in Victorias and the letter "V" in Valentine are Identically placed.
7. The word "VICTORIAS" and the word "VALENTINE" are Identically arranged, the
same containing the same number of letters.
8. Immediately below the words "VICTORIAS" and "VALENTINE"appears the words
"REFINED SUGAR".
9. underneath the diamond design in both trademarks are the words "FINE
GRANULATED" and below said phrase are the words 'CANE SUGAR'with a small
diamond design.
10. Both, trade marks are used on refines sugar.
11. The words "PURE," "VALENTINE," "VICTORIAS," "FINE GRANULATED" and "CANE
SUGAR" in both trade marks are same has arranged and printed.9
The respondent Ong Su maintains that the alleged are minor for the following reason:
Appellant attempts to show the possibility or likelihood of purchaser confusion by
pointing out alleged similarities in the packages in question, e.g. "Pure Refined
Sugar" appearing in both marks in question. It should be noted, however, that these
words are merely descriptive commonly applied to the goods, namely, sugar, and
cannot be exclusively appropriated by the petitioner. The other alleged similarities
pointed to by appellant — that the lines forming the diamond design in both
trademarks consist of two lines, the outer portion and the inner portion; that the
diamond design in both tradeniarks has the color black and the inner line of both
designs has the red color; that the diamond design as used by the petitioner and by
"Valentine" are the same size; and that the letter 'V' in VICTORIAS and the letter "V"
in the Valentine package are Identically pIaced in the diamond; and that — the word
"Victorias" and the word "VALENTINE" are Identically arranged within the diamond —
are, we submit with respect, minor and insignificant for the purpose of this petition
even if the observations of appellant are correct.10
It seems clear that the words "Valentine" and "Victorias" and the names and places
of business of Victorias Milling Company, Inc. and Ong Su are the dominant features
of the trademarks in question. The petitioner has not established such a substantial
similarity between the two trademarks in question as to warrant the cancellation of
the trademark 'Valentine'of the respondent Su. The Director of Patents correctly ruled
that he has no jurisdiction over the issue of unfair competition. Under Section 27 of
the Trade Mark Law, Republic Act No. 166, after actions for unfair competition shall
be brought before the proper Court of First Instance.
The refusal of the Director of Patents to allow respondent Ong Su and witness
Emesto Duran to testify on rebuttal is not a reversible effort.
The only'purpose of the petitioner in proposing to call Ong Su as a witness on
rebuttal is to ask the latter if he had judicial authority to use the alias 'Mariano'. Ang
It appears, however, that the counsel of petitioner had already extensively cross-
examined Ong Su as to a citizenship, alien certificate of registration and the other
name Mariano Ang. It seems immaterial whether or not Ong Su has judicial authority
to use Mariano Ang as an alias. There is evidence that even before the last World
War, the trademark 'Valentine' and design had been used under the name of either
Ong Su or Mariano Ang.
The petitioner sought to present Emesto T. Duran as rebuttal witness to prove that
there was a confusion among consumers or buyers of sugar caused by the alleged
sorority of the "Victorias" and "Valentine" trademarks. The presentation of Emesto T.
Duran as rebuttal witness was objected to by counsel of the respondent on the
ground that the evidence sought to be elicited from Duran did not directly contradict
the testimony of witness Chicane The objection was sustained by the hearing officer
whose ruling was subsequently confer by the Director of Patents. Counsel for the
petitioner made the following formal offer of proof:
ATTY. GONZALEZ:
Your Honor please, in view of the ruling of the Honorable Director your Honor please
on the admissibility of certain items of evidence, which resolution dated February 21,
1966 was received by undersigned counsel for the petitioner on February 22, 1966,
said resolution was setting the hearing of this case for this morning, I wish to state, I
wish to register my exception, my respectful exception to said resolution. In view of
the resolution not permitting me to present Mr. Ernesto Duran, my proposed witness
whom I attempted to present at the last hearing, I wish to offer as proof the
following items ol' the testimony of witness Duran. Now as he would go shopping
with his parents and that sometime in the month of February 1963 he went to the
Aranque market, and while he was buying groceries he saw a shelf with five (5) lbs.
bag of sugar with the bag and package he thought was VICTORIAS. Witness Duran
will further testify that he went to the shelf and pointed to the bag of sugar and
hesaid Isang support ng Victorias Ang. That the sugar was taken by the shopkeeper
and when he went home he found out that the sugar was marked VALENTINE. lie
went on again on another time later and saw that the shelf was still filled with five (5)
pounds (lbs,) bag VALENTINE sugar. The shelf also has bags of VICTORIAS sugar
side by side with VALENTINE sugar, that the package of VALENTINE looked so much
alike will VICTORIAS sugar that he was misled into pointing to VALENTINE and asked
for VICTORIAS.
HEARING OFFICER:
What is that, is that supposed to be the testimony of witness Duran?
ATTY. GONZALEZ:
Yes, your Honor, I am offering as proof of what the witness Duran would have
testified. Since this office has ruled that I cannot present him an offer of proof is
being made for purposes of putting on record what he would have testified to on
record in accordance with the Rules of Evidence. 11
Having made the foregoing formal offer of proof, the petitioner cannot complain that
it was denied procedural due process.
The proposed testimony of Emesto T. Duran that in February 1963 he went to
Arangue market and bought one bag of sugar which he thought was "Victorias" and
when he went home he found out that the sugar was marked "Valentine" is not
sufficient evidence that the two trademarks are so similar that buyers of sugar are
confused. The words "Victorias" and "Valentine" are not similar in spelling and do not
have a similar sound when pronounced. Even the diamond designs are different. The
diamond design of the trademark "Valentine" has protruding fines at the comers.
Even an illiterate person can see the difference between the two diamond designs.
There is no evidence that the respondent Ong Su had obtained the registration of his
trademark "Valentine" and design by means of fraud. The said trademark was
registered in the Philippines Patent Office before the petitioner registered its
trademark.
The record and evidence show that Ong Su had also used in his business the name
Mariano Ang. Hence the licenses and permits in the name of Ong Su and/or Mariano
Ang were correctly admitted as evidence.
WHEREFORE the decision of the Director of Patents sought to be reviewed is hereby
affirmed, without pronouncement as to costs.
SO ORDERED.
Unno Commercial vs. Gen Milling Corp, 205 Phils.707
The Court affirms respondent Director of Patent's decision declaring respondent
General Milling Corporation as the prior user of the trademark "All Montana" on
wheat flour in the Philippines and ordering the cancellation of the certificate of
registration for the same trademark previously issued in favor of petitioner Unno
Commercial Enterprises, Incorporated, it appearing that Unno Commercial Enterprises,
Inc. merely acted as exclusive distributor of All Montana wheat flour in the Philippines.
Only the owner of a trademark, trade name or service mark may applly for its
registration and an importer, broker, indentor or distributor acquires no rights to the
trademark of the goods he is dealing with in the absence of a valid transfer or
assignment of the trade mark.
On December 11, 1962, respondent General Milling Corporation filed an application
for the registration of the trademark "All Montana" to be used in the sale of wheat
flour. In view of the fact that the same trademark was previously, registered in favor
of petitioner Unno Commercial Enterprises, Inc., the Chief Trademark Examiner of
the Philippines Patent Office declared an interference proceeding 1 between
respondent corporation's application (Serial No. 9732), as Junior - Party-Applicant
and petitioner company's registration (Registration No. 9589), as Senior Party-
Applicant, docketed in the Philippines Patent Office as Inter Partes Case No. 313, to
determine which party has previously adopted and used the trademark "All Montana".
Respondent General Milling Corporation, in its application for registration, alleged that
it started using the trademark "All Montana" on August 31, 1955 and subsequently
was licensed to use the same by Centennial Mills, Inc. by virtue of a deed of
assignment executed on September 20, 1962. On the other hand petitioner Unno
Commercial Enterprises, Inc. argued that the same trademark had been registered in
its favor on March 8, 1962 asserting that it started using the trademark on June 30,
1956, as indentor or broker for S.H. Huang Bros. & Co., a local firm.
The Director of Patents, after hearing, ruled in favor of respondent General Milling
Corporation and rendered its decision as follows:
However, there is testimony in the record (t.s.n., pp. 11-12, Jan.17,1967, testimony
of Jose Uy) to the effect that, indispensable, "ALL MONTANA" wheat flour is a
premium flour produced from premium wheat coming from the State of Montana,
U.S.A. It is apparent that the trademark is primarily geographically descriptive of the
goods. It is therefore a matter overlooked by the Trademark Examiner, and it is
incumbent upon him to determine if the applicant should claim and is qualified to
claim distinctiveness under Section 4(f) of the Trademark Statute. Otherwise, it is
registrable on the Supplemental Register and should thus be registered therein.
WHEREFORE, the Junior Party-Applicant is adjudged prior -user of the trademark ALL
MONTANA, but 'because it is primarily geographically descriptive, the application is
herein remanded to the Chief Trademark Examiner for proper proceeding before
issuance of the certificate of registration.
The certificate of registration issued to the Senior Party is ordered cancelled.
IT IS SO ORDERED.
After its motion for reconsideration was denied, petitioner brought the instant petition
seeking the reversal of the decision and praying that it be declared the owner and
prior user of the trademark "All Montana" on wheat flour.
Petitioner based its claim of ownership over the trademark in question by the fact
that it acted as an indentor or broker for S. H. Huang Bros. & Co., a local importer of
wheat flour, offering as evidence the various shipments, documents, invoices and
other correspondence of Centennial Mills, Inc., shipping thousand of bags of wheat
flour bearing the trademark "All Montana" to the Philippines. Petitioner argued that
these documents, invoices and correspondence proved the fact that it has been using
the trademark "All Montana" as early as 1955 in the concept of an owner and
maintained that anyone, whether he is only an importer, broker or indentor can
appropriate, use and own a particular mark of its own choice although he is not the
manufacturer of the goods he deals with. Relying on the provisions of Section 2-A of
the Trademarks Law 2 (Republic Act 166), petitioner insists that "the appropriation
and ownership of a particular trademark is not merely confined to producers or
manufacturers but likewise to anyone who lawfully deals in merchandise who renders
any lawful service in commerce, like petitioner in the case at bar. 3
The right to register trademark is based on ownership. 4 When the applicant is not
the owner of the trademark being applied for, he has no right to apply for the
registration of the same. 5 Under the Trademark Law only the owner of the
trademark, trade name or service mark used to distinguish his goods, business or
service from the goods, business or service of others is entitled to register the
same. 6
The term owner does not include the importer of the goods bearing the trademark,
trade name, service mark, or other mark of ownership, unless such importer is
actually the owner thereof in the country from which the goods are imported. A local
importer, however, may make application for the registration of a foreign trademark,
trade name or service mark if he is duly authorized by the actual owner of the name
or other mark of ownership. 7
Thus, this Court, has on several occasions ruled that where the applicant's alleged
ownership is not shown in any notarial document and the applicant appears to be
merely an importer or distributor of the merchandise covered by said trademark, its
application cannot be granted. 8
Moreover, the provision relied upon by petitioner (Sec. 2-A, Rep. Act No. 166) allows
one "who lawfully produces or deals in merchandise ... or who engages in any lawful
business or who renders any lawful service in commerce, by actual use thereof . . .
(to) appropriate to his exclusive use a trademark, or a service mark not so
appropriated by another. " In the case at bar, the evidence showed that the
trademark "All Montana" was owned and registered in the name of Centennial Mills,
Inc. which later transferred it to respondent General Milling Corporation by way of a
deed of assignment. It is undisputed that way back in March, 1955, Centennial Mills,
Inc. under the tradename Wenatchee Milling Co., exported flour to the Philippines,
through its distributor, herein petitioner Unno Commercial Enterprises, Inc. which
acted as indentor or broker for the firm S. H. Huang Bros. & Co. However, because of
increased taxes and subsidies, Centennial Mills discontinued shipments of flour in the
Philippines and eventually sold its brands for wheat flour, including "All Montana"
brand to respondent General Milling Corporation in consideration of 1,000 shares of
stock of respondent corporation with a par value of P100.00 per share or a total of
P100,000.00. Respondent General Milling Corporation, since the start of the operation
in 1961 of its flour mills located in Lapu-lapu City, Cebu has been manufacturing and
selling "All Montana" flour in the Philippines.
As against petitioner's argument that respondent failed to establish convincingly the
ownership of the trademark "All Montana" by its assignor Centennial Mills, Inc., the
Director of Patents correctly found that ample evidence was presented that
Centennial Mills, Inc. was the owner and prior user in the Philippines of the
trademark "All Montana" through a local importer and broker. The Deed of
Assignment itself constitutes sufficient proof of its ownership of the trademark "All
Montana," showing that Centennial Mills was a corporation duly organized and
existing under and by virtue of the laws of the State of Oregon, U.S.A. with principal
place and business at Portland, Oregon, U.S.A. and the absolute and registered
owner of several trademarks for wheat flour, i.e. (Imperial, White Lily, Duck, General,
Swan, White Horse, Vinta, El Paro, Baker's Joy, Choice, Red Bowl All Montana and
Dollar.) all of which were assigned by it to respondent General Milling Corporation.
The deed of assignment was signed by its president, Dugald MacGregor, duly
acknowledged before James Hunt, a notary public for the State of Oregon,
accompanied by a certification issued by the Secretary of State of the State of
Oregon stating that the said James Hunt is a duly qualified Notary Public with full
power and authority to take acknowledgments of all oaths and that full faith and
credit should be given to his official acts as notary public.
The Director of Patents likewise correctly rejected petitioner's contention that in a
1954 conference in Manila the ownership and use by petitioner of the brand "All
Montana" was agreed upon, on the contrary finding that "Details of that meeting
were, however, explained by Mr. Dugald MacGregor, President of Centennial Mills,
Inc., as the Junior Party's rebuttal witness. Mr. MacGregor confirmed holding such
conference in a restaurant in Manila with representatives of the Senior Party, namely;
Messrs. Jose Uy, Francisco Gonzales and S. H. Huang although he could not
remember the name of the restaurant. He further explained that his company owned
the trademark; that it had been using the mark in the United States; and that
ownership of the mark had never been conferred upon any other company, much
less the Senior Party"; and "Inasmuch as it was not the owner of the trademark, the
Senior Party could not be regarded as having used and adopted it, and had no right
to apply for its registration. It acknowledged that it was a mere importer of flour, and
a mere importer and distributor acquires no rights in the mark used on the imported
goods by the foreign exporter in the absence of an assignment of any kind ...
Trademarks used and adopted on goods manufactured or packed in a foreign country
in behalf of a domestic importer, broker, or indentor and distributor are presumed to
be owned by the manufacturer or packer, unless there is a written agreement clearly
showing that ownership vests in the importer, broker, indentor or distributor.
Thus, petitioner's contention that it is the owner of the mark "All Montana" because
of its certificate of registration issued by the Director of Patents, must fail, since
ownership of a trademark is not acquired by the mere fact of registration
alone. 9 Registration merely creates a prima facie presumption of the validity of the
registration, of the registrant's ownership of the trademark and of the exclusive right
to the use thereof. 10 Registration does not perfect a trademark right. 11 As
conceded itself by petitioner, evidence may be presented to overcome the
presumption. Prior use by one will controvert a claim of legal appropriation, by
subsequent users. In the case at bar, the Director of Patents found that "ample
evidence was presented in the record that Centennial Mills, Inc. was the owner and
prior user in the Philippines of the trademark 'All Montana' through a local importer
and broker. Use of a trademark by a mere importer, indentor or exporter (the Senior
Party herein) inures to the benefit of the foreign manufacturer whose goods are
Identified by the trademark. The Junior Party has hereby established a continuous
chain of title and, consequently, prior adoption and use" and ruled that "based on the
facts established, it is safe to conclude that the Junior Party has satisfactorily
discharged the burden of proving priority of adoption and use and is entitled to
registration." It is well-settled that we are precluded from making further inquiry,
since the findings of fact of the Director of Patents in the absence of any showing
that there was grave abuse of discretion is binding on us 12 and the findings of facts
by the Director of Patents are deemed conclusive in the Supreme Court provided that
they are supported by substantial evidence. 13 Petitioner has failed to show that the
findings of fact of the Director of Patents are not substantially supported by evidence
nor that any grave abuse of discretion was committed.
Finally, the Court finds without merit petitioner's argument that the Director of
Patents could not order the cancellation of' its certificate of registration in an
interference proceeding and that the question of whether or not a certificate of
registration is to be cancelled should have been brought in cancellation proceedings.
Under Rule 178 of the Rules of the Patent Office in Trademark Cases, 14 the Director
of Patents is expressly authorized to order the cancellation of a registered mark or
trade name or name or other mark of ownership in an inter partes case, such as the
interference proceeding at bar. 15
WHEREFORE, the appealed decision is hereby affirmed. No costs.
Philip Morris, Inc. v. CA (274 SCRA 576) and Philip Morris, Inc. v. CA 224
scra 624
In the petition before us, petitioners Philip Morris, Inc., Benson and Hedges (Canada),
Inc., and Fabriques of Tabac Reunies, S.A., are ascribing whimsical exercise of the
faculty conferred upon magistrates by Section 6, Rule 58 of the Revised Rules of
Court when respondent Court of Appeals lifted the writ of preliminary injunction it
earlier had issued against Fortune Tobacco Corporation, herein private respondent,
from manufacturing and selling "MARK" cigarettes in the local market.
Banking on the thesis that petitioners' respective symbols "MARK VII", "MARK TEN",
and "LARK", also for cigarettes, must be protected against unauthorized
appropriation, petitioners twice solicited the ancillary writ in the course the main suit
for infringement but the court of origin was unpersuaded.
Before we proceed to the generative facts of the case at bar, it must be emphasized
that resolution of the issue on the propriety of lifting the writ of preliminary injunction
should not be construed as a prejudgment of the suit below. Aware of the fact that
the discussion we are about to enter into involves a mere interlocutory order, a
discourse on the aspect infringement must thus be avoided. With these caveat, we
shall now shift our attention to the events which spawned the controversy.
As averred in the initial pleading, Philip Morris, Incorporated is a corporation
organized under the laws of the State of Virginia, United States of America, and does
business at 100 Park Avenue, New York, New York, United States of America. The
two other plaintiff foreign corporations, which are wholly-owned subsidiaries of Philip
Morris, Inc., are similarly not doing business in the Philippines but are suing on an
isolated transaction. As registered owners "MARK VII", "MARK TEN", and "LARK" per
certificates of registration issued by the Philippine Patent Office on April 26, 1973,
May 28, 1964, and March 25, 1964, plaintiffs-petitioners asserted that defendant
Fortune Tobacco Corporation has no right to manufacture and sell cigarettes bearing
the allegedly identical or confusingly similar trademark "MARK" in contravention of
Section 22 of the Trademark Law, and should, therefore, be precluded during the
pendency of the case from performing the acts complained of via a preliminary
injunction (p. 75, Court of Appeals Rollo in AC-G.R. SP No. 13132).
For its part, Fortune Tobacco Corporation admitted petitioners' certificates of
registration with the Philippine Patent Office subject to the affirmative and special
defense on misjoinder of party plaintiffs. Private respondent alleged further that it
has been authorized by the Bureau of Internal Revenue to manufacture and sell
cigarettes bearing the trademark "MARK", and that "MARK" is a common word which
cannot be exclusively appropriated (p.158, Court of Appeals Rollo in A.C.-G.R. SP No.
13132). On March 28, 1983, petitioners' prayer for preliminary injunction was denied
by the Presiding Judge of Branch 166 of the Regional Trial Court of the National
Capital Judicial Region stationed at Pasig, premised upon the following propositions:
Plaintiffs admit in paragraph 2 of the complaint that ". . . they are
not doing business in the Philippines and are suing on an isolated transaction . . .".
This simply means that they are not engaged in the sale, manufacture, importation,
expor[t]ation and advertisement of their cigarette products in the Philippines. With
this admission, defendant asks: ". . . how could defendant's "MARK" cigarettes cause
the former "irreparable damage" within the territorial limits of the Philippines?"
Plaintiffs maintain that since their trademarks are entitled to protection by treaty
obligation under Article 2 of the Paris Convention of which the Philippines is a
member and ratified by Resolution No. 69 of the Senate of the Philippines and as
such, have the force and effect of law under Section 12, Article XVII of our
Constitution and since this is an action for a violation or infringement of a trademark
or trade name by defendant, such mere allegation is sufficient even in the absence of
proof to support it. To the mind of the Court, precisely, this is the issue in the main
case to determine whether or not there has been an invasion of plaintiffs' right of
property to such trademark or trade name. This claim of plaintiffs is disputed by
defendant in paragraphs 6 and 7 of the Answer; hence, this cannot be made a basis
for the issuance of a writ of preliminary injunction.
There is no dispute that the First Plaintiff is the registered owner of trademar[k]
"MARK VII" with Certificate of Registration No. 18723, dated April 26,1973 while the
Second Plaintiff is likewise the registered owner of trademark "MARK TEN" under
Certificate of Registration No. 11147, dated May 28, 1963 and the Third Plaintiff is a
registrant of trademark "LARK" as shown by Certificate of Registration No. 10953
dated March 23, 1964, in addition to a pending application for registration of
trademark "MARK VII" filed on November 21, 1980 under Application Serial No.
43243, all in the Philippine Patent Office. In same the manner, defendant has a
pending application for registration of the trademark "LARK" cigarettes with the
Philippine Patent Office under Application Serial No. 44008. Defendant contends that
since plaintiffs are "not doing business in the Philippines" coupled the fact that the
Director of Patents has not denied their pending application for registration of its
trademark "MARK", the grant of a writ of preliminary injunction is premature.
Plaintiffs contend that this act(s) of defendant is but a subterfuge to give semblance
of good faith intended to deceive the public and patronizers into buying the products
and create the impression that defendant's goods are identical with or come from the
same source as plaintiffs' products or that the defendant is a licensee of plaintiffs
when in truth and in fact the former is not. But the fact remains that with its pending
application, defendant has embarked in the manufacturing, selling, distributing and
advertising of "MARK" cigarettes. The question of good faith or bad faith on the part
of defendant are matters which are evidentiary in character which have to be proven
during the hearing on the merits; hence, until and unless the Director of Patents has
denied defendant's application, the Court is of the opinion and so holds that issuance
a writ of preliminary injunction would not lie.
There is no question that defendant has been authorized by the Bureau of Internal
Revenue to manufacture cigarettes bearing the trademark "MARK" (Letter of Ruben B.
Ancheta, Acting Commissioner addressed to Fortune Tobacco Corporation dated April
3, 1981, marked as Annex "A", defendant's "OPPOSITION, etc." dated September 24,
1982). However, this authority is qualified . . . that the said brands have been
accepted and registered by the Patent Office not later than six (6) months after you
have been manufacturing the cigarettes and placed the same in the market."
However, this grant ". . . does not give you protection against any person or entity
whose rights may be prejudiced by infringement or unfair competition in relation to
your indicated trademarks/brands". As aforestated, the registration of defendant's
application is still pending in the Philippine Patent Office.
It has been repeatedly held in this jurisdiction as well as in the United States that the
right or title of the applicant for injunction remedy must be clear and free from doubt.
Because of the disastrous and painful effects of an injunction, Courts should be
extremely careful, cautious and conscionable in the exercise of its discretion
consistent with justice, equity and fair play.
There is no power the exercise of which is more delicate which requires greater
caution, deliberation, and sound discretion, or (which is) more dangerous in a
doubtful case than the issuing of an injunction; it is the strong arm of equity that
never ought to be extended unless to cases of great injury, where courts of law
cannot afford an adequate or commensurate remedy in damages. The right must be
clear, the injury impending or threatened, so as to be averted only by the protecting
preventive process of injunction. (Bonaparte v. Camden, etc. N. Co., 3 F. Cas. No. 1,
617, Baldw. 205, 217.)
Courts of equity constantly decline to lay down any rule which injunction shall be
granted or withheld. There is wisdom in this course, for it is impossible to foresee all
exigencies of society which may require their aid to protect rights and restrain
wrongs. (Merced M. Go v. Freemont, 7 Gal. 317, 321; 68 Am. Dec. 262.)
It is the strong arm of the court; and to render its operation begin and useful, it must
be exercised with great discretion, and when necessary requires it. (Attorney-General
v. Utica Inc. Co., P. John Ch. (N.Y.) 371.)
Having taken a panoramic view of the position[s] of both parties as viewed from their
pleadings, the picture reduced to its minimum size would be this: At the crossroads
are the two (2) contending parties, plaintiffs vigorously asserting the rights granted
by law, treaty and jurisprudence to restrain defendant in its activities of
manufacturing, selling, distributing and advertising its "MARK" cigarettes and now
comes defendant who countered and refused to be restrained claiming that it has
been authorized temporarily by the Bureau of Internal Revenue under certain
conditions to do so as aforestated coupled by its pending application for registration
of trademark "MARK" in the Philippine Patent Office. This circumstance in itself has
created a dispute between the parties which to the mind of the Court does not
warrant the issuance of a writ of preliminary injunction.
It is well-settled principle that courts of equity will refuse an application for the
injunctive remedy where the principle of law on which the right to preliminary
injunction rests is disputed and will admit of doubt, without a decision of the court of
law establishing such principle although satisfied as to what is a correct conclusion of
law upon the facts. The fact, however, that there is no such dispute or conflict does
not in itself constitute a justifiable ground for the court to refuse an application for
the injunctive relief. (Hackensack Impr. Commn. v. New Jersey Midland P. Co., 22 N.J.
Eg. 94.)
Hence, the status quo existing between the parties prior to the filing of this case
should be maintained. For after all, an injunction, without reference to the parties,
should be violent, vicious nor even vindictive. (pp. 338-341, Rollo in G.R. No. 91332.)
In the process of denying petitioners' subsequent motion for reconsideration of the
order denying issuance of the requested writ, the court of origin took cognizance of
the certification executed on January 30, 1984 by the Philippine Patent Office
attesting to the fact that private respondent's application for registration is still
pending appropriate action. Apart from this communication, what prompted the trial
court judge to entertain the idea of prematurity and untimeliness of petitioners'
application for a writ of preliminary injunction was the letter from the Bureau of
Internal Revenue date February 2, 1984 which reads:
MRS. TERESITA GANDIONGCO OLEDAN
Legal Counsel
Fortune Tobacco Corporation
Madam:
In connection with your letter dated January 25, 1984, reiterating your query as to
whether your label approval automatically expires or becomes null and void after six
(6) months if the brand is not accepted and by the patent office, please be informed
that no provision in the Tax Code or revenue regulation that requires an applicant to
comply with the aforementioned condition order that his label approved will remain
valid and existing.
Based on the document you presented, it shows that registration of this particular
label still pending resolution by the Patent Office. These being so , you may therefore
continue with the production said brand of cigarette until this Office is officially
notified that the question of ownership of "MARK" brand is finally resolved.
Very truly yours,
TEODORO D. PAREÑO
Chief, Manufactured Tobacco
Tax(p. 348,It appears from the testimony of Atty. Enrique Madarang, Chief of the
Trademark Division of the then Philippine Patent Office that Fortune's application for
its trademark is still pending before said office (p. 311, Rollo).
Petitioners thereafter cited supervening events which supposedly transpired since
March 28, 1983, when the trial court first declined issuing a writ of preliminary
injunction, that could alter the results of the case in that Fortune's application had
been rejected, nay, barred by the Philippine Patent Office, and that the application
had been forfeited by abandonment, but the trial court nonetheless denied the
second motion for issuance of the injunctive writ on April 22, 1987, thus:
For all the prolixity of their pleadings and testimonial evidence, the plaintiffs-movants
have fallen far short of the legal requisites that would justify the grant of the writ of
preliminary injunction prayed for. For one, they did not even bother to establish by
competent evidence that the products supposedly affected adversely by defendant's
trademark now subject of an application for registration with the Philippine Patents
Office, are in actual use in the Philippines. For another, they concentrated their fire
on the alleged abandonment and forfeiture by defendant of said application for
registration.
The Court cannot help but take note of the fact that in their complaint plaintiffs
included a prayer for issuance preliminary injunction. The petition was duly heard,
and thereafter matter was assiduously discussed lengthily and resolved against
plaintiffs in a 15-page Order issued by the undersigned's predecessor on March 28,
1983. Plaintiffs' motion for reconsideration was denied in another well-argued 8 page
Order issued on April 5, 1984,, and the matter was made to rest.
However, on the strength of supposed changes in the material facts of this case,
plaintiffs came up with the present motion citing therein the said changes which are:
that defendant's application had been rejectedand barred by the Philippine Patents
Office, and that said application has been deemed abandoned and forfeited. But
defendant has refiled the same.
Plaintiffs' arguments in support of the present motion appear to be a mere rehash of
their stand in the first above-mentioned petition which has already been ruled upon
adversely against them. Granting that the alleged changes in the material facts are
sufficient grounds for a motion seeking a favorable grant of what has already been
denied, this motion just the same cannot prosper.
In the first place there is no proof whatsoever that any of plaintiffs' products which
they seek to protect from any adverse effect of the trademark applied for by
defendant, is in actual use and available for commercial purposes anywhere in the
Philippines. Secondly as shown by plaintiffs' own evidence furnished by no less than
the chief of Trademarks Division of the Philippine Patent Office, Atty. Enrique
Madarang, the abandonment of an application is of no moment, for the same can
always be refiled. He said there is no specific provision in the rules prohibiting such
refiling (TSN, November 21, 1986, pp. 60 & 64, Raviera). In fact, according to
Madarang, the refiled application of defendant is now pending before the Patents
Office. Hence, it appears that the motion has no leg to stand on. (pp. 350-
351, Rolloin G. R. No. 91332.)
Confronted with this rebuff, petitioners filed a previous petition for certiorari before
the Court, docketed as G.R. No. 78141, but the petition was referred to the Court of
Appeals.
The Court of Appeals initially issued a resolution which set aside the court of origin's
order dated April 22, 1987, and granted the issuance of a writ of preliminary
injunction enjoining Fortune, its agents, employees, and representatives, from
manufacturing, selling, and advertising "MARK" cigarettes. The late Justice Cacdac,
speaking for the First Division of the Court of Appeals in CA-G.R. SP No. 13132,
remarked:
There is no dispute that petitioners are the registered owners of the trademarks for
cigarettes "MARK VII", "MARK TEN", and "LARK".(Annexes B, C and D, petition). As
found and reiterated by the Philippine Patent Office in two (2) official
communications dated April 6, 1983 and January 24, 1984, the trademark "MARK" is
"confusingly similar" to the trademarks of petitioners, hence registration was barred
under Sec. 4 (d) of Rep. Act. No. 166, as amended (pp. 106, 139, SCA rollo). In a
third official communication dated April 8, 1986, the trademark application of private
respondent for the "MARK" under Serial No. 44008 filed on February 13, 1981 which
was declared abandoned as of February 16, 1986, is now deemed forfeited, there
being no revival made pursuant to Rule 98 of the Revised Rules of Practitioners in
Trademark Cases." (p. 107, CA rollo). The foregoing documents or communications
mentioned by petitioners as "the changes in material facts which occurred after
March 28, 1983", are not also questioned by respondents.
Pitted against the petitioners' documentary evidence, respondents pointed to (1) the
letter dated January 30, 1979 (p. 137, CA rollo) of Conrado P. Diaz, then Acting
Commissioner of Internal Revenue, temporarily granting the request of private
respondent for a permit to manufacture two (2) new brands of cigarettes one of
which is brand "MARK" filter-type blend, and (2) the certification dated September 26,
1986 of Cesar G. Sandico, Director of Patents (p. 138, CA rollo) issued upon the
written request of private respondents' counsel dated September 17, 1986 attesting
that the records of his office would show that the "trademark MARK" for cigarettes is
now the subject of a pending application under Serial No. 59872 filed on September
16, 1986.
Private respondent's documentary evidence provides the reasons neutralizing or
weakening their probative values. The penultimate paragraph of Commissioner Diaz'
letter of authority reads:
Please be informed further that the authority herein granted does not give you
protection against any person or entity whose rights may be prejudiced by
infringement or unfair competition in relation to your above-named brands/trademark.
while Director Sandico's certification contained similar conditions as follows:
This Certification, however, does not give protection as against any person or entity
whose right may be prejudiced by infringement or unfair competition in relation to
the aforesaid trademark nor the right to register if contrary to the provisions of the
Trademark Law, Rep. Act No. 166 as amended and the Revised Rules of Practice in
Trademark Cases.
The temporary permit to manufacture under the trademark "MARK" for cigarettes
and the acceptance of the second application filed by private respondent in the
height of their dispute in the main case were evidently made subject to the outcome
of the said main case or Civil Case No. 47374 of the respondent Court. Thus, the
Court has not missed to note the absence of a mention in the Sandico letter of
September 26, 1986 of any reference to the pendency of the instant action filed on
August 18, 1982. We believe and hold that petitioners have shown a prima facie case
for the issuance of the writ of prohibitory injunction for the purposes stated in their
complaint and subsequent motions for the issuance of the prohibitory writ. (Buayan
Cattle Co. vs. Quintillan, 125 SCRA 276)
The requisites for the granting of preliminary injunction are the existence of the right
protected and the facts against which the injunction is to be directed as violative of
said right. (Buayan Cattle Co. vs. Quintillan, supra; Ortigas & Co. vs. Ruiz, 148 SCRA
326). It is a writ framed according to the circumstances of the case commanding an
act which the Court regards as essential to justice and restraining an act it deems
contrary to equity and good conscience (Rosauro vs. Cuneta, 151 SCRA 570). If it is
not issued, the defendant may, before final judgment, do or continue the doing of
the act which the plaintiff asks the court to restrain, and thus make ineffectual the
final judgment rendered afterwards granting the relief sought by the plaintiff (Calo vs.
Roldan, 76 Phil. 445). Generally, its grant or denial rests upon the sound discretion of
the Court except on a clear case of abuse (Belish Investment & Finance Co. vs. State
House, 151 SCRA 636). Petitioners' right of exclusivity to their registered trademarks
being clear and beyond question, the respondent court's denial of the prohibitive writ
constituted excess of jurisdiction and grave abuse discretion. If the lower court does
not grant preliminary injunction, the appellate court may grant the same. (Service
Specialists, Inc. vs. Sheriff of Manila, 145 SCRA 139). (pp. 165-167, Rollo in G.R. No.
91332.)
After private respondent Fortune's motion for reconsideration was rejected, a motion
to dissolve the disputed writ of preliminary injunction with offer to post a
counterbond was submitted which was favorably acted upon by the Court of Appeals,
premised on the filing of a sufficient counterbond to answer for
whatever perjuicio petitioners may suffer as a result thereof, to wit:
The private respondent seeks to dissolve the preliminary injunction previously
granted by this Court with an offer to file a counterbond. It was pointed out in its
supplemental motion that lots of workers employed will be laid off as a consequence
of the injunction and that the government will stand to lose the amount of specific
taxes being paid by the
private respondent. The specific taxes being paid is the sum total of P120,120,
295.98 from January to July 1989.
The petitioners argued in their comment that the damages caused by the
infringement of their trademark as well as the goodwill it generates are incapable of
pecuniary estimation and monetary evaluation and not even the counterbond could
adequately compensate for the damages it will incur as a result of the dissolution of
the bond. In addition, the petitioner further argued that doing business in the
Philippines is not relevant as the injunction pertains to an infringement of a
trademark right.
After a thorough re-examination of the issues involved and the arguments advanced
by both parties in the offer to file a counterbond and the opposition thereto, WE
believe that there are sound and cogent reasons for US to grant the dissolution of the
writ of preliminary injunction by the offer of the private respondent to put up a
counterbond to answer for whatever damages the petitioner may suffer as a
consequence of the dissolution of the preliminary injunction.
The petitioner will not be prejudiced nor stand to suffer irreparably as a consequence
of the lifting of the preliminary injunction considering that they are not actually
engaged in the manufacture of the cigarettes with the trademark in question and the
filing of the counterbond will amply answer for such damages.
While the rule is that an offer of a counterbond does not operate to dissolve an
injunction previously granted, nevertheless, it is equally true that an injunction could
be dissolved only upon good and valid grounds subject to the sound discretion of the
court. As WE have maintained the view that there are sound and good reasons to lift
the preliminary injunction, the motion to file a counterbond is granted. (pp. 53-
54, Rollo in G.R. No. 91332.)
Petitioners, in turn, filed their own motion for re-examination geared towards
reimposition of the writ of preliminary injunction but to no avail (p. 55, Rollo in G.R.
No. 91332).
Hence, the instant petition casting three aspersions that respondent court gravely
abused its discretion tantamount to excess of jurisdiction when:
I. it required, contrary to law and jurisprudence, that in order that petitioners may
suffer irreparable injury due to the lifting of the injunction, petitioners should be
using actually their registered trademarks in commerce in the Philippines;
II. it lifted the injunction in violation of section 6 of Rule 58 of the Rules of Court; and
III. after having found that the trial court had committed grave abuse of discretion
and exceeded its jurisdiction for having refused to issue the writ of injunction to
restrain private respondent's acts that are contrary to equity and good conscience, it
made a complete about face for legally insufficient grounds and authorized the
private respondent to continue performing the very same acts that it had considered
contrary to equity and good conscience, thereby ignoring not only the mandates of
the Trademark Law, the international commitments of the Philippines, the judicial
admission of private respondent that it will have no more right to use the trademark
"MARK" after the Director of Patents shall have rejected the application to register it,
and the admonitions of the Supreme Court. (pp. 24-25, Petition; pp. 25-26, Rollo.)
To sustain a successful prosecution of their suit for infringement, petitioners, as
foreign corporations not engaged in local commerce, rely on section 21-A of the
Trademark Law reading as follows:
Sec. 21-A. Any foreign corporation or juristic person to which a mark or trade-name
has been registered or assigned under this act may bring an action hereunder for
infringement, for unfair competition, or false designation of origin and false
description, whether or not it has been licensed to do business in the Philippines
under Act Numbered Fourteen hundred and fifty-nine, as amended, otherwise known
as the Corporation Law, at the time it brings complaint: Provided, That the country of
which the said foreign corporation or juristic person is a citizen or in which it is
domiciled, by treaty, convention or law, grants a similar privilege to corporate or
juristic persons of the Philippines. (As inserted by Sec. 7 of Republic Act No. 638.) to
drive home the point that they are not precluded from initiating a cause of action in
the Philippines on account of the principal perception that another entity is pirating
their symbol without any lawful authority to do so. Judging from a perusal of the
aforequoted Section 21-A, the conclusion reached by petitioners is certainly correct
for the proposition in support thereof is embedded in the Philippine legal
jurisprudence.
Indeed, it was stressed in General Garments Corporation vs. Director of Patents (41
SCRA 50 [1971]) by then Justice (later Chief Justice) Makalintal that:
Parenthetically, it may be stated that the ruling in the Mentholatum case was
subsequently derogated when Congress, purposely to "counteract the effects" of said
case, enacted Republic Act No. 638, inserting Section 21-A in the Trademark Law,
which allows a foreign corporation or juristic person to bring an action in Philippine
courts for infringement of a mark or tradename, for unfair competition, or false
designation of origin and false description, "whether or not it has been licensed to do
business in the Philippines under Act Numbered Fourteen hundred and fifty-nine, as
amended, otherwise known as the Corporation Law, at the time it brings complaint."
Petitioner argues that Section 21-A militates against respondent's capacity to
maintain a suit for cancellation, since it requires, before a foreign corporation may
bring an action, that its trademark or tradename has been registered under the
Trademark Law. The argument misses the essential point in the said provision, which
is that the foreign corporation is allowed thereunder to sue "whether or not it has
been licensed to do business in the Philippines" pursuant to the Corporation Law
(precisely to counteract the effects of the decision in the Mentholatum case). (at p.
57.)
However, on May, 21, 1984, Section 21-A, the provision under consideration, was
qualified by this Court in La Chemise Lacoste S.A. vs. Fernandez (129 SCRA 373
[1984]), to the effect that a foreign corporation not doing business in the Philippines
may have the right to sue before Philippine Courts, but existing adjective axioms
require that qualifying circumstances necessary for the assertion of such right should
first be affirmatively pleaded (2 Agbayani Commercial Laws of the Philippines, 1991
Ed., p. 598; 4 Martin, Philippine Commercial Laws, Rev. Ed., 1986, p. 381). Indeed, it
is not sufficient for a foreign corporation suing under Section 21-A to simply allege its
alien origin. Rather, it must additionally allege its personality to sue. Relative to this
condition precedent, it may be observed that petitioners were not remiss in averring
their personality to lodge a complaint for infringement (p. 75, Rollo in AC-G.R. SP No.
13132) especially so when they asserted that the main action for infringement is
anchored on an isolated transaction (p. 75, Rollo in AC-G.R. SP No. 13132; Atlantic
Mutual Ins. Co. vs. Cebu Stevedoring Co., Inc., 17 SCRA 1037 (1966), 1 Regalado,
Remedial Law Compendium, Fifth Rev. Ed., 1988, p. 103).
Another point which petitioners considered to be of significant interest, and which
they desire to impress upon us is the protection they enjoy under the Paris
Convention of 1965 to which the Philippines is a signatory. Yet, insofar as this
discourse is concerned, there is no necessity to treat the matter with an extensive
response because adherence of the Philippines to the 1965 international covenant
due to pact sunt servanda had been acknowledged in La Chemise (supra at page
390).
Given these confluence of existing laws amidst the cases involving trademarks, there
can be no disagreement to the guiding principle in commercial law that foreign
corporations not engaged in business in the Philippines may maintain a cause of
action for infringement primarily because of Section 21-A of the Trademark Law
when the legal standing to sue is alleged, which petitioners have done in the case at
hand.
In assailing the justification arrived at by respondent court when it recalled the writ
of preliminary injunction, petitioners are of the impression that actual use of their
trademarks in Philippine commercial dealings is not an indispensable element under
Article 2 of the Paris Convention in that:
(2) . . . . no condition as to the possession of a domicile or establishment in the
country where protection is claimed may be required of persons entitled to the
benefits of the Union for the enjoyment of any industrial property of any industrial
property rights. (p. 28, Petition; p. 29, Rollo in G.R. No. 91332.)
Yet petitioners' perception along this line is nonetheless resolved by Sections 2 and 2-
A of the Trademark Law which speak loudly, about necessity of actual commercial
use of the trademark in the local forum:
Sec. 2. What are registrable. — Trademarks, tradenames and service marks owned
by persons, corporations, partnerships or associations domiciled in the Philippines
and by persons, corporations, partnerships or associations domiciled in any foreign
country may be registered in accordance with the provisions of this Act; Provided,
That said trademarks, tradenames, or service marks are actually in use in
commerce and services not less than two months in the Philippines before the time
the applications for registration are filed; And provided, further, That the country of
which the applicant for registration is a citizen grants by law substantially similar
privileges to citizens of the Philippines, and such fact is officially certified, with a
certified true copy of the foreign law translated into the English language, by the
government of the foreign country to the Government of the Republic of the
Philippines. (As amended by R.A. No. 865).
Sec. 2-A. Ownership of trademarks, tradenames and service marks; how acquired. —
Anyone who lawfully produces or deals in merchandise of any kind or who engages in
any lawful business, or who renders any lawful service in commerce, by actual use
thereof in manufacture or trade, in business,and in the service rendered, may
appropriate to his exclusive use a trademark, a tradename, or a service mark not so
appropriated by another, to distinguish his merchandise, business or service from the
merchandise, business or service of others. The ownership or possession of a
trademark, tradename, service mark, heretofore or hereafter appropriated, as in this
section provided, shall be recognized and protected in the same manner and to the
same extent as are other property rights known to the law. (As amended by R.A. No.
638). (Kabushi Kaisha Isetan vs. Intermediate Appellate Court, 203 SCRA 583 [1991],
at pp. 589-590; emphasis supplied.)
Following universal acquiescence and comity, our municipal law on trademarks
regarding the requirement of actual use in the Philippines must subordinate an
international agreement inasmuch as the apparent clash is being decided by a
municipal tribunal (Mortensen vs. Peters, Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions 93; Paras, International Law and World Organization,
1971 Ed., p. 20). Withal, the fact that international law has been made part of the
law of the land does not by any means imply the primacy of international law over
national law in the municipal sphere. Under the doctrine of incorporation as applied
in most countries, rules of international law are given a standing equal, not superior,
to national legislative enactments (Salonga and Yap, Public International Law, Fourth
ed., 1974, p. 16).
The aforequoted basic provisions of our Trademark Law, according to Justice
Gutierrez, Jr., in Kabushi Kaisha Isetan vs. Intermediate Appellate Court (203 SCRA
583 [1991]), have been construed in this manner:
A fundamental principle of Philippine Trademark Law is that actual use in commerce
in the Philippines is a pre-requisite to the acquisition of ownership over a trademark
or a tradename.
These provisions have been interpreted in Sterling Products International, Inc. v.
Farbenfabriken Bayer Actiengesellschaft (27 SCRA 1214 [1969]) in this way:
A rule widely accepted and firmly entrenched because it has come down through the
years is that actual use in commerce or business is a prerequisite to the acquisition of
the right of ownership over a trademark.
Adoption alone of a trademark would not give exclusive right thereto. Such right
grows out of their actual use. Adoption is not use. One may make advertisements,
issue circulars, give out price lists on certain goods; but these alone would not give
exclusive right of use. For trademark is a creation of use. The underlying reason for
all these is that purchasers have come to understand the mark as indicating the
origin of the wares. Flowing from this is the trader's right to protection in the trade
he has built up and the goodwill he has accumulated from use of the trademark. . . .
In fact, a prior registrant cannot claim exclusive use of the trademark unless it uses it
in commerce.
We rule[d] in Pagasa Industrial Corporation v. Court of Appeals (118 SCRA 526
[1982]):
3. The Trademark law is very clear. It requires actual commercial use of the mark
prior to its registration. There is no dispute that respondent corporation was the first
registrant, yet it failed to fully substantiate its claim that it used in trade or business
in the Philippines the subject mark; it did not present proof to invest it with exclusive,
continuous adoption of the trademark which should consist among others, of
considerable sales since its first use. The invoices (Exhibits 7, 7-a, and 8-b) submitted
by respondent which were dated way back in 1957 show that the zippers sent to the
Philippines were to be used as "samples" and "of no commercial value". The evidence
for respondent must be clear, definite and free from inconsistencies. (Sy Ching v.
Gaw Lui, 44 SCRA 148-149) "Samples" are not for sale and therefore, the fact of
exporting them to the Philippines cannot be considered to be equivalent to the "use"
contemplated by the law. Respondent did not expect income from such "samples".
There were no receipts to establish sale, and no proof were presented to show that
they were subsequently sold in the Philippines. (Pagasa Industrial Corp. v. Court of
Appeals, 118 SCRA 526 [1982]; Emphasis Supplied) The records show that the
petitioner has never conducted any business in the Philippines. It has never
promoted its tradename or trademark in the Philippines. It is unknown to Filipino
except the very few who may have noticed it while travelling abroad. It has never
paid a single centavo of tax to the Philippine government. Under the law, it has no
right to the remedy it seeks. (at pp. 589-591.)
In other words, petitioners may have the capacity to sue for infringement irrespective
of lack of business activity in the Philippines on account of Section 21-A of the
Trademark Law but the question whether they have an exclusive right over their
symbol as to justify issuance of the controversial writ will depend on actual use of
their trademarks in the Philippines in line with Sections 2 and 2-A of the same law. It
is thus incongruous for petitioners to claim that when a foreign corporation not
licensed to do business in Philippines files a complaint for infringement, the entity
need not be actually using its trademark in commerce in the Philippines. Such a
foreign corporation may have the personality to file a suit for infringement but it may
not necessarily be entitled to protection due to absence of actual use of the emblem
in the local market.
Going back to the first assigned error, we can not help but notice the manner the
ascription was framed which carries with it the implied but unwarranted assumption
of the existence of petitioners' right to relief. It must be emphasized that this aspect
of exclusive dominion to the trademarks, together with the corollary allegation of
irreparable injury, has yet to be established by petitioners by the requisite quantum
of evidence in civil cases. It cannot be denied that our reluctance to issue a writ of
preliminary injunction is due to judicial deference to the lower courts, involved as
there is mere interlocutory order (Villarosa vs. Teodoro, Sr., 100 Phil. 25 [1956]). In
point of adjective law, the petition has its roots on a remedial measure which is but
ancillary to the main action for infringement still pending factual determination before
the court of origin. It is virtually needless to stress the obvious reality that critical
facts in an infringement case are not before us more so when even Justice Feliciano's
opinion observes that "the evidence is scanty" and that petitioners "have yet to
submit copies or photographs of their registered marks as used in cigarettes" while
private respondent has not, for its part, "submitted the actual labels or packaging
materials used in selling its "Mark" cigarettes." Petitioners therefore, may not be
permitted to presume a given state of facts on their so called right to the trademarks
which could be subjected to irreparable injury and in the process, suggest the fact of
infringement. Such a ploy would practically place the cart ahead of the horse. To our
mind, what appears to be the insurmountable barrier to petitioners' portrayal of
whimsical exercise of discretion by the Court of Appeals is the well-taken remark of
said court that:
The petitioner[s] will not be prejudiced nor stand to suffer irreparably as a
consequence of the lifting of the preliminary injunction considering that they are not
actually engaged in the manufacture of the cigarettes with the trademark in question
and the filing of the counterbond will amply answer for such damages. (p.
54. Rollo in G.R. No. 91332.)
More telling are the allegations of petitioners in their complaint (p. 319, Rollo G.R. No.
91332) as well as in the very petition filed with this Court (p. 2, Rollo in G.R. No.
91332) indicating that they are not doing business in the Philippines, for these frank
representations are inconsistent and incongruent with any pretense of a right which
can breached (Article 1431, New Civil Code; Section 4, Rule 129; Section 3, Rule 58,
Revised Rules of Court). Indeed, to be entitled to an injunctive writ, petitioner must
show that there exists a right to be protected and that the facts against which
injunction is directed are violative of said right (Searth Commodities Corporation vs.
Court of Appeals, 207 SCRA 622 [1992]). It may be added in this connection that
albeit petitioners are holders of certificate of registration in the Philippines of their
symbols as admitted by private respondent, the fact of exclusive ownership cannot
be made to rest solely on these documents since dominion over trademarks is not
acquired by the mere fact of registration alone and does not perfect a trademark
right (Unno Commercial Enterprises, Inc. vs. General Milling Corporation, 120 SCRA
804 [1983]).
Even if we disregard the candid statements of petitioners anent the absence of
business activity here and rely on the remaining statements of the complaint below,
still, when these averments are juxtaposed with the denials and propositions of the
answer submitted by private respondent, the supposed right of petitioners to the
symbol have thereby been controverted. This is not to say, however, that the manner
the complaint was traversed by the answer is sufficient to tilt the scales of justice in
favor of private respondent. Far from it. What we are simply conveying is another
basic tenet in remedial law that before injunctive relief may properly issue,
complainant's right or title must be undisputed and demonstrated on the strength of
one's own title to such a degree as to unquestionably exclude dark clouds of doubt,
rather than on the weakness of the adversary's evidence, inasmuch as the possibility
of irreparable damage, without prior proof of transgression of an actual existing right,
is no ground for injunction being mere damnum absque injuria (Talisay-Silay Milling
Co., Inc. vs. CFI of Negros Occidental, 42 SCRA 577 [1971]; Francisco, Rules of Court,
Second ed., 1985, p. 225; 3 Martin, Rules of Court, 1986 ed., p. 82).
On the economic repercussion of this case, we are extremely bothered by the
thought of having to participate in throwing into the streets Filipino workers engaged
in the manufacture and sale of private respondent's "MARK" cigarettes who might be
retrenched and forced to join the ranks of the many unemployed and unproductive
as a result of the issuance of a simple writ of preliminary injunction and this, during
the pendency of the case before the trial court, not to mention the diminution of tax
revenues represented to be close to a quarter million pesos annually. On the other
hand, if the status quo is maintained, there will be no damage that would be suffered
by petitioners inasmuch as they are not doing business in the Philippines.
With reference to the second and third issues raised by petitioners on the lifting of
the writ of preliminary injunction, it cannot be gainsaid that respondent court acted
well within its prerogatives under Section 6, Rule 58 of the Revised Rules of Court:
Sec. 6. Grounds for objection to, or for motion of dissolution of injunction. — The
injunction may be refused or, if granted ex parte, may be dissolved, upon the
insufficiency of the complaint as shown by the complaint itself, with or without notice
to the adverse party. It may also be refused or dissolved on other grounds upon
affidavits on the part of the defendants which may be opposed by the plaintiff also by
affidavits. It may further be refused or, if granted, may be dissolved, if it appears
after hearing that although the plaintiff is entitled to the injunction, the issuance or
continuance thereof, as the case may be, would cause great damage to the
defendant while the plaintiff can be fully compensated for such damages as he may
suffer, and the defendant files a bond in an amount fixed by the judge conditioned
that he will pay all damages which the plaintiff may suffer by the refusal or the
dissolution of the injunction. If it appears that the extent of the preliminary injunction
granted is too great, it must be modified.
Under the foregoing rule, injunction may be refused, or, if granted, may be dissolved,
on the following instances:
(1) If there is insufficiency of the complaint as shown by the allegations
therein. Refusal or dissolution may be granted in this case with or without notice to
the adverse party.
(2) If it appears after hearing that although the plaintiff is entitled to the injunction,
the issuance or continuance thereof would cause great damage to the defendant,
while the plaintiff can be fully compensated for such damages as he may suffer. The
defendant, in this case, must file a bond in an amount fixed by the judge conditioned
that he will pay all damages which plaintiff may suffer by the refusal or the
dissolution of the injunction.
(3) On the other grounds upon affidavits on the part of the defendant which may be
opposed by the plaintiff also affidavits.
Modification of the injunction may also be ordered by the court if it appears that the
extent of the preliminary injunction granted is too great. (3 Martin, Rules of Court,
1986 ed., p. 99; Francisco, supra, at p. 268.)
In view of the explicit representation of petitioners in the complaint that they are not
engaged in business in the Philippines, it inevitably follows that no conceivable
damage can be suffered by them not to mention the foremost consideration
heretofore discussed on the absence of their "right" to be protected. At any rate, and
assuming in gratia argumenti that respondent court erroneously lifted the writ it
previously issued, the same may be cured by appeal and not in the form of a petition
for certiorari (Clark vs. Philippine Ready Mix Concrete Co., 88 Phil. 460 [1951]). Verily,
and mindful of the rule that a writ of preliminary injunction is an interlocutory order
which is always under the control of the court before final judgment, petitioners'
criticism must fall flat on the ground, so to speak, more so when extinction of the
previously issued writ can even be made without previous notice to the adverse party
and without a hearing (Caluya vs. Ramos, 79 Phil. 640 [1974]; 3 Moran, Rules of
Court, 1970 ed., p. 81).
WHEREFORE, the petition is hereby DISMISSED and the Resolutions of the Court of
Appeals dated September 14, 1989 and November 29, 1989 are hereby AFFIRMED.
SO ORDERED.
Bidin, J., concurs.
Davide, Jr., concurs in the result.
Romero, J. took no part.
Separate Opinions
FELICIANO, J., dissenting:
I find myself unable to join in the opinion prepared by my distinguished brother,
Melo, J.
It seems to me that the issues involved in this case are rather more complex than
what has been assumed to be the case by the majority opinion. For this and related
reasons, there is set out below a statement of the relevant facts (as I see them) that
is more extensive than what is ordinarily found in dissenting opinions.
Petitioner Philip Morris, Inc. is a corporation organized and existing under the law of
Virginia, U.S.A. Petitioners Benson & Hedges (Canada), Inc. and Fabriques de Tabac
Reunies, S.A., both wholly owned subsidiaries of Philip Morris, Inc., are organized
and existing under the law of Canada and Switzerland, respectively.
Philip Morris, Inc. is registered owner of the trademark "MARK VII" for cigarettes. Its
ownership thereof is evidenced by Philippine Patent Office Trademark Certificate of
Registration No. 18723, dated 26 April 1973. The statement attached to the
Certificate of Registration states that the trademark "MARK VII" had been registered
in the United States Patent Office, on the Principal Register, under Certificate of
Registration No. 888,931 issued on 7 April 1970. The statement also requested that
the trademark be registered in the Philippine Patent Office on the Principal Register in
accordance with Section 37 of R.A. No. 166, as amended.
Benson & Hedges (Canada), Inc. is the registered owner of the trademark "MARK
TEN" also for cigarettes, as evidenced by Philippine Patent Office Trademark
Certificate of Registration No. 11147, dated 28 May 1964, on the Principal Register.
This Trademark Certificate of Registration was originally issued in the name of
Canadian Tabacofina Ltd. and later assigned to Benson & Hedges (Canada), Inc.
Petitioners alleged that the name Canadian Tabacofina Ltd. was later changed to
Benson & Hedges (Canada) Ltd. This trademark Certificate of Registration was
renewed on 28 May 1984. The statement attached thereto stated that the " date of
first use of the trademark 'MARK TEN' in trade in or with the Philippines is April 15,
1963," and that trademark had "been in actual use in commerce over the Philippines
continuously for two months."
Fabriques de Tabac Reunies, S.A. is registered owner of the trademark "LARK" also
for cigarettes, as evidenced by Philippine Patent Office Trademark Certificate of
Registration No. 10953, dated 25 March 1964. This Trademark Certificate of
Registration was originally issued in the name of Ligget and Myres Tobacco Company
was later assigned to Fabriques de Tabac Reunies, S.A. Petitioners alleged that the
name of Liggett and Myres Tobacco Company was changed later to Fabriques de
Tabac Reunies, S.A. The statement attached to this Certificate of Registration states
that the trademark "LARK" was first used by Ligget and Myres Tobacco Company on
31 May 1920, and first used by it "in commerce in or with the Philippines on February
6, 1963" and has been continuously used by it "in trade in or with the Philippines
since February 6, 1963."
Sometime before 17 October 1981, private respondent Fortune Tobacco Corporation
("Fortune") commenced manufacturing and selling in the Philippines cigarettes under
the brandname "MARK." Fortune also filed on 13 February 1981 with the Philippine
Patent Office an application for registration of "MARK" as a trademark for cigarettes.
By a letter dated 17 October 1981, petitioner through their lawyers wrote to Fortune
stating that the manufacturing, selling and advertising of "MARK" cigarettes by
Fortune constituted an "infringement or an act of unfair competition with" petitioners'
"well-known international trademarks used on cigarettes and tobacco products which
were registered worldwide and with the Philippine Patent Office." Petitioners listed
their Philippine Certificates of Registration for the trademarks "MARK VII," "MARK
TEN," and "LARK." Petitioners then asked Fortune "to cease and desist from further
manufacturing; selling or advertising 'MARK' cigarettes," otherwise appropriate court
actions would be filed without further notice.
On 18 August 1982, petitioners commenced action before the Court of First Instance
of Pasig, Metro Manila (Civil Case No. 47374). In their complaint, petitioners alleged
that they were not doing business in the Philippines but had nonetheless the right
and the capacity to bring the instant suit; that they were owners of Philippine Patent
Office Trademark Certificates of Registration which were in full force and effect,
covering "MARK VII," "MARK TEN," and "LARK," all for cigarettes (except the last
which also covered chewing and smoking tobacco); that they had registered those
trademarks in their respective countries of origin and in other countries the world and
that by virtue of their "long and extensive use [had] gained international fame and
acceptance;" that they had their respective real and effective industrial or commercial
establishments in the United States, Canada and Switzerland, which countries were,
like the Philippines, members of the Convention of Paris for the Protection of
Industrial Property; that under that Convention each member-country undertakes to
prohibit the use of a trademark which constitutes a reproduction, imitation or
translation of a mark already belonging to a person entitled to the benefits of the
Convention and use for identical or similar goods; that petitioner Fabriques de Tabac
Reunies, S.A. had long been using trademark "LARK" throughout the world, including
the Philippines where its products bearing the trademark "LARK" had been sold in the
duty-free market, and advertised and marketted in the Philippines at least since 1964
and have continued to be so to present; that Fortune had without previous consent,
authority or license from petitioners, with knowledge of the popularity of petitioners'
marks and their Philippine registrations, manufactured, advertised and sold cigarettes
bearing the identical or confusingly similar trademark "MARK" which unauthorized use
constituted an act of infringement under Section 22 of R.A. No. 166, as amended;
that thereby the public and the patronizers of petitioners' products were being
deceived into buying Fortune's cigarettes under the impression and mistaken belief
that Fortune's cigarettes were identical with, or came from the same source as,
petitioners' products or that Fortune was licensee of petitioners, which it was not;
that the infringement by Fortune of petitioners' trademarks have inflicted damages
upon petitioners; that the continued unauthorized and unlicensed manufacture and
sale by Fortune of its infringing products during the litigation would work injustice
and cause irreparable injury to petitioners in violation of their property rights and
moreover tend to render the judgment which the court might render ineffectual.
Petitioners accordingly asked for a writ of preliminary injunction to restrain Fortune
from manufacturing or selling "MARK" cigarettes, and after trial, to make such
preliminary injunction permanent and to order Fortune's infringing materials to be
destroyed, and for damages.
Fortune filed an Opposition to petitioners' prayer for preliminary injunction. On 28
March 1983, the trial court1 issued an Order denying petitioners' motion for
preliminary injunction. In rendering that order, the trial court, while noting that
petitioners were holders of Philippine Certificates of Trademark Registration, relied
heavily on three (3) factors:
Firstly, that petitioners were foreign corporations not doing business in the
Philippines;
Secondly, that Fortune's application for a registration as trademark of the word
"MARK" for cigarettes was then pending before the Philippine Patent Office; and
Thirdly, that Fortune was the "only party authorized" by the Bureau of Internal
Revenue ("BIR") to manufacture cigarettes bearing the mark "MARK" in the
Philippines.
In respect of the first point, the trial court was obviously heavily influenced by
Fortune's argument that because petitioners were not doing business in the
Philippines, which meant that "they [were] not engaged in the sale, manufacture,
importation, exportation and advertisement of their cigarette products in the
Philippines," Fortune's manufacture and sale of its "MARK" cigarettes could not be
said to be causing petitioners "irreparable damage" within the Philippines. In respect
to the second point, the trial judge felt that because the Director of Patents had not,
at that point, denied Fortune's pending application for registration of its trademark
"MARK," the grant of a preliminary injunction was premature. With regard to the third
point, the judge noted a letter dated 30 January 1979 2 of the then Acting
Commissioner of Internal Revenue Mr. Conrado P. Diaz, temporarily granting the
request of Fortune for a permit to manufacture two (2) new brands of cigarettes, one
of which was "MARK." The trial judge also noted that the BIR letter contained the
following paragraph:
Please be informed further that this authority herein granted does not give you
protection against any person or entity whose rights may be prejudiced by
infringement or unfair competition in relation to your above named
brands/trademarks. 3
The trial judge, however, apparently gave no weight at all to this caveat.
Petitioners sought, on 15 April 1983, reconsideration of Judge Reyes' Order denying
preliminary injunction. After Fortune had filed an Opposition to petitioners' Motion for
Reconsideration, and petitioners had filed their Reply and Fortune a Rejoinder, and
after an offer of exhibits by the parties respectively, Judge Reyes issued on 5 April
1984 another Order denying the Motion for Reconsideration. In his second order, the
trial judge laid great stress on the fact that Fortune's application for registration of its
trademark "MARK" for cigarettes remained subsisting. On the basis, Judge Reyes
denied petitioners' motion for reconsideration.
More than two (2) years later, petitioners filed a "Second Motion for Issuance of
Preliminary Injunction" dated 1 September 1986. In their Second Motion, petitioners
invited attention to Paper No. 3, dated 6 April 1983, relating to Fortune's application
for registration of its brandname "MARK." This Paper No. 3 reproduced a letter to
Fortune's counsel by Bienvenido A. Palisoc, Senior Trademark Examiner, and Wilfredo
T. Jaramillo, Trademark Examiner, stating that:
This application [for registration of "Mark"] has been examined.
Caption mark of the application must tally with the drawing on file.
Subject mark is confusingly similar with the following marks on file:
a. "Mark" with Reg. No. SR-2659 for cigarettes.
b. "Mark VII" with Reg. No. 18723 for cigarettes.
c. "Mark Ten" with Reg. No. 11147 for cigarettes.
d. "Lark" with Reg. No. 10953 for cigarettes.
Hence, registration is barred under Sec . 4 (d) of Rep. Act No. 166 as amended.
Subject mark has no trademark significance and can not serve its purpose as to
indicate the source and origin of goods.
Furthermore, the word "Mark" is generic and therefore incapable of exclusive
appropriation.
Makati, Metro Manila, April 6, 1983. 4 (Emphasis supplied)
Petitioners also invited attention to a certification dated 8 August 1986 issued by Mr.
Luis M. Daca, Jr., Assistant Director, Philippine Patent Office, to the effect that
Fortune's application for the mark "MARK" for cigarettes was declared abandoned as
of 16 February 1986 and was now deemed forfeited. In addition, petitioners
explained in some detail how Fortune's use of its mark "MARK" was "destructive of
[petitioners'] property right to [their] registered trademarks."5 Further, petitioners
assailed Fortune's argument that issuance of preliminary injunction would cause "loss
of revenue and taxes to the Government" and that more damages would be
sustained by Fortune than by petitioners since the petitioners do not market their
cigarettes in the Philippines.
After Fortune had filed an Opposition to petitioners' Second Motion, the trial court,
this time presided over by Judge Nicolas Galing, issued an Order dated 22 April 1987
denying once more the motion for issuance of a writ of preliminary injunction. In this
order, Judge Galing relied on two (2) points: firstly, according to the trial judge,
petitioners had not shown that the products they sought to protect from Fortune's
"MARK" cigarettes were "in actual use and available for commercial purposes
anywhere in the Philippines;" and secondly, it appeared that while Fortune's original
application had been abandoned, it could be refiled and was in fact re-filed. Thus,
Judge Galing in effect reiterated Judge Reyes's position that until the Director of
Patents had definitely acted upon Fortune's application for registration of "MARK,"
petitioners' prayer for preliminary injunction could not be granted.
Petitioners then filed a Petition for Review with the Supreme Court, which Petition
was docketed as G.R. No. 78141. The Court ordered respondents to file their
Comments on the Petition and on 30 September 1987, the Court referred the Petition
to the Court of Appeals.
In due course of time, the Court of Appeals, through Cacdac, Jr., J.,6 rendered a
decision on 5 May 1989 setting aside the 22 April 1987 order of the trial court and
ordering issuance of a writ of preliminary injunction upon filing of a bond by
petitioners in the sum of P200,000.00 to be approved by the appellate court,
"enjoining the private respondents, its agents, employees and representatives from
manufacturing, selling and/or advertising "MARK" cigarettes until further orders." The
Court of Appeals said in pertinent part:
There is no dispute that petitioners are the registered owners of the trademarks for
cigarettes "MARK VII," "MARK TEN," and "LARK". (Annexes B, C and D, Petition). As
found and reiterated by the Philippine Patent Office in two (2) official
communications dated April 6, 1983 and January 24, 1984, the trademark "MARK" is
"confusingly similar" to the trademarks of petitioners, hence, registration was barred
under Sec. 4(d) of Rep. Act No. 166, as amended (pp. 106, 139 SCA rollo). In a third
official communication dated April 8, 1986, the trademark application of private
respondent for the mark "MARK" under Serial No. 44008 filed on February 13, 1981
which was declared abandoned as of February 16, 1986, is now deemed forfeited,
there being no revival made pursuant to Rule 98 of the Revised Rules of Practitioners
in Trademark Cases.' (p. 107, CA rollo). The foregoing documents or communications
mentioned by petitioners as "the changes in material facts which occurred after
March 28, 1983", are not also questioned by respondents.7 (Emphasis supplied)
The Court of Appeals also noted the BIR letter of 30 January 1979 temporarily
granting Fortune's request for a permit to manufacture two (2) new brands of
cigarettes, including one branded "MARK," and the caveat (earlier noted)8 that the
BIR's authorization would not give Fortune any protection against any person or
entity whose rights may be prejudiced by infringement or unfair competition on the
part of Fortune. The Court of Appeals also referred to the certificate dated 26
September 1986 of Mr. Cesar G. Sandico, then Director of Patents, issued upon
request of Fortune's counsel stating that there was a pending application for
registration of the trademark "MARK" for cigarettes under Serial No. 59872, filed on
16 September 1986, noting at the same time, that Director Sandico's certification
contained the following caveat or qualification:
This certification, however, does not give protection as against any person or entity
whose right may be prejudiced by infringement or unfair competition in relation to
the aforesaid trademark nor the right to register as contrary to the provisions of the
Trademark Law, Republic Act No. 166 as amended and the Revised Rules of Practice
in Trademark Cases. (Emphasis supplied)
The Court of Appeals then went on to say that:
[We] believe and hold that petitioners have shown a prima facie case for the
issuance of the writ of prohibitory injunction for the purposes stated in their
complaint and subsequent motions for the issuance of the prohibitory writ. (Buayan
Cattle Co. v. Quintillan, 125 SCRA 276).
The requisites for the granting of preliminary injunction are the existence of the right
protected and the facts against which the injunction is to be directed as violative of
said right. (Buayan Cattle Co. v. Quintillan, supra; Ortigas & Co. vs. Ruiz, 148 SCRA
326). It is a writ framed according to the circumstances of the case commanding an
act which the Court regards as essential to justice and restraining an act it deems
contrary to equity and good conscience (Rosauro vs. Cuneta, 151 SCRA 570). If it is
not issued, the defendant may, before final judgment, do or continue the doing of
the act which the plaintiff asks the court to restrain, and thus make ineffectual the
final judgment rendered afterwards granting the relief sought by the plaintiff (Calo vs.
Roldan, 76 Phil. 445). Generally, its grant or denial rests upon the sound discretion of
the Court except on a clear case of abuse (Belish Investment & Finance Co. vs.
Statement House, 151 SCRA 636). Petitioners' right of exclusivity to their registered
trademarks being clear and beyond question, the respondent court's denial of the
prohibitive writ constituted excess of jurisdiction and grave abuse of discretion . If the
lower court does not grant preliminary injunction, the appellate court may grant the
same (Service Specialists, Inc. v. Sheriff of Manila. 145 SCRA 139).9 (Emphasis
supplied)
Fortune moved for reconsideration of the Decision of the Court of Appeals insisting
that petitioners must first prove their "clear, unmistakable and unquestioned right to
the writ, coupled with the possible damages it would suffer;" that petitioners had not
suffered any "great and irreparable injury to speak of" because "petitioners have
never done business in this country in the past nor in the future;" that, on the other
hand, Fortune had been authorized by the BIR to manufacture "MARK" cigarettes,
"thereby generating much needed funds for the Government;" that Fortune's
application for registration of its brandname "MARK" with the Philippine Patent Office
"still pending" and not "finally rejected" by the Director of Patents. On 12 July 1989,
the Court of Appeals issued a Minute Resolution stating that the issues and
arguments in Fortune's motion for reconsideration had been "fully discussed" in the
Decision sought to be reconsidered, that no new arguments were raised, and
accordingly denied the Motion for Reconsideration.
Fortune then filed a "Motion to Dissolve Writ of Preliminary Injunction with Offer to
File Counterbond" date 25 July 1989, where it reiterated the basic arguments it
previously made.
A "Supplemental Motion to Lift Writ of Preliminary Injunction with Offer of
Counterbond" dated 17 August 1989 was next filed by Fortune. In this "Supplemental
Motion," Fortune averred that it had paid to the BIR for 1988 the amount of
P181,940,177.38 for specific taxes; while for January to July 1989, it had paid the
amount of P120,120,735.28. Fortune also referred to its employees assigned to the
manufacture of "MARK" cigarettes who were apparently apprehensive that their
services would eventually be terminated and that they would join the ranks of the
unemployed.
Petitioners filed an Opposition to the "Motion to Dissolve" and a Comment on the
"Supplemental Motion" of Fortune.
On 14 September 1989, the Court of Appeals once more through Cacdac,
Jr., J. issued a Resolution lifting the preliminary injunction it had earlier granted upon
the filing of counterbond by private respondent in the amount of P400,000.00 to
answer for any damages petitioners may suffer as a consequence of such lifting. In
its Resolution, the Court of Appeals referred to the "lots of workers employed [who]
will be laid off as a consequence of the injunction" and that Government "will stand
to lose the amount of specific taxes being paid by" Fortune. It when went on to say:
After a thorough re-examination of the issues involved and the arguments advanced
by both parties in the offer to file a counterbond and the opposition thereto, WE
believe that there are sound and cogent reasons for Us to grant the dissolution of the
writ of preliminary injunction by the offer of the private respondent to put up a
counterbond to answer for whatever damages the petitioner may suffer as a
consequence of the dissolution of the preliminary injunction.
The petitioner will not be prejudiced nor stand to suffer irreparably as a consequence
of the lifting of the preliminary injunction considering that they are not actually
engaged in the manufacture of the cigarettes with the trademarks in question and
the filing of the counterbond will amply answer for such damages.
While the rule is that an offer of a counterbond does not operate to dissolve an
injunction previously granted, nevertheless, it is equally true that an injunction could
be dissolved only upon good and valid grounds subject to the sound discretion of the
court. As WE have maintained the view that there are sound and good reasons to lift
the preliminary injunction the motion to file a counterbond is granted. 10(Emphasis
supplied)
Petitioners filed a Motion for Reconsideration, without success.
In the instant Petition, petitioners make the following basic submissions:
1. that the Court of Appeals gravely abused its discretion amounting to excess of
jurisdiction when it required, contrary to law and jurisprudence that in order that
petitioners may suffer irreparable injury due to the lifting of the injunction, petitioners
should be using actually their registered trademarks in commerce in the Philippines;
2. that the Court of Appeals gravely abused its discretion amounting to excess of
jurisdiction when it lifted the injunction in violation of Section 6 of Rule 58 of the
rules of Court;
3. that the Court of Appeals gravely abused its discretion amounting to excess of
jurisdiction when, after having found that the trial court had committed grave abuse
of discretion and exceeded its jurisdiction for having refused to issue the writ of
injunction to restrain respondent's acts that are contrary to equity and good
conscience, it made a complete about face for legally insufficient grounds and
authorized private respondent to continue performing the very same acts that it had
considered contrary to equity and good conscience, thereby ignoring not only the
mandates of the trademark law, the international commitments of the Philippines, the
judicial admission of private respondent that it will have no more right to use the
trademark "MARK" after the Director of Patents shall have rejected the application to
register it, and the admonitions of the Supreme Court. 11
The Court required private respondent to file a comment. The comment reiterated
the basic arguments made by private respondent before the Court of Appeals:
a. the petitioners are not suffering any irreparable damage by the lifting of the
preliminary injunction by the Court of appeals. Whatever damages they might suffer
are "based purely on speculation, since by judicial admission, petitioners are not
doing business in the Philippines. Private respondent stressed that petitioners "are
not manufacturing, importing or selling "MARK TEN," "MARK VII" or "LARK" in this
country," notwithstanding "false allegation" that petitioners have been "using" the
said trademarks "in commerce and trade" in the Philippines since 1963 up to the
present.
b. that whatever damage petitioners may be suffering is negligible when compared to
the taxes that would have to be foregone by the Government considering that private
respondent "paid an annual specific tax of P240 Million only on the manufacture and
sale of "MARK cigarettes." Private respondent claims that, in contrast, petitioners
which are foreign corporations "based in three different countries" have not
contributed anything to Government tax revenues.
c. that the Court of Appeals lifted the writ of preliminary injunction it had earlier
issued upon the submission of a counter bond in double the amount of the bond
submitted by petitioners, under Section 6, Rule 58 of the Rules of Court, which act
was within the sound discretion of the Court of Appeals . Private respondent also
stresses that the right of petitioners to the injunction was still being litigated before
the trial court.
Reformulating the issues raised by the petitioners here, we think the principal issues
may be reduced to the following: firstly, is there a clear legal right to the relief asked
by petitioners in the form of a preliminary injunction to restrain private respondent
from manufacturing, selling and distributing cigarettes under the trademark "MARK"?
The second question is: are private respondent's acts complained of by petitioners
causing irreparable injury to petitioners' rights in the premises? These two (2) basic
issues are obviously related and need to be addressed together.
I
The first point that needs to be stressed is that petitioners have Philippine Certificates
of Registration for their trademarks "MARK TEN", "MARK VII," and "LARK" in the
Principal Register.
Upon the other hand, private respondent's trademark "MARK" is not registered in the
Principal Register in the Office of the Director of Patents; private respondents is
simply an applicant for registration of a mark, the status of which application may be
noted later.
It is important to stress the legal effects of registration of a trademark in the Principal
Register in the Office of the Director of Patents. Section 20 of R.A. No. 166, as
amended, sets out the principal legal effects of such registration:
Sec. 20. Certificate of registration prima facie evidence of validity. — A certificate of
registration, of a mark or a trade name shall be prima facie evidence of the validity of
the registration, the registrant's ownership of the mark or trade name, and of the
registrant's exclusive right to use the same in connection with the goods, business or
services specified in the certificate, subject to any conditions and limitations stated
therein. (Emphasis supplied)
In Lorenzana v. Macagba, 12 the Court distinguished between the effects of
registration in the Principal Register and registration in the Supplemental Register in
the following manner:
(1) Registration in the Principal Register gives rise to a presumption of the validity of
the registration, the registrant's ownership of the mark, and his right to the exclusive
use thereof. There is no such presumption in registrations in the Supplemental
Register.
(2) Registration in the Principal Register is limited to the actual owner of the
trademark (Unno Commercial Enterprises v. Gen. Milling Corp., 120 SCRA 804 [1983])
and proceedings therein pass on the issue of ownership, which may be contested
through opposition or interference proceedings, or after registration, in a petition for
cancellation.
Registration in the Principal Register is constructive notice of the registrant's claims of
ownership, while registration in the Supplemental Register is merely proof of actual
use of the trademark and notice that the registrant has used or appropriated it. (Le
Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 373 [1984]: "Registration in the
Supplemental Register . . . serves as notice that the registrant is using or has
appropriated the trademark.") It is not subject to opposition although it may be
cancelled after its issuance. Corollarilly, registration in the Principal Register is a basis
for an action for infringement, while registration in the Supplemental Register is not.
(3) In application for registration in the Principal Register, publication of the
application is necessary. This is not so in applications for registration in the
Supplemental Register. Certificates of registration under both Registers are also
different from each other.
(4) Proof of registration in the Principal Register may be filed with the Bureau of
Customs to exclude foreign goods bearing infringing marks while it does not hold true
for registrations in the Supplemental Register. 13 (Emphasis supplied)
When taken with the companion presumption of regularity of performance of official
duty, it will be seen that issuance of a Certificate of Registration of a trademark in
the Principal Register also gives rise to the presumption that
all requirements of Philippine law necessary for a valid registration (including prior
use in commerce in the Philippines for at least two [2] months) were complied with
and satisfied.
In contrast, private respondent filed an application for registration of its mark "MARK"
for cigarettes with the Director of Patents soon after it commenced manufacturing
and selling cigarettes trademark with "MARK." This application was abandoned or
"forfeited", 14 for failure of private respondent to file a necessary Paper with the
Director of Patent. It also appears, however, that private respondent later re-filed or
reinstated its application for registration of "MARK" 15 and that, so far as the record
here before us is concerned, this application remains merely an application and has
not been granted and a Certificate of Registration in the Principal Register
issued. 16 While final action does not appear as yet to have been taken by the
Director of Patents on private respondent's application, there was at least a
preliminary determination of the trademark examiners that the trademark "MARK"
was "confusingly similar" with petitioners' marks "MARK VII," "MARK TEN" and
"LARK" and that accordingly, registration was barred under Section 4 (d) of R.A. No.
166, as amended. 17
In the trial court, both Judge Reyes and Judge Galing took the position that until the
Director of Patents shall have finally acted on private respondent's application for
registration of "MARK," petitioners cannot be granted the relief of preliminary
injunction. It is respectfully submitted that this position is both erroneous and
unfortunate. In reliance upon that position, private respondent has kept its
application for registration alive and pending. The Director of Patents in turn may
well have refrained from taking final action on that application, even in the absence
of a restraining order from the courts, out of deference to the courts. The pendency
of the application before the Director of Patents is not in itself a reason for denying
preliminary injunction. Our courts have jurisdiction and authority to determine
whether or not "MARK" is an infringement on petitioners' registered trademarks.
Under our case law, the issuance of a Certificate of Registration of a trademark in the
Principal Register by the Director of Patents would not prevent a court from ruling on
whether or not the trademark so granted registration is confusingly similar with a
previously registered trademark, where such issue is essential for resolution of a case
properly before the court. A fortiori, a mere application for registration cannot be a
sufficient reason for denying injunctive relief, whether preliminary or definitive. In the
case at bar, petitioners' suit for injunction and for damages for infringement, and
their application for a preliminary injunction against private respondent, cannot be
resolved without resolving the issue of claimed confusing similarity.
In the case at bar, the evidence of record is scanty. Petitioners have not submitted
actual copies or photographs of their registered marks as used in cigarettes. Private
respondent has not, for its part, submitted the actual labels or packaging material
used in selling its "MARK" cigarettes. Petitioners have appended to their Petition a
photocopy of an advertisement of "MARK" cigarettes. Private respondent has not
included in the record a copy of its application for registration of "MARK" for
cigarettes, which would include a facsimile of the trademark being applied for. It
should be noted that "MARK" and "LARK," when read or pronounced orally,
constitute idem sonans in striking degree. Further, "MARK" has taken over the
dominant word in "MARK VII" and "MARK TEN." These circumstances, coupled with
private respondent's failure to explain how or why it chose, out of all the words in the
English language, the word "mark" to refer to its cigarettes, lead me to the
submission that there is a prima facie basis for holding, as the Patent Office has held
and as the Court of Appeals did hold originally, that private respondent's "MARK"
infringes upon petitioners' registered trademarks.
II
There is thus no question as to the legal rights of petitioners as holders of
trademarks registered in the Philippines. Private respondent, however, resists and
assails petitioners' effort to enforce their legal rights by heavily underscoring the fact
that petitioners are not registered to do business in the Philippines and are not in fact
doing business in the Philippines. It is thus necessary to determine what
consequences, if any, flow from this circumstance so far as enforcement of
petitioners' rights as holders of registered Philippine trademarks is concerned.
It should be stressed at the outset that circumstance has no legal impact upon the
right of petitioners to own and register their trademarks in the Philippines. Section 2
of R.A. No. 166 as amended expressly recognizes as registrable, under this statute,
marks which are owned by corporations domiciled in any foreign country:
Sec. 2. What are registrable. — Trademarks, trade names and service marks owned
by persons, corporations, partnerships or associations domiciled in the Philippines
and by persons, corporations, partnerships or associations domiciled in any foreign
country may be registered in accordance with the provisions of this Act; Provided,
That said trade marks, trade names or service marks are actually in use in commerce
and services not less than two months in the Philippines before the time the
applications for registration are filed: And provided further, That the country of which
the applicant for registration is a citizen grants by law substantially similar privileges
to citizens of the Philippines, and such fact is officially certified, with a certified true
copy of the foreign law translated into the English language, by the government of
the foreign country to the Government of the Republic of the Philippines. (Emphasis
suppplied)
It is also entirely clear that foreign corporations and corporations domiciled in a
foreign country are not disabled from bringing suit in Philippine courts to protect their
rights as holders of trademarks registered in the Philippines. Under Section 21-A of
R.A. No. 166, as amended, any foreign corporation which is a holder of a trademark
registered under Philippine law may bring an action for infringement of such mark or
for unfair competition or false designation of origin and false description "whether or
not it has been licensed to do business in the Philippines under the [Corporation Law]
at the time it brings complaint, subject to the proviso that:
. . . that the country of which the said foreign corporation or juristic person is a
citizen or in which it is domiciled by treaty, convention or law, grants similar privilege
to corporate or juristic persons of the Philippines. (Emphasis supplied)
The rule thus embodied in Section 21-A of R.A. No. 166 as amended is also set out in
Article 2 of the Paris Convention for the Protection of Industrial Property ("Paris
Convention"), to which the Philippines, the United States, Canada and Switzerland
are all parties. 18 Article 2 of the Paris Convention provides in relevant part:
Article 2
(1) Nationals of any country of the Union shall, as regards the protection of industrial
property, enjoy in all the other countries of the Union the advantages that their
respective laws now grant, or may hereafter grant, to nationals; all without prejudice
to the rights specially provided for by this Convention. Consequently, they shall have
the same protection as the latter, and the same legal remedy against any
infringement of their rights, provided that the conditions and formalities imposed
upon national are complied with.
(2) However, no requirement as to domicile or establishment in the country where
protection is claimed may be imposed upon nationals of countries of the Union for
the enjoyment of any industrial property rights.
Article 2, paragraph 1 of the Paris Convention embodies the principle of "national
treatment" or "assimilation with nationals," one of the basic rules of the
Convention. 19 Under Article 2, paragraph 1 of the Paris Convention, nationals of
Canada, Switzerland and the United States who are all countries of the Paris Union
are entitled to enjoy in the Philippines, also a country of the Union, the advantages
and protections which Philippine law grants to Philippine nationals. Article 2
paragraph 2 of the Paris Convention restrains the Philippines from imposing a
requirement of local incorporation or establishment of a local domicile as a pre-
requisite for granting to foreign nationals the protection which nationals of the
Philippines are entitled to under Philippine law in respect of their industrial property
rights. It should be noted that Article 2, paragraph 2 also constitutes proof of
compliance with the requirement of reciprocity between, on the one hand, the
Philippines and, on the other hand, Canada, Switzerland and the United States
required under Section 21-A of R.A. No. 166 as amended.
The net effect of the statutory and treaty provisions above referred to is that a
corporate national of a member country of the Paris Union is entitled to bring in
Philippine courts an action for infringement of trademarks, or for unfair competition,
without necessity for obtaining registration or a license to do business in the
Philippines. Article 2 as quoted above is in effect with respect to all four (4) countries.
Such has been the rule in our jurisdiction even before the enactment of R.A. No. 166
and before the Philippines became a party to the Paris Convention. In Western
Equipment and Supplies Company, et al. v. Reyes, etc., et al. , 20 petitioner Western
Electrical Company, a U.S. manufacturer of electrical and telephone equipment and
supplies not doing business in the Philippines, commenced action in a Philippine court
to protect its corporate name from unauthorized use thereof by certain Philippine
residents. The Philippine residents sought to organize a Philippine corporation to be
known as "Western Electrical Company" for the purpose of manufacturing and selling
electrical and telephone equipment in the Philippines. The local residents resisted the
suit by contending, inter alia, that the petitioner Western Electrical Company had
never transacted business in the Philippines and that registration of private
respondent's articles of incorporation could not in any way injure petitioner. The
Supreme Court, in rejecting this argument, stated that:
. . . a foreign corporation which has never done business in the Philippines — but is
widely and favorably known in the Philippines through the use therein of its products
bearing its corporate name and tradename has a legal right to maintain an action in
the [Philippines]. The purpose of such a suit is to protect its reputation, corporate
name and goodwill which has been established through the natural development of
its trade for a long period of years in the doing of which it does not seek to enforce
any legal or contract rights arising from or closing out of any business which it has
transacted in the Philippines. . . .21 (Emphasis supplied)
Similarly, in Asari Yoko v. Kee Boc,22 a Japanese corporation, also not engaged in
any business in the Philippines, successfully opposed an application for registration of
its trademark "Race Brand" on shirts and undershirts by a local businessman, even
though the Japanese company had not previously registered its own mark "Race
Brand" in the Philippines.
Again, in General Garments Corporation v. Director of Patents and Puritan Sportswear
Corporation,23 Puritan Sportswear Corporation, an entity organized in Pennsylvania
U.S.A. and not doing business in the Philippines, filed a petition for cancellation of the
mark "Puritan" which was registered in the name of petitioner General Garments
Corporation for assorted men's wear, undershirts, briefs, shirts, sweaters and jackets.
Puritan Sportswear alleged ownership and prior use of the trademark "Puritan" in the
Philippines. Petitioner General Garments, on the other hand, contended that Puritan
Sportswear, being a foreign corporation not licensed to do, and not doing, business
in the Philippines, could not maintain an action for cancellation of a trademark. The
Court, in upholding the Director of Patents' cancellation of the registration of the
mark "Puritan" in the name of General Garments, said:
. . . .such mark should not have been registered in the first place (and consequently
may be cancelled if so required) if it consists of
or comprises a mark or tradename which so resembles a mark or
tradename . . . . previously used in the Philippines by another and not abandoned, as
to be likely, when applied to or used in connection with goods, business or services
of the applicant, to cause confusion or mistake or to deceive
purchasers. 24 (Emphasis supplied)
In Converse Rubber Corporation v. Universal Rubber Products, Inc., 25 petitioner
Converse Rubber Corporation was an American manufacturer of rubber shoes, not
doing business on its own in the Philippines and not licensed to do business in the
Philippines, opposed the application for registration of the trademark "Universal
Converse and Device" to be used also in rubber shoes and rubber slippers by private
respondent Universal Rubber Products, Inc. ("Universal"). In reversing the Director of
Patents and holding that Universal's application must be rejected, the Supreme Court
said:
The sales of 12 to 20 pairs a month of petitioner's rubber shoes cannot be considered
insignificant, considering that they appear to be of high expensive quality, which not
too many basketball players can afford to buy. Any sale made by a legitimate trader
from his store is a commercial act establishing trademark rights since such sales are
made in due course of business to the general public, not only to limited individuals.
It is a matter of public knowledge that all brands of goods filter into the market,
indiscriminately sold by jobbers, dealers and merchants not necessarily with the
knowledge or consent of the manufacturer. Such actual sale of goods in the local
market establishes trademark use which serves as the basis for any action aimed at
trademark pre-emption. It is a corollary logical deduction that while Converse Rubber
Corporation is not licensed to do business in the country and is not actually doing
business here, it does not mean that its goods are not being sold here or that it has
not earned a reputation or goodwill as regards its products. The Director of Patents
was, therefore, remiss in ruling that the proofs sales presented "was made by a
single witness who had never dealt with nor had never known opposer
{petitioner} . . . without Opposer having a direct or indirect hand in the transaction
to be the basis of trademark pre-exemption. 26 (Emphasis supplied)
Three (3) other cases may be noted. The first is La Chemise Lacoste, S.A. v.
Fernandez 27 La Chemise Lacoste, S.A. although a foreign corporation not engaged
in and not licensed to do business in the Philippines , was accorded protection for its
trademarks "Lacoste", "Chemise Lacoste," and "Crocodile Device" for clothing and
sporting apparel. The Court recognized that those marks were "world famous
trademarks which the Philippines, as a party to the Paris Union, is bound to protect."
Similarly, in Del Monte Corporation, et al. v. Court of Appeals, et al., 28petitioner Del
Monte Corporation was a company organized under the laws of the United States
and not engaged in business in the Philippines. Because both the Philippines and the
United States are signatories to the Convention of Paris, which grants to nationals of
the parties the rights and advantages which their own nationals enjoy for the
repression of acts of infringement and unfair competition, the Court, having found
that private respondent's label was an infringement of Del Monte's trademark, held
Del Monte entitled to recover damages.
In Puma Sportschuhfabriken Rudolf Dassler, K.G. v. Intermediate appellate Court, et
al, 29 petitioner Puma was a foreign corporation existing under the laws of the
Federal Republic of Germany not registered to do business and not doing business in
the Philippines, filed a complaint for infringement of trademark and for issuance of a
writ of preliminary injunction against a local manufacturing company. Reversing the
Court of Appeals, this Court held that Puma had legal capacity to bring the suit in the
Philippines under Section 21-A of R.A. No. 166 as amended and under the provisions
of the Paris Convention to which both the Philippines and the Federal Republic of
Germany are parties. The Court also noted that "Puma" is an internationally known
brandname.
The relevancy of the doctrines set out in the cases above cited are conceded by my
distinguished brother Melo, J. in the majority opinion. The majority opinion, however,
goes on to say:
In other words, petitioners may have the capacity to sue for infringement irrespective
of lack of business activity in the Philippines on account of Section 21-A of the
Trademark Law but the question of whether they have an exclusive right over their
symbols as to justify issuance of the controversial writ will depend on actual use of
their trademarks in the Philippines in line with Sections 2 and 2-A of the same law. It
is thus incongruous for petitioners to claim that when a foreign corporation not
licensed to do business in the Philippines files a complaint for infringement, the entity
need not be actually using its trademark in commerce in the Philippines. Such a
foreign corporation may have the personality to file a suit for infringement but it may
not necessarily be entitled to protection due to absence of actual use of the emblem
in the local market.
With great respect, certain essential qualifications must be made respecting the
above paragraph. Firstly, of the petitioners' three (3) marks here involved, two (2) of
them — i.e., "MARK TEN" and "LARK" — were registered in the Philippines on the
basis of actual use in the Philippines, precisely in accordance with the requirements
of Section 2-A and Section 5 (A) of R.A. No. 166 as amended. The pre-registration
use in commerce and trade in the Philippines for at least two (2) months as required
by the statute, is explicitly stated in the Certificates of Registration. The very fact that
the appropriate Philippine Government office issued the Certificates of Registration
necessarily gave rise to the presumption that such pre-registration use had in fact
been shown to the satisfaction of the Philippine Patent Office (now the Bureau of
Patents, Trademark and Technology Transfer ["BPTTT"]). It is important to note that
respondent Fortune has not purported to attack the validity of the trademarks "Mark
Ten" and "Lark" by pretending that no pre-registration use in commerce in the
Philippines had been shown. 30
The third mark of petitioners — "MARK VII" — was registered in the Philippines on
the basis of Section 37 of R.A. No. 166 as amended, i.e., on the basis of registration
in the country of origin and under the Paris Convention. In such registration, by the
express provisions of Section 37 (b) of R.A. No. 166 as amended, prior (pre-
registration) use in commerce in the Philippines need not be alleged.
Whether the Philippine trademark was based on actual use in the Philippines (under
Section 2-A) or on registration in a foreign country of origin (under Section 37), the
statute appears to require that trademarks (at least trademarks not shown to be
internationally "well-known") must continue to be used in trade and commerce in the
Philippines. It is, however, essential to point out that such continued use, as a
requirement for the continued right to the exclusive use of the registered trademark,
is presumed so long as the Certificate of Registration remains outstanding and so
long as the registered trademark owner complies with the requirements of Section 12
of R.A. No. 166 as amended of filing affidavits with the BPTTT on the 5th, 10th and
15th anniversaries of the date of issuance of the Certificate of Registration, showing
that the trademark is still in use or showing that its non-use is not due to any
intention to abandon the same. In the case at bar, again, respondent Fortune has not
explicitly pretended that the petitioners' trademarks have been abandoned by non-
use in trade and commerce in the Philippines although it appears to insinuate such
non-use and abandonment by stressing that petitioners are not doing business in the
Philippines.
That petitioners are not doing business and are not licensed to do business in the
Philippines, does not by any means mean either that petitioners have not complied
with the requirements of Section 12 of R.A. No. 166 relating to affidavits of continued
use, or that petitioners' trademarks are not in fact used in trade and commerce in the
Philippines. In the Converse case, as earlier noted, the Court held that the
circumstance that the foreign owner of a Philippine trademark is not licensed to do
business and is not doing business in the Philippines, does not mean that petitioner's
goods (that is, goods bearing petitioner's trademark) are not sold in the Philippines.
For cigarettes bearing petitioners' trademarks may in fact be imported into and be
available for sale in the Philippines through the acts of importers or distributors .
Petitioners have stated that their "Mark VII," "Mark Ten" and "Lark" cigarettes are in
fact brought into the country and available for sale here in, e.g., duty-free shops,
though not imported into or sold in the Philippines by petitioners themselves. There is
no legal requirement that the foreign registrant itself manufacture and sell its
products here. All the statute requires is the use in trade and commerce in the
Philippines, and that can be carried out by third party manufacturers operating under
license granted by the foreign registrant or by the importation and distribution of
finished products by independent importers or traders . The "use" of the trademark in
such instances by the independent third parties constitutes use of the foreign
registrant's trademarks to the benefit of the foreign registrant. 31
III
We turn to petitioners' claim that they are suffering irreparable damage by reason of
the manufacture and sale of cigarettes under the trademark "MARK." Here again, a
basic argument of private respondent was that petitioners had not shown any
damages because they are not doing business in the Philippines. I respectfully
maintain that this argument is specious and without merit.
That petitioners are not doing business and are not licensed to do business in the
Philippines, does not necessarily mean that petitioners are not in a position to sustain,
and do not in fact sustain, damage through trademark infringement on the part of a
local enterprise. 32 Such trademark infringement by a local company may, for one
thing, affect the volume of importation into the Philippines of cigarettes bearing
petitioners' trademarks by independent or third party traders.
The damage which the petitioners claim they are sustaining by reason of the acts of
private respondents, are not limited to impact upon the volume of actual imports into
the Philippines of petitioners' cigarettes. Petitioners urge that private respondent's
use of its confusingly similar trademark "MARK" is invasive and destructive of
petitioners property right in their registered trademarks because.
a) Plaintiffs' undeniable right to the exclusive use of their registered trademarks is
effectively effaced by defendant's use of a confusingly similar trademark;
b) Plaintiffs would lose control of the reputation of their products as their reputation
will depend on defendant's commercial activities and the quality of defendant's
products
c) The market in the Philippines for plaintiffs' products will be pre-empted;
d) Purchasers will think that defendant's goods are approved or sponsored by plaintiff; competition with identical or similar products of the parties, but extends to all cases
e) Defendant will be allowed to benefit from the reputation of the plaintiffs' goods lead to a confusing of source, as where prospective purchasers would be misled into
and trademarks;
f) Defendant will be effectively authorized to continually invade plaintiffs' property
rights, for which invasion no fair and reasonable redness can be had in a court of law;
and
g) Plaintiffs will lose their goodwill and trade and the value of their registered
trademarks will irreparably diluted and the damages to be suffered by plaintiffs
cannot be redressed fairly in terms of money. 33
Modern authorities on trademark law view trademarks as symbols which perform
three (3) distinct functions: first, they indicate origin or ownership of the articles to
which they are attached; second, they guarantee that those articles come up to a
certain standard of quality; third, they advertise the articles they symbolize. 34
The first two (2) functions have long been recognized in trademark law which
characterizes the goodwill or business reputation symbolized by a trademark as a
property right protected by law. Thus, the owner of a trademark is held entitled to
exclude others from the use of the same, or of a confusingly similar, mark where
confusion results in diversion of trade or financial injury. At the same time,
trademarks warn against the imitation or faking of products and prevent the
imposition of fraud upon the public. The first two (2) functions of trademarks were
aptly stressed in e.g., the La Chemise Lacoste case where the objectives of
trademark protection were described in the following terms:
. . . to stem the tide of fake and counterfeit consumer items flooding the Philippine
market or exported abroad from our country. The greater victim is not so much the
manufacturer whose product is being faked but
the Filipino consuming public and in the case of exportations, our image abroad . . . .
We buy a kitchen appliance, a household tool, perfume, a face powder, other toilet
articles, watches, brandy or whisky, and items of clothing like jeans, T-shirts,
neckties, etc. — the list is quite lengthy — and pay good money relying on the brand
name as guarantee of its quality and genuine nature only to explode in bitter
frustration and helpless anger because the purchased item turns out to be a shoddy
imitation, albeit a clever looking counterfeit, of the quality product . . . . 35
The third or advertisement function of trademark has become of especial importance
given the modern technology of communication and transportation and the growth of
international trade. 36 Through advertisement in the broadcast and print media, the
owner of the trademark is able to establish a nexus between its trademark products
and the public in regions where the owner does not itself manufacture or sell its own
products. 37 Through advertisement, a well-established and well-earned reputation
may be gained in countries where the trademark owner has itself no established
business connection. 38 Goodwill may thus be seen to be much less closely confined
territorially than, say, a hundred or fifty years ago. 39 It is no longer true that "a
trademark of itself cannot travel to markets where there is no article to wear the
badge and no trader to offer the article." 40 Advertisement of trademarks is geared
towards the promotion of use of the marked article and the attraction of potential
buyers and users;41 by fixing the identity of the marked article in the public mind, it
prepares the way for growth in such commerce whether the commerce be handled
by the trademark owner itself or by its licensees or independent traders.
That a registered trademark has value in itself apart from the trade physically
accompanying its use, has been recognized by our Court. In Ang v. Teodoro,42 the
Court was called upon the determine whether there was infringement in the use of
the same trademark on articles which do not belong to the same class of goods
which the lawful trademark owner manufactures and sells. In holding that there was
infringing use in such case, the Court said:
Such unfair trading can cause injury or damage to the first user of a given trade-
mark, first, by prevention of the natural expansion of his business and, second, by
having his business reputation confused with and put at the mercy of the second
user. When noncompetitive products are sold under the same mark, the gradual
whittling away or dispersion of the identity and hold upon the public mind of the
mark created by its first user, inevitably result. The original owner is entitled to the
preservation of the valuable link between him and the public that has been created
by his ingenuity and the merit of his wares or services . Experience has demonstrated
that when a well-known trade-mark is adopted by another even for a totally different
class of goods, it is done to get the benefit of the reputation and advertisements of
the originator of said mark, to convey to the public a false impression of some
supposed connection between the manufacturer of the article sold under the original
mark and the new articles being tendered to the public under the same or similar
mark . . . The owner of a trademark or tradename has a property right in which he is
entitled to protection, since there is damage to him in the form of confusion of
reputation or goodwill in the mind of the public as well as from confusion of goods .
(Emphasis supplied)
In Sta. Ana v. Maliwat,43 the Court, through J.B.L. Reyes, J., in holding that the use
of the name "Flormen" with respect to shoes was infringement of the mark
"Flormann" used in the men's wear such as shirts, polo shirts and pants, said:
Modern law recognizes that the protection to which the owner of a trade-mark is
entitled is not limited to guarding his goods or business from actual market
in which the use by a junior appropriator of a trade-mark or trade-name is likely to
thinking that the complaining party has extended his business into the field (see 148
ALR 56 et seq; 52 Am. Jur. 576) or is in any way connected with the activities of the
infringer; or when it forestalls the normal potential expansion of his business (v. 148
ALR, 77, 84; 52 Am. Jur. 576, 577). . . . . 44 (Emphasis supplied)
Petitioners did not try to put a peso figure on their claimed damage arising from the
erosion and possible eventual destruction of the symbolic value of their trademark.
Such damage, while not easily quantifiable, is nonetheless real and effective. I submit,
with respect, that such continuing damage falls clearly within the concept of
irreparable damage or injury described in Social Security Commission v. Bayona 45 in
the following terms:
Damages are irreparable within the meaning of the rule relative to the issuance of
injunction where there is no standard by which their amount can be measured with
reasonable accuracy (Crouc v. Central Labor Council, 83 ALR, 193). "An irreparable
injury which a court of equity will enjoin includes that degree of wrong of a repeated
and continuing kind which produce hurt, inconvenience, or damage that can be
estimated only by conjecture, and not by any accurate standard of measurement"
(Phipps v. Rogue River Valley Canal Co., 7 ALR, 741). An irreparable injury to
authorize an injunction consists of a serious charge of, or is destructive to, the
property if affects, either physically or in the character in which it has been held and
enjoined, or when the property has some peculiar quality or use, so that its pecuniary
value will not fairly recompense the owner of the loss thereof' (Dunker v. Field and
Tub Club, 92 P., 502).
Respondent corporations made a lengthy discourse on the matter of irreparable
injury they may suffer if the injunction were not issued, but the array of figures they
have laid out merely succeeded in proving that the damage, if any they may suffer,
is susceptible of mathematical computation. It is not then irreparable. As already
stated, this term has a definite meaning in law. It does not have reference to the
amount of damages that may be caused but rather to the difficulty of measuring the
damages inflicted. If full compensation can be obtained by way of damages, equity
will not apply the remedy of injunction(28 Am. Jur., 244; 43 C.J.S., 427, 446). 46
I next turn to private respondent's claim that issuance of an injunction would impose
heavy damage upon itself and upon Government. As noted, private respondent
stated that it had paid many millions of pesos as ad valorem and VAT taxes to the
Government in 1988 and 1989 in connection with its "MARK"
cigarettes. 47 Presumably, the total volume of its business associated with the
manufacture and sale of cigarettes trademarked "MARK" would be even larger. In
addition, private respondent suggests, albeit indirectly only, that hundreds if not
thousands of its employees would find themselves unemployed if it were restrained
from the manufacture and sale of "MARK" cigarettes.
Private respondent's claims concerning alleged damages both to itself and to the
Government, which obviously loomed very large in the mind of the majority here, and
of the Court of Appeals when it lifted the injunction it had issued, appear to me to be
extravagant indeed. Petitioners cannot claim to be entitled to an injunction which
could restrain private respondent from manufacturing and selling cigarettes
completely; petitioner do not pretend to be so entitled to such a comprehensive
injunction. Petitioners seek only the reinstatement of the original injunction issued by
the Court of Appeals, i.e., one that restrains private respondent from using the
trademark "MARK" on its cigarettes. There is nothing to prevent private respondent
from continuing to manufacture and sell cigarettes under any of its already existing
and registered trademarks, of which it has several, or under some new and specially
created trademark(s). Realistically, private respondent, if enjoined, would lose only
the value of the packaging material imprinted with the same trademark (which
cigarettes and material may well be amenable to re-cycling) and the cost of past
advertisements of "MARK" in media, if any. Thus, the apprehension on the part of the
majority which private respondent tried diligently to foment — that the Government
would lose many millions of pesos in tax revenues and that many employees would
lose their jobs, if an injunction is issued — is more apparent than real. The damages
private respondent would sustain from reinstatement of the preliminary injunction are
clearly quantifiable in pesos.
Besides, as pointed out by petitioners, to pay heed to private respondent's creative
economic argument would ultimately mean that the greater the volume of sales and
the profits of the infringer, the greater would be the infringer's claim to be entitled to
continue infringement. I respectfully submit that the law should not countenance
such a cynical result.
My conclusion is that private respondent's claims concerning damage which it would
sustain if the petitioners were granted the injunction they seek, did not constitute a
sufficient basis for overturning the original decision of the Court of Appeals. The
Resolution of the Court of Appeals granting private respondent's Motion to Dissolve,
in effect disregarded everything that Court had set out in its original Decision. The
mere offer and filing of a counterbond does not, by itself, provide a sufficient basis
for lifting the preliminary injunction earlier granted. For all the elements which
supported the original issuance of a preliminary injunction continued to exist. Private
respondent's hyperbolic claims concerning the damages that it and the Government
would sustain by reason of an injunction, had been made earlier both before the trial
court and the Court of Appeals. Finally, it is not enough to say as private respondent
says, that the Court of Appeals in granting its Motion to Dissolve the preliminary
injunction was merely exercising its discretion; for the Court of Appeals obviously was
also exercising its discretion when it rendered its original Decision granting the
preliminary injunction.
I vote to grant due course to the petition for Certiorari, to set aside the Resolution of
the respondent Court of Appeals dated 14 September 1989 in C.A.-G.R. SP No. 13132
and to reinstate the Decision of that same Court dated 5 May 1989.
# Separate Opinions
FELICIANO, J., dissenting:
I find myself unable to join in the opinion prepared by my distinguished brother,
Melo, J.
It seems to me that the issues involved in this case are rather more complex than
what has been assumed to be the case by the majority opinion. For this and related
reasons, there is set out below a statement of the relevant facts (as I see them) that
is more extensive than what is ordinarily found in dissenting opinions.
Petitioner Philip Morris, Inc. is a corporation organized and existing under the law of
Virginia, U.S.A. Petitioners Benson & Hedges (Canada), Inc. and Fabriques de Tabac
Reunies, S.A., both wholly owned subsidiaries of Philip Morris, Inc., are organized
and existing under the law of Canada and Switzerland, respectively.
Philip Morris, Inc. is registered owner of the trademark "MARK VII" for cigarettes. Its
ownership thereof is evidenced by Philippine Patent Office Trademark Certificate of
Registration No. 18723, dated 26 April 1973. The statement attached to the
Certificate of Registration states that the trademark "MARK VII" had been registered
in the United States Patent Office, on the Principal Register, under Certificate of
Registration No. 888,931 issued on 7 April 1970. The statement also requested that
the trademark be registered in the Philippine Patent Office on the Principal Register in
accordance with Section 37 of R.A. No. 166, as amended.
Benson & Hedges (Canada), Inc. is the registered owner of the trademark "MARK
TEN" also for cigarettes, as evidenced by Philippine Patent Office Trademark
Certificate of Registration No. 11147, dated 28 May 1964, on the Principal Register.
This Trademark Certificate of Registration was originally issued in the name of
Canadian Tabacofina Ltd. and later assigned to Benson & Hedges (Canada), Inc.
Petitioners alleged that the name Canadian Tabacofina Ltd. was later changed to
Benson & Hedges (Canada) Ltd. This trademark Certificate of Registration was
renewed on 28 May 1984. The statement attached thereto stated that the "date of
first use of the trademark 'MARK TEN' in trade in or with the Philippines is April 15,
1963," and that trademark had "been in actual use in commerce over the Philippines
continuously for two months."
Fabriques de Tabac Reunies, S.A. is registered owner of the trademark "LARK" also
for cigarettes, as evidenced by Philippine Patent Office Trademark Certificate of
Registration No. 10953, dated 25 March 1964. This Trademark Certificate of
Registration was originally issued in the name of Ligget and Myres Tobacco Company
was later assigned to Fabriques de Tabac Reunies, S.A. Petitioners alleged that the
name of Liggett and Myres Tobacco Company was changed later to Fabriques de
Tabac Reunies, S.A. The statement attached to this Certificate of Registration states
that the trademark "LARK" was first used by Ligget and Myres Tobacco Company on
31 May 1920, and first used by it "in commerce in or with the Philippines on February
6, 1963" and has been continuously used by it "in trade in or with the Philippines
since February 6, 1963."
Sometime before 17 October 1981, private respondent Fortune Tobacco Corporation
("Fortune") commenced manufacturing and selling in the Philippines cigarettes under
the brandname "MARK." Fortune also filed on 13 February 1981 with the Philippine
Patent Office an application for registration of "MARK" as a trademark for cigarettes.
By a letter dated 17 October 1981, petitioner through their lawyers wrote to Fortune
stating that the manufacturing, selling and advertising of "MARK" cigarettes by
Fortune constituted an "infringement or an act of unfair competition with" petitioners'
"well-known international trademarks used on cigarettes and tobacco products which
were registered worldwide and with the Philippine Patent Office." Petitioners listed
their Philippine Certificates of Registration for the trademarks "MARK VII," "MARK
TEN," and "LARK." Petitioners then asked Fortune "to cease and desist from further
manufacturing; selling or advertising 'MARK' cigarettes," otherwise appropriate court
actions would be filed without further notice.
On 18 August 1982, petitioners commenced action before the Court of First Instance
of Pasig, Metro Manila (Civil Case No. 47374). In their complaint, petitioners alleged
that they were not doing business in the Philippines but had nonetheless the right
and the capacity to bring the instant suit; that they were owners of Philippine Patent
Office Trademark Certificates of Registration which were in full force and effect,
covering "MARK VII," "MARK TEN," and "LARK," all for cigarettes (except the last
which also covered chewing and smoking tobacco); that they had registered those
trademarks in their respective countries of origin and in other countries the world and
that by virtue of their "long and extensive use [had] gained international fame and
acceptance;" that they had their respective real and effective industrial or commercial
establishments in the United States, Canada and Switzerland, which countries were,
like the Philippines, members of the Convention of Paris for the Protection of
Industrial Property; that under that Convention each member-country undertakes to
prohibit the use of a trademark which constitutes a reproduction, imitation or
translation of a mark already belonging to a person entitled to the benefits of the
Convention and use for identical or similar goods; that petitioner Fabriques de Tabac
Reunies, S.A. had long been using trademark "LARK" throughout the world, including
the Philippines where its products bearing the trademark "LARK" had been sold in the
duty-free market, and advertised and marketted in the Philippines at least since 1964
and have continued to be so to present; that Fortune had without previous consent,
authority or license from petitioners, with knowledge of the popularity of petitioners'
marks and their Philippine registrations, manufactured, advertised and sold cigarettes
bearing the identical or confusingly similar trademark "MARK" which unauthorized use
constituted an act of infringement under Section 22 of R.A. No. 166, as amended;
that thereby the public and the patronizers of petitioners' products were being
deceived into buying Fortune's cigarettes under the impression and mistaken belief
that Fortune's cigarettes were identical with, or came from the same source as,
petitioners' products or that Fortune was licensee of petitioners, which it was not;
that the infringement by Fortune of petitioners' trademarks have inflicted damages
upon petitioners; that the continued unauthorized and unlicensed manufacture and
sale by Fortune of its infringing products during the litigation would work injustice
and cause irreparable injury to petitioners in violation of their property rights and
moreover tend to render the judgment which the court might render ineffectual.
Petitioners accordingly asked for a writ of preliminary injunction to restrain Fortune
from manufacturing or selling "MARK" cigarettes, and after trial, to make such
preliminary injunction permanent and to order Fortune's infringing materials to be
destroyed, and for damages.
Fortune filed an Opposition to petitioners' prayer for preliminary injunction. On 28
March 1983, the trial court1 issued an Order denying petitioners' motion for
preliminary injunction. In rendering that order, the trial court, while noting that
petitioners were holders of Philippine Certificates of Trademark Registration, relied
heavily on three (3) factors:
Firstly, that petitioners were foreign corporations not doing business in the
Philippines;
Secondly, that Fortune's application for a registration as trademark of the word
"MARK" for cigarettes was then pending before the Philippine Patent Office; and
Thirdly, that Fortune was the "only party authorized" by the Bureau of Internal
Revenue ("BIR") to manufacture cigarettes bearing the mark "MARK" in the
Philippines.
In respect of the first point, the trial court was obviously heavily influenced by
Fortune's argument that because petitioners were not doing business in the
Philippines, which meant that "they [were] not engaged in the sale, manufacture,
importation, exportation and advertisement of their cigarette products in the
Philippines," Fortune's manufacture and sale of its "MARK" cigarettes could not be
said to be causing petitioners "irreparable damage" within the Philippines. In respect
to the second point, the trial judge felt that because the Director of Patents had not,
at that point, denied Fortune's pending application for registration of its trademark
"MARK," the grant of a preliminary injunction was premature. With regard to the third
point, the judge noted a letter dated 30 January 1979 2 of the then Acting
Commissioner of Internal Revenue Mr. Conrado P. Diaz, temporarily granting the
request of Fortune for a permit to manufacture two (2) new brands of cigarettes, one
of which was "MARK." The trial judge also noted that the BIR letter contained the
following paragraph:
Please be informed further that this authority herein granted does not give you
protection against any person or entity whose rights may be prejudiced by
infringement or unfair competition in relation to your above named
brands/trademarks. 3
The trial judge, however, apparently gave no weight at all to this caveat.
Petitioners sought, on 15 April 1983, reconsideration of Judge Reyes' Order denying
preliminary injunction. After Fortune had filed an Opposition to petitioners' Motion for
Reconsideration, and petitioners had filed their Reply and Fortune a Rejoinder, and
after an offer of exhibits by the parties respectively, Judge Reyes issued on 5 April
1984 another Order denying the Motion for Reconsideration. In his second order, the
trial judge laid great stress on the fact that Fortune's application for registration of its
trademark "MARK" for cigarettes remained subsisting. On the basis, Judge Reyes
denied petitioners' motion for reconsideration.
More than two (2) years later, petitioners filed a "Second Motion for Issuance of
Preliminary Injunction" dated 1 September 1986. In their Second Motion, petitioners
invited attention to Paper No. 3, dated 6 April 1983, relating to Fortune's application
for registration of its brandname "MARK." This Paper No. 3 reproduced a letter to
Fortune's counsel by Bienvenido A. Palisoc, Senior Trademark Examiner, and Wilfredo
T. Jaramillo, Trademark Examiner, stating that:
This application [for registration of "Mark"] has been examined.
Caption mark of the application must tally with the drawing on file.
Subject mark is confusingly similar with the following marks on file:
a. "Mark" with Reg. No. SR-2659 for cigarettes.
b. "Mark VII" with Reg. No. 18723 for cigarettes.
c. "Mark Ten" with Reg. No. 11147 for cigarettes.
d. "Lark" with Reg. No. 10953 for cigarettes.
Hence, registration is barred under Sec. 4 (d) of Rep. Act No. 166 as amended.
Subject mark has no trademark significance and can not serve its purpose as to
indicate the source and origin of goods.
Furthermore, the word "Mark" is generic and therefore incapable of exclusive
appropriation.
Makati, Metro Manila, April 6, 1983." 4 (Emphasis supplied)
Petitioners also invited attention to a certification dated 8 August 1986 issued by Mr.
Luis M. Daca, Jr., Assistant Director, Philippine Patent Office, to the effect that
Fortune's application for the mark "MARK" for cigarettes was declared abandoned as
of 16 February 1986 and was now deemed forfeited. In addition, petitioners
explained in some detail how Fortune's use of its mark "MARK" was "destructive of
[petitioners'] property right to [their] registered trademarks."5 Further, petitioners
assailed Fortune's argument that issuance of preliminary injunction would cause "loss
of revenue and taxes to the Government" and that more damages would be
sustained by Fortune than by petitioners since the petitioners do not market their
cigarettes in the Philippines.
After Fortune had filed an Opposition to petitioners' Second Motion, the trial court,
this time presided over by Judge Nicolas Galing, issued an Order dated 22 April 1987
denying once more the motion for issuance of a writ of preliminary injunction. In this
order, Judge Galing relied on two (2) points: firstly, according to the trial judge,
petitioners had not shown that the products they sought to protect from Fortune's
"MARK" cigarettes were "in actual use and available for commercial purposes
anywhere in the Philippines;" and secondly, it appeared that while Fortune's original
application had been abandoned, it could be refiled and was in fact re-filed. Thus,
Judge Galing in effect reiterated Judge Reyes's position that until the Director of
Patents had definitely acted upon Fortune's application for registration of "MARK,"
petitioners' prayer for preliminary injunction could not be granted.
Petitioners then filed a Petition for Review with the Supreme Court, which Petition
was docketed as G.R. No. 78141. The Court ordered respondents to file their
Comments on the Petition and on 30 September 1987, the Court referred the Petition
to the Court of Appeals.
In due course of time, the Court of Appeals, through Cacdac, Jr., J.,6 rendered a
decision on 5 May 1989 setting aside the 22 April 1987 order of the trial court and
ordering issuance of a writ of preliminary injunction upon filing of a bond by
petitioners in the sum of P200,000.00 to be approved by the appellate court,
"enjoining the private respondents, its agents, employees and representatives from
manufacturing, selling and/or advertising "MARK" cigarettes until further orders." The
Court of Appeals said in pertinent part:
There is no dispute that petitioners are the registered owners of the trademarks for
cigarettes "MARK VII," "MARK TEN," and "LARK". (Annexes B, C and D, Petition). As
found and reiterated by the Philippine Patent Office in two (2) official
communications dated April 6, 1983 and January 24, 1984, the trademark "MARK" is
"confusingly similar" to the trademarks of petitioners, hence, registration was barred
under Sec. 4(d) of Rep. Act No. 166, as amended (pp. 106, 139 SCA rollo). In a third
official communication dated April 8, 1986, the trademark application of private
respondent for the mark "MARK" under Serial No. 44008 filed on February 13, 1981
which was declared abandoned as of February 16, 1986, is now deemed forfeited,
there being no revival made pursuant to Rule 98 of the Revised Rules of Practitioners
in Trademark Cases. (p. 107, CA rollo). The foregoing documents or communications
mentioned by petitioners as "the changes in material facts which occurred after
March 28, 1983", are not also questioned by respondents.7 (Emphasis supplied)
The Court of Appeals also noted the BIR letter of 30 January 1979 temporarily
granting Fortune's request for a permit to manufacture two (2) new brands of
cigarettes, including one branded "MARK," and the caveat (earlier noted)8 that the
BIR's authorization would not give Fortune any protection against any person or
entity whose rights may be prejudiced by infringement or unfair competition on the
part of Fortune. The Court of Appeals also referred to the certificate dated 26
September 1986 of Mr. Cesar G. Sandico, then Director of Patents, issued upon
request of Fortune's counsel stating that there was a pending application for
registration of the trademark "MARK" for cigarettes under Serial No. 59872, filed on
16 September 1986, noting at the same time, that Director Sandico's certification
contained the following caveat or qualification:
This certification, however, does not give protection as against any person or entity
whose right may be prejudiced by infringement or unfair competition in relation to
the aforesaid trademark nor the right to register as contrary to the provisions of the
Trademark Law, Republic Act No. 166 as amended and the Revised Rules of Practice
in Trademark Cases. (Emphasis supplied)
The Court of Appeals then went on to say that:
[We] believe and hold that petitioners have shown a prima facie case for the
issuance of the writ of prohibitory injunction for the purposes stated in their
complaint and subsequent motions for the issuance of the prohibitory writ. (Buayan
Cattle Co. v. Quintillan, 125 SCRA 276).
The requisites for the granting of preliminary injunction are the existence of the right
protected and the facts against which the injunction is to be directed as violative of
said right. (Buayan Cattle Co. v. Quintillan, supra; Ortigas & Co. vs. Ruiz, 148 SCRA
326). It is a writ framed according to the circumstances of the case commanding an
act which the Court regards as essential to justice and restraining an act it deems
contrary to equity and good conscience (Rosauro vs. Cuneta, 151 SCRA 570). If it is
not issued, the defendant may, before final judgment, do or continue the doing of
the act which the plaintiff asks the court to restrain, and thus make ineffectual the
final judgment rendered afterwards granting the relief sought by the plaintiff (Calo vs.
Roldan, 76 Phil. 445). Generally, its grant or denial rests upon the sound discretion of
the Court except on a clear case of abuse (Belish Investment & Finance Co. vs.
Statement House, 151 SCRA 636). Petitioners' right of exclusivity to their registered
trademarks being clear and beyond question, the respondent court's denial of the
prohibitive writ constituted excess of jurisdiction and grave abuse of discretion . If the
lower court does not grant preliminary injunction, the appellate court may grant the
same (Service Specialists, Inc. v. Sheriff of Manila. 145 SCRA 139).9 (Emphasis
supplied)
Fortune moved for reconsideration of the Decision of the Court of Appeals insisting
that petitioners must first prove their "clear, unmistakable and unquestioned right to
the writ, coupled with the possible damages it would suffer;" that petitioners had not
suffered any "great and irreparable injury to speak of" because "petitioners have
never done business in this country in the past nor in the future;" that, on the other
hand, Fortune had been authorized by the BIR to manufacture "MARK" cigarettes,
"thereby generating much needed funds for the Government;" that Fortune's
application for registration of its brandname "MARK" with the Philippine Patent Office
"still pending" and not "finally rejected" by the Director of Patents. On 12 July 1989,
the Court of Appeals issued a Minute Resolution stating that the issues and
arguments in Fortune's motion for reconsideration had been "fully discussed" in the
Decision sought to be reconsidered, that no new arguments were raised, and
accordingly denied the Motion for Reconsideration.
Fortune then filed a "Motion to Dissolve Writ of Preliminary Injunction with Offer to
File Counterbond" date 25 July 1989, where it reiterated the basic arguments it
previously made.
A "Supplemental Motion to Lift Writ of Preliminary Injunction with Offer of
Counterbond" dated 17 August 1989 was next filed by Fortune. In this "Supplemental
Motion," Fortune averred that it had paid to the BIR for 1988 the amount of
P181,940,177.38 for specific taxes; while for January to July 1989, it had paid the
amount of P120,120,735.28. Fortune also referred to its employees assigned to the
manufacture of "MARK" cigarettes who were apparently apprehensive that their
services would eventually be terminated and that they would join the ranks of the
unemployed.
Petitioners filed an Opposition to the "Motion to Dissolve" and a Comment on the
"Supplemental Motion" of Fortune.
On 14 September 1989, the Court of Appeals once more through Cacdac,
Jr., J. issued a Resolution lifting the preliminary injunction it had earlier granted upon
the filing of counterbond by private respondent in the amount of P400,000.00 to
answer for any damages petitioners may suffer as a consequence of such lifting. In
its Resolution, the Court of Appeals referred to the "lots of workers employed [who]
will be laid off as a consequence of the injunction" and that Government "will stand
to lose the amount of specific taxes being paid by" Fortune. It when went on to say:
After a thorough re-examination of the issues involved and the arguments advanced
by both parties in the offer to file a counterbond and the opposition thereto, WE
believe that there are sound and cogent reasons for Us to grant the dissolution of the
writ of preliminary injunction by the offer of the private respondent to put up a
counterbond to answer for whatever damages the petitioner may suffer as a
consequence of the dissolution of the preliminary injunction.
The petitioner will not be prejudiced nor stand to suffer irreparably as a consequence
of the lifting of the preliminary injunction considering that they are not actually
engaged in the manufacture of the cigarettes with the trademarks in question and
the filing of the counterbond will amply answer for such damages.
While the rule is that an offer of a counterbond does not operate to dissolve an
injunction previously granted, nevertheless, it is equally true that an injunction could
be dissolved only upon good and valid grounds subject to the sound discretion of the
court. As WE have maintained the view that there are sound and good reasons to lift
the preliminary injunction the motion to file a counterbond is granted. 10(Emphasis
supplied)
Petitioners filed a Motion for Reconsideration, without success.
In the instant Petition, petitioners make the following basic submissions:
1. that the Court of Appeals gravely abused its discretion amounting to excess of
jurisdiction when it required, contrary to law and jurisprudence that in order that
petitioners may suffer irreparable injury due to the lifting of the injunction, petitioners
should be using actually their registered trademarks in commerce in the Philippines;
2. that the Court of Appeals gravely abused its discretion amounting to excess of
jurisdiction when it lifted the injunction in violation of Section 6 of Rule 58 of the
rules of Court;
3. that the Court of Appeals gravely abused its discretion amounting to excess of
jurisdiction when, after having found that the trial court had committed grave abuse
of discretion and exceeded its jurisdiction for having refused to issue the writ of
injunction to restrain respondent's acts that are contrary to equity and good
conscience, it made a complete about face for legally insufficient grounds and
authorized private respondent to continue performing the very same acts that it had
considered contrary to equity and good conscience, thereby ignoring not only the
mandates of the trademark law, the international commitments of the Philippines, the
judicial admission of private respondent that it will have no more right to use the
trademark "MARK" after the Director of Patents shall have rejected the application to
register it, and the admonitions of the Supreme Court. 11
The Court required private respondent to file a comment. The comment reiterated
the basic arguments made by private respondent before the Court of Appeals:
a. the petitioners are not suffering any irreparable damage by the lifting of the
preliminary injunction by the Court of appeals. Whatever damages they might suffer
are "based purely on speculation, since by judicial admission, petitioners are not
doing business in the Philippines. Private respondent stressed that petitioners "are
not manufacturing, importing or selling "MARK TEN," "MARK VII" or "LARK" in this
country," notwithstanding "false allegation" that petitioners have been "using" the
said trademarks "in commerce and trade" in the Philippines since 1963 up to the
present.
b. that whatever damage petitioners may be suffering is negligible when compared to
the taxes that would have to be foregone by the Government considering that private
respondent "paid an annual specific tax of P240 Million only on the manufacture and
sale of "MARK cigarettes." Private respondent claims that, in contrast, petitioners
which are foreign corporations "based in three different countries" have not
contributed anything to Government tax revenues.
c. that the Court of Appeals lifted the writ of preliminary injunction it had earlier
issued upon the submission of a counter bond in double the amount of the bond
submitted by petitioners, under Section 6, Rule 58 of the Rules of Court, which act
was within the sound discretion of the Court of Appeals. Private respondent also
stresses that the right of petitioners to the injunction was still being litigated before
the trial court.
Reformulating the issues raised by the petitioners here, we think the principal issues
may be reduced to the following: firstly, is there a clear legal right to the relief asked
by petitioners in the form of a preliminary injunction to restrain private respondent
from manufacturing, selling and distributing cigarettes under the trademark "MARK"?
The second question is: are private respondent's acts complained of by petitioners
causing irreparable injury to petitioners' rights in the premises? These two (2) basic
issues are obviously related and need to be addressed together.
I
The first point that needs to be stressed is that petitioners have Philippine Certificates
of Registration for their trademarks "MARK TEN", "MARK VII," and "LARK" in the
Principal Register.
Upon the other hand, private respondent's trademark "MARK" is not registered in the
Principal Register in the Office of the Director of Patents; private respondents is
simply an applicant for registration of a mark, the status of which application may be
noted later.
It is important to stress the legal effects of registration of a trademark in the Principal
Register in the Office of the Director of Patents. Section 20 of R.A. No. 166, as
amended, sets out the principal legal effects of such registration:
Sec. 20. Certificate of registration prima facie evidence of validity. — A certificate of
registration, of a mark or a trade name shall be prima facie evidence of the validity of
the registration, the registrant's ownership of the mark or trade name, and of the
registrant's exclusive right to use the same in connection with the goods, business or
services specified in the certificate, subject to any conditions and limitations stated
therein. (Emphasis supplied)
In Lorenzana v. Macagba, 12 the Court distinguished between the effects of
registration in the Principal Register and registration in the Supplemental Register in
the following manner:
(1) Registration in the Principal Register gives rise to a presumption of the validity of
the registration, the registrant's ownership of the mark, and his right to the exclusive
use thereof. There is no such presumption in registrations in the Supplemental
Register.
(2) Registration in the Principal Register is limited to the actual owner of the
trademark (Unno Commercial Enterprises v. Gen. Milling Corp., 120 SCRA 804 [1983])
and proceedings therein pass on the issue of ownership, which may be contested
through opposition or interference proceedings, or after registration, in a petition for
cancellation.
Registration in the Principal Register is constructive notice of the registrant's claims of
ownership, while registration in the Supplemental Register is merely proof of actual
use of the trademark and notice that the registrant has used or appropriated it. (Le
Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 373 [1984]: "Registration in the
Supplemental Register . . . serves as notice that the registrant is using or has
appropriated the trademark.") It is not subject to opposition although it may be
cancelled after its issuance. Corollarilly, registration in the Principal Register is a basis
for an action for infringement, while registration in the Supplemental Register is not.
(3) In application for registration in the Principal Register, publication of the
application is necessary. This is not so in applications for registration in the
Supplemental Register. Certificates of registration under both Registers are also
different from each other.
(4) Proof of registration in the Principal Register may be filed with the Bureau of
Customs to exclude foreign goods bearing infringing marks while it does not hold true
for registrations in the Supplemental Register. 13 (Emphasis supplied)
When taken with the companion presumption of regularity of performance of official
duty, it will be seen that issuance of a Certificate of Registration of a trademark in
the Principal Register also gives rise to the presumption that
all requirements of Philippine law necessary for a valid registration (including prior
use in commerce in the Philippines for at least two [2] months) were complied with
and satisfied.
In contrast, private respondent filed an application for registration of its mark "MARK"
for cigarettes with the Director of Patents soon after it commenced manufacturing
and selling cigarettes trademark with "MARK." This application was abandoned or
"forfeited", 14 for failure of private respondent to file a necessary Paper with the
Director of Patent. It also appears, however, that private respondent later re-filed or
reinstated its application for registration of "MARK" 15 and that, so far as the record
here before us is concerned, this application remains merely an application and has
not been granted and a Certificate of Registration in the Principal Register
issued. 16 While final action does not appear as yet to have been taken by the
Director of Patents on private respondent's application, there was at least a
preliminary determination of the trademark examiners that the trademark "MARK"
was "confusingly similar" with petitioners' marks "MARK VII," "MARK TEN" and
"LARK" and that accordingly, registration was barred under Section 4 (d) of R.A. No.
166, as amended. 17
In the trial court, both Judge Reyes and Judge Galing took the position that until the
Director of Patents shall have finally acted on private respondent's application for
registration of "MARK," petitioners cannot be granted the relief of preliminary
injunction. It is respectfully submitted that this position is both erroneous and
unfortunate. In reliance upon that position, private respondent has kept its
application for registration alive and pending. The Director of Patents in turn may
well have refrained from taking final action on that application, even in the absence
of a restraining order from the courts, out of deference to the courts. The pendency
of the application before the Director of Patents is not in itself a reason for denying
preliminary injunction. Our courts have jurisdiction and authority to determine
whether or not "MARK" is an infringement on petitioners' registered trademarks.
Under our case law, the issuance of a Certificate of Registration of a trademark in the
Principal Register by the Director of Patents would not prevent a court from ruling on
whether or not the trademark so granted registration is confusingly similar with a
previously registered trademark, where such issue is essential for resolution of a case
properly before the court. A fortiori, a mere application for registration cannot be a
sufficient reason for denying injunctive relief, whether preliminary or definitive. In the
case at bar, petitioners' suit for injunction and for damages for infringement, and
their application for a preliminary injunction against private respondent, cannot be
resolved without resolving the issue of claimed confusing similarity.
In the case at bar, the evidence of record is scanty. Petitioners have not submitted
actual copies or photographs of their registered marks as used in cigarettes. Private
respondent has not, for its part, submitted the actual labels or packaging material
used in selling its "MARK" cigarettes. Petitioners have appended to their Petition a
photocopy of an advertisement of "MARK" cigarettes. Private respondent has not
included in the record a copy of its application for registration of "MARK" for
cigarettes, which would include a facsimile of the trademark being applied for. It
should be noted that "MARK" and "LARK," when read or pronounced orally,
constitute idem sonans in striking degree. Further, "MARK" has taken over the
dominant word in "MARK VII" and "MARK TEN." These circumstances, coupled with
private respondent's failure to explain how or why it chose, out of all the words in the
English language, the word "mark" to refer to its cigarettes, lead me to the
submission that there is a prima facie basis for holding, as the Patent Office has held
and as the Court of Appeals did hold originally, that private respondent's "MARK"
infringes upon petitioners' registered trademarks.
II
There is thus no question as to the legal rights of petitioners as holders of
trademarks registered in the Philippines. Private respondent, however, resists and
assails petitioners' effort to enforce their legal rights by heavily underscoring the fact
that petitioners are not registered to do business in the Philippines and are not in fact
doing business in the Philippines. It is thus necessary to determine what
consequences, if any, flow from this circumstance so far as enforcement of
petitioners' rights as holders of registered Philippine trademarks is concerned.
It should be stressed at the outset that circumstance has no legal impact upon the
right of petitioners to own and register their trademarks in the Philippines. Section 2
of R.A. No. 166 as amended expressly recognizes as registrable, under this statute,
marks which are owned by corporations domiciled in any foreign country:
Sec. 2. What are registrable. — Trademarks, trade names and service marks owned
by persons, corporations, partnerships or associations domiciled in the Philippines
and by persons, corporations, partnerships or associations domiciled in any foreign
country may be registered in accordance with the provisions of this Act; Provided,
That said trade marks, trade names or service marks are actually in use in commerce
and services not less than two months in the Philippines before the time the
applications for registration are filed: And provided further, That the country of which
the applicant for registration is a citizen grants by law substantially similar privileges
to citizens of the Philippines, and such fact is officially certified, with a certified true
copy of the foreign law translated into the English language, by the government of
the foreign country to the Government of the Republic of the Philippines. (Emphasis
in the original)
It is also entirely clear that foreign corporations and corporations domiciled in a
foreign country are not disabled from bringing suit in Philippine courts to protect their
rights as holders of trademarks registered in the Philippines. Under Section 21-A of
R.A. No. 166, as amended, any foreign corporation which is a holder of a trademark
registered under Philippine law may bring an action for infringement of such mark or
for unfair competition or false designation of origin and false description "whether or
not it has been licensed to do business in the Philippines under the [Corporation Law]
at the time it brings complaint, subject to the proviso that:
. . . that the country of which the said foreign corporation or juristic person is a
citizen or in which it is domiciled by treaty, convention or law, grants similar privilege
to corporate or juristic persons of the Philippines. (Emphasis supplied)
The rule thus embodied in Section 21-A of R.A. No. 166 as amended is also set out in
Article 2 of the Paris Convention for the Protection of Industrial Property ("Paris
Convention"), to which the Philippines, the United States, Canada and Switzerland
are all parties. 18 Article 2 of the Paris Convention provides in relevant part:
Article 2
(1) Nationals of any country of the Union shall, as regards the protection of industrial
property, enjoy in all the other countries of the Union the advantages that their
respective laws now grant, or may hereafter grant, to nationals; all without prejudice
to the rights specially provided for by this Convention. Consequently, they shall have
the same protection as the latter, and the same legal remedy against any
infringement of their rights, provided that the conditions and formalities imposed
upon national are complied with.
(2) However, no requirement as to domicile or establishment in the country where
protection is claimed may be imposed upon nationals of countries of the Union for
the enjoyment of any industrial property rights.
Article 2, paragraph 1 of the Paris Convention embodies the principle of "national
treatment" or "assimilation with nationals," one of the basic rules of the
Convention. 19 Under Article 2, paragraph 1 of the Paris Convention, nationals of
Canada, Switzerland and the United States who are all countries of the Paris Union
are entitled to enjoy in the Philippines, also a country of the Union, the advantages
and protections which Philippine law grants to Philippine nationals. Article 2
paragraph 2 of the Paris Convention restrains the Philippines from imposing a
requirement of local incorporation or establishment of a local domicile as a pre-
requisite for granting to foreign nationals the protection which nationals of the
Philippines are entitled to under Philippine law in respect of their industrial property
rights. It should be noted that Article 2, paragraph 2 also constitutes proof of
compliance with the requirement of reciprocity between, on the one hand, the
Philippines and, on the other hand, Canada, Switzerland and the United States
required under Section 21-A of R.A. No. 166 as amended.
The net effect of the statutory and treaty provisions above referred to is that a
corporate national of a member country of the Paris Union is entitled to bring in
Philippine courts an action for infringement of trademarks, or for unfair competition,
without necessity for obtaining registration or a license to do business in the
Philippines. Article 2 as quoted above is in effect with respect to all four (4) countries.
Such has been the rule in our jurisdiction even before the enactment of R.A. No. 166
and before the Philippines became a party to the Paris Convention. In Western
Equipment and Supplies Company, et al. v. Reyes, etc., et al. , 20 petitioner Western
Electrical Company, a U.S. manufacturer of electrical and telephone equipment and
supplies not doing business in the Philippines, commenced action in a Philippine court
to protect its corporate name from unauthorized use thereof by certain Philippine
residents. The Philippine residents sought to organize a Philippine corporation to be
known as "Western Electrical Company" for the purpose of manufacturing and selling
electrical and telephone equipment in the Philippines. The local residents resisted the
suit by contending, inter alia, that the petitioner Western Electrical Company had
never transacted business in the Philippines and that registration of private
respondent's articles of incorporation could not in any way injure petitioner. The
Supreme Court, in rejecting this argument, stated that:
. . . a foreign corporation which has never done business in the Philippines — but is
widely and favorably known in the Philippines through the use therein of its products
bearing its corporate name and tradename has a legal right to maintain an action in
the [Philippines]. The purpose of such a suit is to protect its reputation, corporate
name and goodwill which has been established through the natural development of
its trade for a long period of years in the doing of which it does not seek to enforce
any legal or contract rights arising from or closing out of any business which it has
transacted in the Philippines. . . .21 (Emphasis supplied)
Similarly, in Asari Yoko v. Kee Boc,22 a Japanese corporation, also not engaged in
any business in the Philippines, successfully opposed an application for registration of
its trademark "Race Brand" on shirts and undershirts by a local businessman, even
though the Japanese company had not previously registered its own mark "Race
Brand" in the Philippines.
Again, in General Garments Corporation v. Director of Patents and Puritan Sportswear
Corporation,23 Puritan Sportswear Corporation, an entity organized in Pennsylvania
U.S.A. and not doing business in the Philippines, filed a petition for cancellation of the
mark "Puritan" which was registered in the name of petitioner General Garments
Corporation for assorted men's wear, undershirts, briefs, shirts, sweaters and jackets.
Puritan Sportswear alleged ownership and prior use of the trademark "Puritan" in the
Philippines. Petitioner General Garments, on the other hand, contended that Puritan
Sportswear, being a foreign corporation not licensed to do, and not doing, business
in the Philippines, could not maintain an action for cancellation of a trademark. The
Court, in upholding the Director of Patents' cancellation of the registration of the
mark "Puritan" in the name of General Garments, said:
. . . .such mark should not have been registered in the first place (and consequently
may be cancelled if so required) if it consists of
or comprises a mark or tradename which so resembles a mark or
tradename . . . . previously used in the Philippines by another and not abandoned, as
to be likely, when applied to or used in connection with goods, business or services
of the applicant, to cause confusion or mistake or to deceive
purchasers. 24 (Emphasis supplied)
In Converse Rubber Corporation v. Universal Rubber Products, Inc., 25 petitioner
Converse Rubber Corporation was an American manufacturer of rubber shoes, not
doing business on its own in the Philippines and not licensed to do business in the
Philippines, opposed the application for registration of the trademark "Universal
Converse and Device" to be used also in rubber shoes and rubber slippers by private
respondent Universal Rubber Products, Inc. ("Universal"). In reversing the Director of
Patents and holding that Universal's application must be rejected, the Supreme Court
said:
The sales of 12 to 20 pairs a month of petitioner's rubber shoes cannot be considered
insignificant, considering that they appear to be of high expensive quality, which not
too many basketball players can afford to buy. Any sale made by a legitimate trader
from his store is a commercial act establishing trademark rights since such sales are
made in due course of business to the general public , not only to limited individuals.
It is a matter of public knowledge that all brands of goods filter into the market,
indiscriminately sold by jobbers, dealers and merchants not necessarily with the
knowledge or consent of the manufacturer. Such actual sale of goods in the local
market establishes trademark use which serves as the basis for any action aimed at
trademark pre-emption. It is a corollary logical deduction that while Converse Rubber
Corporation is not licensed to do business in the country and is not actually doing
business here, it does not mean that its goods are not being sold here or that it has
not earned a reputation or goodwill as regards its products. The Director of Patents
was, therefore, remiss in ruling that the proofs sales presented "was made by a
single witness who had never dealt with nor had never known opposer
(petitioner) . . . without Opposer having a direct or indirect hand in the transaction to
be the basis of trademark pre-exemption. 26 (Emphasis supplied)
Three (3) other cases may be noted. The first is La Chemise Lacoste, S.A. v.
Fernandez 27 La Chemise Lacoste, S.A. although a foreign corporation not engaged
in and not licensed to do business in the Philippines , was accorded protection for its
trademarks "Lacoste", "Chemise Lacoste," and "Crocodile Device" for clothing and
sporting apparel. The Court recognized that those marks were "world famous
trademarks which the Philippines, as a party to the Paris Union, is bound to protect."
Similarly, in Del Monte Corporation, et al. v. Court of Appeals, et al., 28petitioner Del
Monte Corporation was a company organized under the laws of the United States
and not engaged in business in the Philippines. Because both the Philippines and the
United States are signatories to the Convention of Paris, which grants to nationals of
the parties the rights and advantages which their own nationals enjoy for the
repression of acts of infringement and unfair competition, the Court, having found
that private respondent's label was an infringement of Del Monte's trademark, held
Del Monte entitled to recover damages.
In Puma Sportschuhfabriken Rudolf Dassler, K.G. v. Intermediate appellate Court, et
al, 29 petitioner Puma was a foreign corporation existing under the laws of the
Federal Republic of Germany not registered to do business and not doing business in
the Philippines, filed a complaint for infringement of trademark and for issuance of a
writ of preliminary injunction against a local manufacturing company. Reversing the
Court of Appeals, this Court held that Puma had legal capacity to bring the suit in the
Philippines under Section 21-A of R.A. No. 166 as amended and under the provisions
of the Paris Convention to which both the Philippines and the Federal Republic of
Germany are parties. The Court also noted that "Puma" is an internationally known
brandname.
The relevancy of the doctrines set out in the cases above cited are conceded by my
distinguished brother Melo, J. in the majority opinion. The majority opinion, however,
goes on to say:
In other words, petitioners may have the capacity to sue for infringement irrespective
of lack of business activity in the Philippines on account of Section 21-A of the
Trademark Law but the question of whether they have an exclusive right over their
symbols as to justify issuance of the controversial writ will depend on actual use of
their trademarks in the Philippines in line with Sections 2 and 2-A of the same law. It
is thus incongruous for petitioners to claim that when a foreign corporation not
licensed to do business in the Philippines files a complaint for infringement, the entity
need not be actually using its trademark in commerce in the Philippines. Such a
foreign corporation may have the personality to file a suit for infringement but it may
not necessarily be entitled to protection due to absence of actual use of the emblem
in the local market.
With great respect, certain essential qualifications must be made respecting the
above paragraph. Firstly, of the petitioners' three (3) marks here involved, two (2) of
them — i.e., "MARK TEN" and "LARK" — were registered in the Philippines on the
basis of actual use in the Philippines, precisely in accordance with the requirements
of Section 2-A and Section 5 (A) of R.A. No. 166 as amended. The pre-registration
use in commerce and trade in the Philippines for at least two (2) months as required
by the statute, is explicitly stated in the Certificates of Registration. The very fact that
the appropriate Philippine Government office issued the Certificates of Registration
necessarily gave rise to the presumption that such pre-registration use had in fact
been shown to the satisfaction of the Philippine Patent Office (now the Bureau of
Patents, Trademark and Technology Transfer ["BPTTT"]). It is important to note that
respondent Fortune has not purported to attack the validity of the trademarks "Mark
Ten" and "Lark" by pretending that no pre-registration use in commerce in the
Philippines had been shown. 30
The third mark of petitioners — "MARK VII" — was registered in the Philippines on
the basis of Section 37 of R.A. No. 166 as amended, i.e., on the basis of registration
in the country of origin and under the Paris Convention. In such registration, by the
express provisions of Section 37 (b) of R.A. No. 166 as amended, prior (pre-
registration) use in commerce in the Philippines need not be alleged.
Whether the Philippine trademark was based on actual use in the Philippines (under
Section 2-A) or on registration in a foreign country of origin (under Section 37), the
statute appears to require that trademarks (at least trademarks not shown to be
internationally "well-known") must continue to be used in trade and commerce in the
Philippines. It is, however, essential to point out that such continued use, as a
requirement for the continued right to the exclusive use of the registered trademark,
is presumed so long as the Certificate of Registration remains outstanding and so
long as the registered trademark owner complies with the requirements of Section 12
of R.A. No. 166 as amended of filing affidavits with the BPTTT on the 5th, 10th and
15th anniversaries of the date of issuance of the Certificate of Registration, showing
that the trademark is still in use or showing that its non-use is not due to any
intention to abandon the same. In the case at bar, again, respondent Fortune has not
explicitly pretended that the petitioners' trademarks have been abandoned by non-
use in trade and commerce in the Philippines although it appears to insinuate such
non-use and abandonment by stressing that petitioners are not doing business in the
Philippines.
That petitioners are not doing business and are not licensed to do business in the
Philippines, does not by any means mean either that petitioners have not complied
with the requirements of Section 12 of R.A. No. 166 relating to affidavits of continued
use, or that petitioners' trademarks are not in fact used in trade and commerce in the
Philippines. In the Converse case, as earlier noted, the Court held that the
circumstance that the foreign owner of a Philippine trademark is not licensed to do
business and is not doing business in the Philippines, does not mean that petitioner's
goods (that is, goods bearing petitioner's trademark) are not sold in the Philippines.
For cigarettes bearing petitioners' trademarks may in fact be imported into and be
available for sale in the Philippines through the acts of importers or distributors .
Petitioners have stated that their "Mark VII," "Mark Ten" and "Lark" cigarettes are in
fact brought into the country and available for sale here in, e.g., duty-free shops,
though not imported into or sold in the Philippines by petitioners themselves. There is
no legal requirement that the foreign registrant itself manufacture and sell its
products here. All the statute requires is the use in trade and commerce in the
Philippines, and that can be carried out by third party manufacturers operating under
license granted by the foreign registrant or by the importation and distribution of
finished products by independent importers or traders. The "use" of the trademark in
such instances by the independent third parties constitutes use of the foreign
registrant's trademarks to the benefit of the foreign registrant. 31
III
We turn to petitioners' claim that they are suffering irreparable damage by reason of
the manufacture and sale of cigarettes under the trademark "MARK." Here again, a
basic argument of private respondent was that petitioners had not shown any
damages because they are not doing business in the Philippines. I respectfully
maintain that this argument is specious and without merit.
That petitioners are not doing business and are not licensed to do business in the
Philippines, does not necessarily mean that petitioners are not in a position to sustain,
and do not in fact sustain, damage through trademark infringement on the part of a
local enterprise. 32 Such trademark infringement by a local company may, for one
thing, affect the volume of importation into the Philippines of cigarettes bearing
petitioners' trademarks by independent or third party traders.
The damage which the petitioners claim they are sustaining by reason of the acts of
private respondents, are not limited to impact upon the volume of actual imports into
the Philippines of petitioners' cigarettes. Petitioners urge that private respondent's
use of its confusingly similar trademark "MARK" is invasive and destructive of
petitioners property right in their registered trademarks because.
a) Plaintiffs' undeniable right to the exclusive use of their registered trademarks is
effectively effaced by defendant's use of a confusingly similar trademark;
b) Plaintiffs would lose control of the reputation of their products as their reputation
will depend on defendant's commercial activities and the quality of defendant's
products;
c) The market in the Philippines for plaintiffs' products will be pre-empted;
d) Purchasers will think that defendant's goods are approved or sponsored by plaintiff;
e) Defendant will be allowed to benefit from the reputation of the plaintiffs' goods
and trademarks;
f) Defendant will be effectively authorized to continually invade plaintiffs' property
rights, for which invasion no fair and reasonable redness can be had in a court of law;
and
g) Plaintiffs will lose their goodwill and trade and the value of their registered
trademarks will irreparably diluted and the damages to be suffered by plaintiffs
cannot be redressed fairly in terms of money. 33
Modern authorities on trademark law view trademarks as symbols which perform
three (3) distinct functions: first, they indicate origin or ownership of the articles to
which they are attached; second, they guarantee that those articles come up to a
certain standard of quality; third, they advertise the articles they symbolize. 34
The first two (2) functions have long been recognized in trademark law which
characterizes the goodwill or business reputation symbolized by a trademark as a
property right protected by law. Thus, the owner of a trademark is held entitled to
exclude others from the use of the same, or of a confusingly similar, mark where
confusion results in diversion of trade or financial injury. At the same time,
trademarks warn against the imitation or faking of products and prevent the
imposition of fraud upon the public. The first two (2) functions of trademarks were
aptly stressed in e.g., the La Chemise Lacoste case where the objectives of
trademark protection were described in the following terms:
. . . to stem the tide of fake and counterfeit consumer items flooding the Philippine
market or exported abroad from our country. The greater victim is not so much the
manufacturer whose product is being faked but
the Filipino consuming public and in the case of exportations, our image abroad . . . .
We buy a kitchen appliance, a household tool, perfume, a face powder, other toilet
articles, watches, brandy or whisky, and items of clothing like jeans, T-shirts,
neckties, etc. — the list is quite lengthy — and pay good money relying on the brand
name as guarantee of its quality and genuine nature only to explode in bitter
frustration and helpless anger because the purchased item turns out to be a shoddy
imitation, albeit a clever looking counterfeit, of the quality product . . . . 35
The third or advertisement function of trademark has become of especial importance
given the modern technology of communication and transportation and the growth of
international trade. 36 Through advertisement in the broadcast and print media, the
owner of the trademark is able to establish a nexus between its trademark products
and the public in regions where the owner does not itself manufacture or sell its own
products. 37 Through advertisement, a well-established and well-earned reputation
may be gained in countries where the trademark owner has itself no established
business connection. 38 Goodwill may thus be seen to be much less closely confined
territorially than, say, a hundred or fifty years ago. 39 It is no longer true that "a
trademark of itself cannot travel to markets where there is no article to wear the
badge and no trader to offer the article." 40 Advertisement of trademarks is geared
towards the promotion of use of the marked article and the attraction of potential
buyers and users;41 by fixing the identity of the marked article in the public mind, it
prepares the way for growth in such commerce whether the commerce be handled
by the trademark owner itself or by its licensees or independent traders.
That a registered trademark has value in itself apart from the trade physically
accompanying its use, has been recognized by our Court. In Ang v. Teodoro,42 the
Court was called upon the determine whether there was infringement in the use of
the same trademark on articles which do not belong to the same class of goods
which the lawful trademark owner manufactures and sells. In holding that there was
infringing use in such case, the Court said:
. . . . such unfair trading can cause injury or damage to the first user of a given
trade-mark, first, by prevention of the natural expansion of his business and, second,
by having his business reputation confused with and put at the mercy of the second
user. When noncompetitive products are sold under the same mark, the gradual
whittling away or dispersion of the identity and hold upon the public mind of the
mark created by its first user, inevitably result. The original owner is entitled to the
preservation of the valuable link between him and the public that has been created
by his ingenuity and the merit of his wares or services . Experience has demonstrated
that when a well-known trade-mark is adopted by another even for a totally different
class of goods, it is done to get the benefit of the reputation and advertisements of
the originator of said mark, to convey to the public a false impression of some
supposed connection between the manufacturer of the article sold under the original
mark and the new articles being tendered to the public under the same or similar
mark . . . The owner of a trademark or tradename has a property right in which he is
entitled to protection, since there is damage to him in the form of confusion of
reputation or goodwill in the mind of the public as well as from confusion of goods .
(Emphasis supplied)
In Sta. Ana v. Maliwat,43 the Court, through J.B.L. Reyes, J., in holding that the use
of the name "Flormen" with respect to shoes was infringement of the mark
"Flormann" used in the men's wear such as shirts, polo shirts and pants, said:
Modern law recognizes that the protection to which the owner of a trade-mark is
entitled is not limited to guarding his goods or business from actual market
competition with identical or similar products of the parties, but extends to all cases
in which the use by a junior appropriator of a trade-mark or trade-name is likely to
lead to a confusing of source, as where prospective purchasers would be misled into
thinking that the complaining party has extended his business into the field (see 148
ALR 56 et seq; 52 Am. Jur. 576) or is in any way connected with the activities of the
infringer; or when it forestalls the normal potential expansion of his business (v. 148
ALR, 77, 84; 52 Am. Jur. 576, 577). . . .. 44 (Emphasis supplied)
Petitioners did not try to put a peso figure on their claimed damage arising from the
erosion and possible eventual destruction of the symbolic value of their trademark.
Such damage, while not easily quantifiable, is nonetheless real and effective. I submit,
with respect, that such continuing damage falls clearly within the concept of
irreparable damage or injury described in Social Security Commission v. Bayona 45 in
the following terms:
Damages are irreparable within the meaning of the rule relative to the issuance of
injunction where there is no standard by which their amount can be measured with
reasonable accuracy (Crouc v. Central Labor Council, 83 ALR, 193). "An irreparable
injury which a court of equity will enjoin includes that degree of wrong of a repeated
and continuing kind which produce hurt, inconvenience, or damage that can be
estimated only by conjecture, and not by any accurate standard of
measurement" (Phipps v. Rogue River Valley Canal Co., 7 ALR, 741). An irreparable
injury to authorize an injunction consists of a serious charge of, or is destructive to,
the property if affects, either physically or in the character in which it has been held
and enjoined, or when the property has some peculiar quality or use, so that its
pecuniary value will not fairly recompense the owner of the loss thereof' (Dunker v.
Field and Tub Club, 92 P., 502).
Respondent corporations made a lengthy discourse on the matter of irreparable
injury they may suffer if the injunction were not issued, but the array of figures they
have laid out merely succeeded in proving that the damage, if any they may suffer,
is susceptible of mathematical computation. It is not then irreparable. As already
stated, this term has a definite meaning in law. It does not have reference to the
amount of damages that may be caused but rather to the difficulty of measuring the
damages inflicted. If full compensation can be obtained by way of damages, equity
will not apply the remedy of injunction(28 Am. Jur., 244; 43 C.J.S., 427, 446). 46
I next turn to private respondent's claim that issuance of an injunction would impose
heavy damage upon itself and upon Government. As noted, private respondent
stated that it had paid many millions of pesos as ad valorem and VAT taxes to the
Government in 1988 and 1989 in connection with its "MARK"
cigarettes. 47 Presumably, the total volume of its business associated with the
manufacture and sale of cigarettes trademarked "MARK" would be even larger. In
addition, private respondent suggests, albeit indirectly only, that hundreds if not
thousands of its employees would find themselves unemployed if it were restrained
from the manufacture and sale of "MARK" cigarettes.
Private respondent's claims concerning alleged damages both to itself and to the
Government, which obviously loomed very large in the mind of the majority here, and
of the Court of Appeals when it lifted the injunction it had issued, appear to me to be
extravagant indeed. Petitioners cannot claim to be entitled to an injunction which
could restrain private respondent from manufacturing and selling cigarettes
completely; petitioner do not pretend to be so entitled to such a comprehensive
injunction. Petitioners seek only the reinstatement of the original injunction issued by
the Court of Appeals, i.e., one that restrains private respondent from using the
trademark "MARK" on its cigarettes. There is nothing to prevent private respondent
from continuing to manufacture and sell cigarettes under any of its already existing
and registered trademarks, of which it has several, or under some new and specially
created trademark(s). Realistically, private respondent, if enjoined, would lose only
the value of the packaging material imprinted with the same trademark (which
cigarettes and material may well be amenable to re-cycling) and the cost of past
advertisements of "MARK" in media, if any. Thus, the apprehension on the part of the
majority which private respondent tried diligently to foment — that the Government
would lose many millions of pesos in tax revenues and that many employees would
lose their jobs, if an injunction is issued — is more apparent than real. The damages
private respondent would sustain from reinstatement of the preliminary injunction are
clearly quantifiable in pesos.
Besides, as pointed out by petitioners, to pay heed to private respondent's creative
economic argument would ultimately mean that the greater the volume of sales and
the profits of the infringer, the greater would be the infringer's claim to be entitled to
continue infringement. I respectfully submit that the law should not countenance
such a cynical result.
My conclusion is that private respondent's claims concerning damage which it would
sustain if the petitioners were granted the injunction they seek, did not constitute a
sufficient basis for overturning the original decision of the Court of Appeals. The
Resolution of the Court of Appeals granting private respondent's Motion to Dissolve,
in effect disregarded everything that Court had set out in its original Decision. The
mere offer and filing of a counterbond does not, by itself, provide a sufficient basis
for lifting the preliminary injunction earlier granted. For all the elements which
supported the original issuance of a preliminary injunction continued to exist. Private
respondent's hyperbolic claims concerning the damages that it and the Government
would sustain by reason of an injunction, had been made earlier both before the trial
court and the Court of Appeals. Finally, it is not enough to say as private respondent
says, that the Court of Appeals in granting its Motion to Dissolve the preliminary
injunction was merely exercising its discretion; for the Court of Appeals obviously was
also exercising its discretion when it rendered its original Decision granting the
preliminary injunction.
I vote to grant due course to the petition for Certiorari, to set aside the Resolution of
the respondent Court of Appeals dated 14 September 1989 in C.A.-G.R. SP No. 13132
and to reinstate the Decision of that same Court dated 5 May 1989.
Shangrila Hotels vs. DGCI, GR No. 159938, March 31, 2006
In this petition for review under Rule 45 of the Rules of Court, petitioners Shangri-La
International Hotel Management, Ltd. (SLIHM), et al. assail and seek to set aside the
Decision dated May 15, 2003[1] of the Court of Appeals (CA) in CA-G.R. CV No.
53351 and its Resolution[2] of September 15, 2003 which effectively affirmed with
modification an earlier decision of the Regional Trial Court (RTC) of Quezon City in
Civil Case No. Q-91-8476, an action for infringement and damages, thereat
commenced by respondent Developers Group of Companies, Inc. (DGCI) against the
herein petitioners.
The facts:
At the core of the controversy are the Shangri-La mark and S logo. Respondent DGCI
claims ownership of said mark and logo in the Philippines on the strength of its prior
use thereof within the country. As DGCI stresses at every turn, it filed on October 18,
1982 with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT)
pursuant to Sections 2 and 4 of Republic Act (RA) No. 166,[3] as amended, an
application for registration covering the subject mark and logo. On May 31, 1983, the
BPTTT issued in favor of DGCI the corresponding certificate of registration
therefor,i.e., Registration No. 31904. Since then, DGCI started using the Shangri-
La mark and S logo in its restaurant business.
On the other hand, the Kuok family owns and operates a chain of hotels with interest
in hotels and hotel-related transactions since 1969. As far back as 1962, it adopted
the name Shangri-La as part of the corporate names of all companies organized
under the aegis of the Kuok Group of Companies (the Kuok Group). The Kuok Group
has used the name Shangri-La in all Shangri-La hotels and hotel-related
establishments around the world which the Kuok Family owned.
To centralize the operations of all Shangri-la hotels and the ownership of the Shangri-
La mark and S logo, the Kuok Group had incorporated in Hong Kong and Singapore,
among other places, several companies that form part of the Shangri-La International
Hotel Management Ltd. Group of Companies. EDSA Shangri-La Hotel and Resort, Inc.,
andMakati Shangri-La Hotel and Resort, Inc. were incorporated in
the Philippines beginning 1987 to own and operate the two (2) hotels put up by the
Kuok Group in Mandaluyong and Makati, Metro Manila.
All hotels owned, operated and managed by the aforesaid SLIHM Group of
Companies adopted and used the distinctive lettering of the name Shangri-La as part
of their trade names.
From the records, it appears that Shangri-La Hotel Singapore commissioned a
Singaporean design artist, a certain Mr. William Lee, to conceptualize and design the
logo of the Shangri-La hotels.
During the launching of the stylized S Logo in February 1975, Mr. Lee gave the
following explanation for the logo, to wit:
The logo which is shaped like a S represents the uniquely Asean
architectural structures as well as keep to the legendary Shangri-la theme
with the mountains on top being reflected on waters below and the
connecting centre [sic] line serving as the horizon. This logo, which is a
bold, striking definitive design, embodies both modernity and
sophistication in balance and thought.
Since 1975 and up to the present, the Shangri-La mark and S logo have been used
consistently and continuously by all Shangri-La hotels and companies in their
paraphernalia, such as stationeries, envelopes, business forms, menus, displays and
receipts.The Kuok Group and/or petitioner SLIHM caused the registration of, and in
fact registered, the Shangri-La mark and S logo in the patent offices in different
countries around the world.
On June 21, 1988, the petitioners filed with the BPTTT a petition, docketed as Inter
Partes Case No. 3145, praying for the cancellation of the registration of the Shangri-
La mark and S logo issued to respondent DGCI on the ground that the same were
illegally and fraudulently obtained and appropriated for the latter's restaurant
business. They also filed in the same office Inter Partes Case No. 3529, praying for
the registration of the same mark and logo in their own names.
Until 1987 or 1988, the petitioners did not operate any establishment in
the Philippines, albeit they advertised their hotels abroad since 1972 in numerous
business, news, and/or travel magazines widely circulated around the world, all
readily available in Philippine magazines and newsstands. They, too, maintained
reservations and booking agents in airline companies, hotel organizations, tour
operators, tour promotion organizations, and in other allied fields in the Philippines.
It is principally upon the foregoing factual backdrop that respondent DGCI filed a
complaint for Infringement and Damages with the RTC of Quezon City against the
herein petitioners SLIHM, Shangri-La Properties, Inc., Makati Shangri-La Hotel &
Resort, Inc., and Kuok Philippine Properties, Inc., docketed as Civil Case No. Q-91-
8476 and eventually raffled to Branch 99 of said court. The complaint with prayer for
injunctive relief and damages alleged that DGCI has, for the last eight (8) years,
been the prior exclusive user in the Philippines of the mark and logo in question and
the registered owner thereof for its restaurant and allied services. As DGCI alleged in
its complaint, SLIHM, et al., in promoting and advertising their hotel and other allied
projects then under construction in the country, had been using a mark and logo
confusingly similar, if not identical, with its mark and S logo. Accordingly, DGCI
sought to prohibit the petitioners, as defendants a quo, from using the Shangri-
La mark and S logo in their hotels in the Philippines.
In their Answer with Counterclaim, the petitioners accused DGCI of appropriating and
illegally using the Shangri-Lamark and S logo, adding that the legal and beneficial
ownership thereof pertained to SLIHM and that the Kuok Group and its related
companies had been using this mark and logo since March 1962 for all their
corporate names and affairs. In this regard, they point to the Paris Convention for
the Protection of Industrial Property as affording security and protection to SLIHMs
exclusive right to said mark and logo. They further claimed having used, since late
1975, theinternationally-known and specially-designed Shangri-La mark
and S logo for all the hotels in their hotel chain.
Pending trial on the merits of Civil Case No. Q-91-8476, the trial court issued a Writ
of Preliminary Injunction enjoining the petitioners from using the subject mark and
logo. The preliminary injunction issue ultimately reached the Court inG.R. No.
104583 entitled Developers Group of Companies, Inc. vs. Court of Appeals, et al. In
a decision[4] datedMarch 8, 1993, the Court nullified the
writ of preliminary injunction issued by the trial court and directed it to proceed with
the main case and decide it with deliberate dispatch.
While trial was in progress, the petitioners filed with the court a motion to suspend
proceedings on account of the pendency before the BPTTT of Inter Partes Case No.
3145 for the cancellation of DGCIs certificate of registration. For its part, respondent
DGCI filed a similar motion in that case, invoking in this respect the pendency of its
infringement case before the trial court. The parties respective motions to suspend
proceedings also reached the Court via their respective petitions in G.R. No.
114802, entitled Developers Group of Companies, Inc. vs. Court of Appeals, et
al. and G.R. No. 111580, entitled Shangri-La International Hotel Management LTD.,
et al. vs. Court of Appeals, et al., which were accordingly consolidated.
In a consolidated decision[5] dated June 21, 2001, the Court, limiting itself to the
core issue of whether, despite the petitioners institution of Inter Partes Case No.
3145 before the BPTTT, herein respondent DGCI can file a subsequent action
for infringement with the regular courts of justice in connection with the same
registered mark, ruled in the affirmative, but nonetheless ordered the BPTTT to
suspend further proceedings in said inter partes case and to await the final outcome
of the main case.
Meanwhile, trial on the merits of the infringement case proceeded. Presented as
DGCIs lone witness was Ramon Syhunliong, President and Chairman of DGCIs Board
of Directors. Among other things, this witness testified that:
1. He is a businessman, with interest in lumber, hotel, hospital, trading
and restaurant businesses but only the restaurant business bears the
name Shangri-La and uses the same and the S-logo as service
marks. The restaurant now known as Shangri-La Finest Chinese Cuisine
was formerly known as the Carvajal Restaurant until December 1982,
when respondent took over said restaurant business.
2. He had traveled widely around Asia prior to 1982,
and admitted knowing the Shangri-La Hotel in Hong Kong as early as
August 1982.
3. The S-logo was one of two (2) designs given to him in December
1982, scribbled on a piece of paper by a jeepney signboard artist with an
office somewhere in Balintawak. The unnamed artist supposedly
produced the two designs after about two or three days from the time he
(Syhunliong) gave the idea of the design he had in mind.
4. On October 15, 1982, or before the unknown signboard artist
supposedly created the Shangri-La and S designs, DGCI was incorporated
with the primary purpose of owning or operating, or both, of hotels and
restaurants.
5. On October 18, 1982, again prior to the alleged creation date of the
mark and logo, DGCI filed an application for trademark registration of the
mark SHANGRI-LA FINEST CHINESE CUISINE & S. Logo with the BPTTT.
On said date, respondent DGCI amended its Articles of Incorporation to
reflect the name of its restaurant, known and operating under the style
and name of SHANGRI-LA FINEST CHINESE CUISINE. Respondent DGCI
obtained Certificate of Registration No. 31904 for the Shangri-La mark
and S logo.
Eventually, the trial court, on the postulate that petitioners, more particularly
petitioner SLIHMs, use of the mark and logo in dispute constitutes an infringement of
DGCIs right thereto, came out with its decision[6] on March 8, 1996 rendering
judgment for DGCI, as follows:
WHEREFORE, judgment is hereby rendered in favor of [respondent DGCI]
and against [SLIHM, et al.]
a) Upholding the validity of the registration of the service mark Shangri-la
and S-Logo in the name of [respondent];
b) Declaring [petitioners] use of said mark and logo as infringement of
[respondents] right thereto;
c) Ordering [petitioners], their representatives, agents, licensees,
assignees and other persons acting under their authority and with their
permission, to permanently cease and desist from using and/or
continuing to use said mark and logo, or any copy, reproduction or
colorable imitation thereof, in the promotion, advertisement, rendition of
their hotel and allied projects and services or in any other manner
whatsoever;
d) Ordering [petitioners] to remove said mark and logo from any
premises, objects, materials and paraphernalia used by them and/or
destroy any and all prints, signs, advertisements or other materials
bearing said mark and logo in their possession and/or under their control;
and
e) Ordering [petitioners], jointly and severally, to indemnify
[respondent] in the amounts of P2,000,000.00 as actual and
compensatory damages, P500,000.00 as attorneys fee and expenses of
litigation. Let a copy of this Decision be certified to the Director, Bureau
of Patents, Trademarks and Technology Transfer for his information and
appropriate action in accordance with the provisions of Section 25,
Republic Act No. 166
Costs against [petitioners].
SO ORDERED. [Words in brackets added.]
Therefrom, the petitioners went on appeal to the CA whereat their
recourse was docketed as CA G.R. SP No. 53351.
As stated at the threshold hereof, the CA, in its assailed Decision of May 15,
2003,[7] affirmed that of the lower court with the modification of deleting the award
of attorneys fees. The appellate court predicated its affirmatory action on the
strength or interplay of the following premises:
1. Albeit the Kuok Group used the mark and logo since 1962, the
evidence presented shows that the bulk use of the tradename was abroad
and not in the Philippines (until 1987). Since the Kuok Group does not
have proof of actual use in commerce in the Philippines(in accordance
with Section 2 of R.A. No. 166), it cannot claim ownership of the mark
and logo in accordance with the holding inKabushi Kaisha Isetan v.
IAC[8], as reiterated in Philip Morris, Inc. v. Court of Appeals.[9]
2. On the other hand, respondent has a right to the mark and logo by
virtue of its prior use in the Philippines and the issuance of Certificate of
Registration No. 31904.
3. The use of the mark or logo in commerce through the bookings
made by travel agencies is unavailing since the Kuok Group did not
establish any branch or regional office in the Philippines. As it were, the
Kuok Group was not engaged in commerce in the Philippinesinasmuch as
the bookings were made through travel agents not owned, controlled or
managed by the Kuok Group.
4. While the Paris Convention protects internationally known marks,
R.A. No. 166 still requires use in commerce in the Philippines. Accordingly,
and on the premise that international agreements, such as Paris
Convention, must yield to a municipal law, the question on the exclusive
right over the mark and logo would still depend on actual use in
commerce in the Philippines.
Petitioners then moved for a reconsideration, which motion was denied by the CA in
its equally assailed Resolution ofSeptember 15, 2003.[10]
As formulated by the petitioners, the issues upon which this case hinges are:
1. Whether the CA erred in finding that respondent had the right to
file an application for registration of the Shangri-La mark and S logo
although respondent never had any prior actual commercial use thereof;
2. Whether the CA erred in finding that respondent's supposed use of
the identical Shangri-La mark and S logo of the petitioners was not
evident bad faith and can actually ripen into ownership, much less
registration;
3. Whether the CA erred in overlooking petitioners' widespread prior
use of the Shangri-La mark and S logo in their operations;
4. Whether the CA erred in refusing to consider that petitioners are
entitled to protection under both R.A. No. 166, the old trademark law,
and the Paris Convention for the Protection of Industrial Property;
5. Whether the CA erred in holding that SLIHM did not have the right
to legally own the Shangri-La mark and S logo by virtue of and despite
their ownership by the Kuok Group;
6. Whether the CA erred in ruling that petitioners' use of the mark and
logo constitutes actionable infringement;
7. Whether the CA erred in awarding damages in favor of respondent
despite the absence of any evidence to support the same, and in failing to
award relief in favor of the petitioners; and
8. Whether petitioners should be prohibited from continuing their use
of the mark and logo in question.
There are two preliminary issues, however, that respondent DGCI calls our attention
to, namely:
1. Whether the certification against forum-shopping submitted on behalf of the
petitioners is sufficient;
2. Whether the issues posed by petitioners are purely factual in nature
hence improper for resolution in the instant petition for review on certiorari.
DGCI claims that the present petition for review should be dismissed outright for
certain procedural defects, to wit: an insufficient certification against forum shopping
and raising pure questions of fact. On both counts, we find the instant petition
formally and substantially sound.
In its Comment, respondent alleged that the certification against forum shopping
signed by Atty. Lee Benjamin Z. Lerma on behalf and as counsel of the petitioners
was insufficient, and that he was not duly authorized to execute such document.
Respondent further alleged that since petitioner SLIHM is a foreign entity based
in Hong Kong, the Director's Certificate executed by Mr. Madhu Rama Chandra Rao,
embodying the board resolution which authorizes Atty. Lerma to act for SLIHM and
execute the certification against forum shopping, should contain the authentication
by a consular officer of the Philippines in Hong Kong. In National Steel Corporation v.
CA,[11] the Court has ruled that the certification on non-forum shopping may be
signed, for and in behalf of a corporation, by a specifically authorized lawyer who has
personal knowledge of the facts required to be disclosed in such document. The
reason for this is that a corporation can only exercise its powers through its board of
directors and/or its duly authorized officers and agents. Physical acts, like the signing
of documents, can be performed only by natural persons duly authorized for the
purpose.[12] Moreover, Rule 7, Section 5 of the Rules of Court concerning the
certification against forum shopping does not require any consular certification if the
petitioner is a foreign entity. Nonetheless, to banish any lingering doubt, petitioner
SLIHM furnished this Court with a consular certification dated October 29,
2003 authenticating the Director's Certificate authorizing Atty. Lerma to execute the
certification against forum shopping, together with petitioners manifestation
ofFebruary 9, 2004.
Respondent also attacks the present petition as one that raises pure questions of fact.
It points out that in a petition for review under Rule 45 of the Rules of Court, the
questions that may properly be inquired into are strictly circumscribed by the express
limitation that the petition shall raise only questions of law which must be distinctly
set forth.[13] We do not, however, find that the issues involved in this petition
consist purely of questions of fact. These issues will be dealt with as we go through
the questions raised by the petitioners one by one.
Petitioners' first argument is that the respondent had no right to file an application
for registration of the Shangri-Lamark and S logo because it did not have prior actual
commercial use thereof. To respondent, such an argument raises a question of fact
that was already resolved by the RTC and concurred in by the CA.
First off, all that the RTC found was that respondent was the prior user and registrant
of the subject mark and logo in the Philippines. Taken in proper context, the trial
courts finding on prior use can only be interpreted to mean that respondent used the
subject mark and logo in the country before the petitioners did. It cannot be
construed as being a factual finding that there was prior use of the mark and logo
before registration.
Secondly, the question raised is not purely factual in nature. In the context of this
case, it involves resolving whether a certificate of registration of a mark, and the
presumption of regularity in the performance of official functions in the issuance
thereof, are sufficient to establish prior actual use by the registrant. It further entails
answering the question of whether prior actual use is required before there may be a
valid registration of a mark.
Under the provisions of the former trademark law, R.A. No. 166, as amended, which
was in effect up to December 31, 1997, hence, the law in force at the time of
respondent's application for registration of trademark, the root of ownership of a
trademark is actual use in commerce. Section 2 of said law requires that before a
trademark can be registered, it must have been actually used in commerce and
service for not less than two months in the Philippinesprior to the filing of an
application for its registration.
Registration, without more, does not confer upon the registrant an absolute right to
the registered mark. The certificate of registration is merely a prima facie proof that
the registrant is the owner of the registered mark or trade name. Evidence of prior
and continuous use of the mark or trade name by another can overcome the
presumptive ownership of the registrant and may very well entitle the former to be
declared owner in an appropriate case.[14]
Among the effects of registration of a mark, as catalogued by the Court in Lorenzana
v. Macagba,[15] are:
1. Registration in the Principal Register gives rise to
a presumption of the validity of the registration, the registrant's
ownership of the mark, and his right to the exclusive use thereof. x x x
2. Registration in the Principal Register is limited to the
actual owner of the trademark and proceedings therein pass on the
issue of ownership, which may be contested through opposition or
interference proceedings, or, after registration, in a petition for
cancellation. xxx
[Emphasis supplied]
Ownership of a mark or trade name may be acquired not necessarily by registration
but by adoption and use in trade or commerce. As between actual use of a mark
without registration, and registration of the mark without actual use thereof, the
former prevails over the latter. For a rule widely accepted and firmly entrenched,
because it has come down through the years, is that actual use in commerce or
business is a pre-requisite to the acquisition of the right of ownership.[16]While the
present law on trademarks[17] has dispensed with the requirement of prior actual
use at the time of registration, the law in force at the time of registration must be
applied, and thereunder it was held that as a condition precedent to registration of
trademark, trade name or service mark, the same must have been in actual use in
the Philippines before the filing of the application for registration.[18] Trademark is a
creation of use and therefore actual use is a pre-requisite to exclusive ownership and
its registration with the Philippine Patent Office is a mere administrative confirmation
of the existence of such right.[19] By itself, registration is not a mode of acquiring
ownership. When the applicant is not the owner of the trademark being applied for,
he has no right to apply for registration of the same. Registration merely creates
a prima facie presumption of the validity of the registration, of the registrant's
ownership of the trademark and of the exclusive right to the use thereof.[20] Such
presumption, just like the presumptive regularity in the performance of official
functions, is rebuttable and must give way to evidence to the contrary.Here,
respondent's own witness, Ramon Syhunliong, testified that a jeepney signboard
artist allegedly commissioned to create the mark and logo submitted his designs only
in December 1982.[21] This was two-and-a-half months after the filing of the
respondents trademark application on October 18, 1982 with the BPTTT. It was also
only in December 1982 when the respondent's restaurant was opened for
business.[22] Respondent cannot now claim before the Court that the certificate of
registration itself is proof that the two-month prior use requirement was complied
with, what with the fact that its very own witness testified otherwise in the trial court.
And because at the time (October 18, 1982) the respondent filed its application for
trademark registration of the Shangri-La mark and S logo, respondent was not using
these in the Philippines commercially, the registration is void.Petitioners also argue
that the respondent's use of the Shangri-La mark and S logo was in evident bad faith
and cannot therefore ripen into ownership, much less registration. While the
respondent is correct in saying that a finding of bad faith is factual, not
legal,[23] hence beyond the scope of a petition for review, there are, however, noted
exceptions thereto. Among these exceptions are:
1. When the inference made is manifestly mistaken, absurd or
impossible;[24]
2. When there is grave abuse of discretion;[25]
3. When the judgment is based on a misapprehension of facts;[26]
4. When the findings of fact are conflicting;[27] and
5. When the facts set forth in the petition as well as in the petitioner's
main and reply briefs are not disputed by the respondent.[28]
And these are naming but a few of the recognized exceptions to the rule. The CA
itself, in its Decision of May 15, 2003, found that the respondents president and
chairman of the board, Ramon Syhunliong, had been a guest at the petitioners' hotel
before he caused the registration of the mark and logo, and surmised that he must
have copied the idea there:
Did Mr. Ramon Syhunliong, [respondent's] President copy the mark and
devise from one of [petitioners] hotel (Kowloon Shangri-la) abroad? The
mere fact that he was a visitor of [petitioners] hotel abroad at one time
(September 27, 1982) establishes [petitioners] allegation that he got the
idea there.[29]
Yet, in the very next paragraph, despite the preceding admission that the mark and
logo must have been copied, the CA tries to make it appear that the adoption of the
same mark and logo could have been coincidental:
The word or name Shangri-la and the S-logo, are not uncommon. The
word Shangri-la refers to a (a) remote beautiful imaginary place where
life approaches perfection or (b) imaginary mountain land depicted as a
utopia in the novel Lost Horizon by James Hilton. The Lost Horizon was a
well-read and popular novel written in 1976. It is not impossible that the
parties, inspired by the novel, both adopted the mark for their business to
conjure [a] place of beauty and pleasure.
The S-logo is, likewise, not unusual. The devise looks like a modified Old
English print.[30]
To jump from a recognition of the fact that the mark and logo must have been
copied to a rationalization for the possibility that both the petitioners and the
respondent coincidentally chose the same name and logo is not only contradictory,
but also manifestly mistaken or absurd. Furthermore, the S logo appears nothing like
the Old English print that the CA makes it out to be, but is obviously a symbol with
oriental or Asian overtones. At any rate, it is ludicrous to believe that the parties
would come up with the exact same lettering for the word Shangri-La and the exact
same logo to boot. As correctly observed by the petitioners, to which we are in full
accord:
When a trademark copycat adopts the word portion of another's
trademark as his own, there may still be some doubt that the adoption is
intentional. But if he copies not only the word but also the word's exact
font and lettering style and in addition, he copies also the logo portion of
the trademark, the slightest doubt vanishes. It is then replaced by the
certainty that the adoption was deliberate, malicious and in bad faith.[31]
It is truly difficult to understand why, of the millions of terms and combination of
letters and designs available, the respondent had to choose exactly the same mark
and logo as that of the petitioners, if there was no intent to take advantage of the
goodwill of petitioners' mark and logo.[32]
One who has imitated the trademark of another cannot bring an action for
infringement, particularly against the true owner of the mark, because he would be
coming to court with unclean hands.[33] Priority is of no avail to the bad faith
plaintiff. Good faith is required in order to ensure that a second user may not merely
take advantage of the goodwill established by the true owner.
This point is further bolstered by the fact that under either Section 17 of R.A. No.
166, or Section 151 of R.A. No. 8293, or Article 6bis(3) of the Paris Convention, no
time limit is fixed for the cancellation of marks registered or used in bad
faith.[34] This is precisely why petitioners had filed an inter partes case before the
BPTTT for the cancellation of respondent's registration, the proceedings on
which were suspended pending resolution of the instant case.
Respondent DGCI also rebukes the next issue raised by the petitioners as being
purely factual in nature, namely, whether the CA erred in overlooking petitioners'
widespread prior use of the Shangri-La mark and S logo in their operations. The
question, however, is not whether there had been widespread prior use, which would
have been factual, but whether that prior use entitles the petitioners to use the mark
and logo in the Philippines. This is clearly a question which is legal in nature.
It has already been established in the two courts below, and admitted
by the respondents president himself, that petitioners had prior widespread use of
the mark and logo abroad:
There is, to be sure, an impressive mass of proof that petitioner
SLIHM and its related companies abroad used the name and logo for one
purpose or another x x x.[35] [Emphasis supplied]
In respondent's own words, [T]he Court of Appeals did note petitioners' use of the
mark and logo but held that such use did not confer to them ownership or exclusive
right to use them in the Philippines.[36] To petitioners' mind, it was error for the CA
to rule that their worldwide use of the mark and logo in dispute could not have
conferred upon them any right thereto. Again, this is a legal question which is well
worth delving into.
R.A. No. 166, as amended, under which this case was heard and decided provides:
Section 2. What are registrable. - Trademarks, trade names and service
marks owned by persons, corporations, partnerships or associations
domiciled in the Philippines and by persons, corporations, partnerships or
associations domiciled in any foreign country may be registered in
accordance with the provisions of this Act: Provided, That said
trademarks trade names, or service marks are actually in use in
commerce and services not less than two months in the
Philippines before the time the applications for registration are filed:
And provided, further, That the country of which the applicant for
registration is a citizen grants by law substantially similar privileges to
citizens of the Philippines, and such fact is officially certified, with a
certified true copy of the foreign law translated into the English language,
by the government of the foreign country to the Government of the
Republic of the Philippines.
Section 2-A. Ownership of trademarks, trade names and service marks;
how acquired. - Anyone who lawfully produces or deals in merchandise of
any kind or who engages in any lawful business, or who renders any
lawful service in commerce, by actual use thereof in manufacture or
trade, in business, and in the service rendered, may appropriate to his
exclusive use a trademark, a trade name, or a servicemark not so
appropriated by another, to distinguish his merchandise, business or
service from the merchandise, business or services of others. The
ownership or possession of a trademark, trade name, service mark,
heretofore or hereafter appropriated, as in this section provided, shall be
recognized and protected in the same manner and to the same extent as
are other property rights known to this law. [Emphasis supplied]
Admittedly, the CA was not amiss in saying that the law requires the actual use in
commerce of the said trade name and S logo in the Philippines. Hence, consistent
with its finding that the bulk of the petitioners' evidence shows that the alleged use
of the Shangri-La trade name was done abroad and not in the Philippines, it
is understandable for that court to rule in respondents favor. Unfortunately, however,
what the CA failed to perceive is that there is a crucial difference between the
aforequoted Section 2 and Section 2-A of R.A. No. 166. For, while Section 2 provides
for what isregistrable, Section 2-A, on the other hand, sets out how ownership is
acquired. These are two distinct concepts.
Under Section 2, in order to register a trademark, one must be the owner thereof and
must have actually used the mark in commerce in the Philippines for 2 months prior
to the application for registration. Since ownership of the trademark is required for
registration, Section 2-A of the same law sets out to define how one goes about
acquiring ownership thereof. Under Section 2-A, it is clear that actual use in
commerce is also the test of ownership but the provision went further by saying that
the mark must not have been so appropriated by another. Additionally, it is
significant to note that Section 2-A does not require that the actual use of a
trademark must be within the Philippines. Hence, under R.A. No. 166, as amended,
one may be an owner of a mark due to actual use thereof but not yet have the right
to register such ownership here due to failure to use it within the Philippines for two
months.
While the petitioners may not have qualified under Section 2 of R.A. No. 166 as a
registrant, neither did respondent DGCI, since the latter also failed to fulfill the 2-
month actual use requirement. What is worse, DGCI was not even the owner of the
mark. For it to have been the owner, the mark must not have been already
appropriated (i.e.,used) by someone else. At the time of respondent DGCI's
registration of the mark, the same was already being used by the petitioners, albeit
abroad, of which DGCIs president was fully aware.
It is respondent's contention that since the petitioners adopted the Shangri-La mark
and S logo as a mere corporate name or as the name of their hotels, instead of using
them as a trademark or service mark, then such name and logo are not trademarks.
The two concepts of corporate name or business name and trademark or service
mark, are not mutually exclusive. It is common, indeed likely, that the name of a
corporation or business is also a trade name, trademark or service mark. Section 38
of R.A. No. 166 defines the terms as follows:
Sec. 38. Words and terms defined and construed In the construction of
this Act, unless the contrary is plainly apparent from the context The term
trade name includes individual names and surnames, firm names, trade
names, devices or words used by manufacturers, industrialists, merchants,
agriculturists, and others to identify their business, vocations or
occupations; the names or titles lawfully adopted and used by
natural or juridical persons, unions, and any manufacturing, industrial,
commercial, agricultural or other organizations engaged in trade or
commerce.
The term trade mark includes any word, name, symbol, emblem, sign or
device or any combination thereof adopted and used by a manufacturer
or merchant to identify his goods and distinguish them from those
manufactured, sold or dealt in by others.
The term service mark means a mark used in the sale or advertising of
services to identify the services of one person and distinguish them
from the services of others and includes without limitation the
marks, names, symbols, titles, designations, slogans, character
names, and distinctive features of radio or other advertising.
[Emphasis supplied]
Clearly, from the broad definitions quoted above, the petitioners can be considered
as having used the Shangri-Laname and S logo as a tradename and service mark.
The new Intellectual Property Code (IPC), Republic Act No. 8293, undoubtedly
shows the firm resolve of the Philippines to observe and follow the Paris
Convention by incorporating the relevant portions of the Convention such
that persons who may question a mark (that is, oppose registration, petition for the
cancellation thereof, sue for unfair competition) include persons whose
internationally well-known mark, whether or not registered, is identical with or
confusingly similar to or constitutes a translation of a mark that is sought to be
registered or is actually registered.[37]
However, while the Philippines was already a signatory to the Paris Convention, the
IPC only took effect on January 1, 1988, and in the absence of a retroactivity clause,
R.A. No. 166 still applies.[38] Under the prevailing law and jurisprudence at the time,
the CA had not erred in ruling that:
The Paris Convention mandates that protection should be afforded to
internationally known marks as signatory to the Paris Convention, without
regard as to whether the foreign corporation is registered, licensed or
doing business in the Philippines. It goes without saying that the
same runs afoul to Republic Act No. 166, which requires the
actual use in commerce in the Philippines of the subject mark or
devise. The apparent conflict between the two (2) was settled by the
Supreme Court in this wise -
Following universal acquiescence and comity, our municipal
law on trademarks regarding the requirement of
actual use in the Philippines must subordinate an
international agreement inasmuch as the apparent clash is
being decided by a municipal tribunal (Mortensen vs. Peters,
Great Britain, High Court of Judiciary of Scotland, 1906, 8
Sessions 93; Paras, International Law and World Organization,
1971 Ed., p. 20). Withal, the fact that international law has
been made part of the law of the land does not by any means
imply the primacy of international law over national law in the
municipal sphere. Under the doctrine of incorporation as
applied in most countries, rules of international law are given
a standing equal, not superior, to national legislative
enactments (Salonga and Yap, Public International Law,
Fourth ed., 1974, p. 16).[39][Emphasis supplied]
Consequently, the petitioners cannot claim protection under the Paris Convention.
Nevertheless, with the double infirmity of lack of two-month prior use, as well as bad
faith in the respondent's registration of the mark, it is evident
that the petitioners cannot be guilty of infringement. It would be a great injustice to
adjudge the petitioners guilty of infringing a mark when they are actually the
originator and creator thereof.
Nor can the petitioners' separate personalities from their mother corporation be an
obstacle in the enforcement of their rights as part of the Kuok Group of Companies
and as official repository, manager and operator of the subject mark and logo.
Besides, R.A. No. 166 did not require the party seeking relief to
be the owner of the mark but any person who believes that he is or will be damaged
by the registration of a mark or trade name.[40]
WHEREFORE, the instant petition is GRANTED. The assailed Decision and
Resolution of the Court of Appeals dated May 15, 2003 and September 15, 2003,
respectively, and the Decision of the Regional Trial Court of Quezon City dated March
8, 1996 are hereby SET ASIDE. Accordingly, the complaint for infringement in Civil
Case No. Q-91-8476 is ordered DISMISSED.
SO ORDERED.
Asia rewBery vs. CA, GR No. 103543, 5 July 1993
On September 15, 1988, San Miguel Corporation (SMC) filed a complaint against Asia
Brewery Inc. (ABI) for infringement of trademark and unfair competition on account
of the latter's BEER PALE PILSEN or BEER NA BEER product which has been
competing with SMC's SAN MIGUEL PALE PILSEN for a share of the local beer market.
(San Miguel Corporation vs. Asia Brewery Inc., Civ. Case. No. 56390, RTC Branch 166,
Pasig, Metro Manila.).
On August 27, 1990, a decision was rendered by the trial Court, presided over by
Judge Jesus O. Bersamira, dismissing SMC's complaint because ABI "has not
committed trademark infringement or unfair competition against" SMC (p. 189, Rollo).
SMC appealed to the Court of Appeals (C.A.-G.R. CV No. 28104). On September 30,
1991, the Court of Appeals (Sixth Division composed of Justice Jose C. Campos, Jr.,
chairman and ponente, and Justices Venancio D. Aldecoa Jr. and Filemon H. Mendoza,
as members) reversed the trial court. The dispositive part of the decision reads as
follows:
In the light of the foregoing analysis and under the plain language of the applicable
rule and principle on the matter, We find the defendant Asia Brewery Incorporated
GUILTY of infringement of trademark and unfair competition. The decision of the trial
court is hereby REVERSED, and a new judgment entered in favor of the plaintiff and
against the defendant as follows:
(1) The defendant Asia Brewery Inc. its officers, agents, servants and employees are
hereby permanently enjoined and restrained from manufacturing, putting up, selling,
advertising, offering or announcing for sale, or supplying Beer Pale Pilsen, or any
similar preparation, manufacture or beer in bottles and under labels substantially
identical with or like the said bottles and labels of plaintiff San Miguel Corporation
employed for that purpose, or substantially identical with or like the bottles and
labels now employed by the defendant for that purpose, or in bottles or under labels
which are calculated to deceive purchasers and consumers into the belief that the
beer is the product of the plaintiff or which will enable others to substitute, sell or
palm off the said beer of the defendant as and for the beer of the plaintiff-
complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered to render an accounting and
pay the San Miguel Corporation double any and all the payments derived by
defendant from operations of its business and the sale of goods bearing the mark
"Beer Pale Pilsen" estimated at approximately Five Million Pesos (P5,000,000.00); to
recall all its products bearing the mark "Beer Pale Pilsen" from its retailers and deliver
these as well as all labels, signs, prints, packages, wrappers, receptacles and
advertisements bearing the infringing mark and all plates, molds, materials and other
means of making the same to the Court authorized to execute this judgment for
destruction.
(3) The defendant is hereby ordered to pay plaintiff the sum of Two Million Pesos
(P2,000,000.00) as moral damages and Half a Million Pesos (P5,000,000.00) by way
of exemplary damages.
(4) The defendant is further ordered to pay the plaintiff attorney's fees in the amount
of P250,000.00 plus costs to this suit. (p. 90, Rollo.)
Upon a motion for reconsideration filed by ABI, the above dispositive part of the
decision, was modified by the separate opinions of the Special Sixth Division 1 so that
it should read thus:
In the light of the foregoing analysis and under the plain language of the applicable
rule and principle on the matter, We find the defendant Asia Brewery
Incorporated GUILTY of infringement of trademark and unfair competition . The
decision of the trial court is hereby REVERSED, and a new judgment entered in favor
of the plaintiff and against the defendant as follows:
(1) The defendant Asia Brewery Inc., its officers, agents, servants and employees are
hereby permanently enjoined and restrained from manufacturing, putting up, selling,
advertising, offering or announcing for sale, or supplying Beer Pale Pilsen, or any
similar preparation, manufacture or beer in bottles and under labels substantially
identical with or like the said bottles and labels of plaintiff San Miguel Corporation
employed for that purpose, or substantially identical with or like the bottles and
labels now employed by the defendant for that purpose, or in bottles or under labels
which are calculated to deceive purchasers and consumers into the belief that the
beer if the product of the plaintiff or which will enable others to substitute, sell or
palm off the said beer of the defendant as and for the beer of the plaintiff-
complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered 2 to recall all its products
bearing the mark Beer Pale Pilsen from its retailers and deliver these as well as all
labels, signs, prints, packages, wrappers, receptacles and advertisements bearing the
infringing mark and all plates, molds, materials and other means of making the same
to the Court authorized to execute this judgment for destruction.
(3) The defendant is hereby ordered to pay plaintiff the sum of Two Million Pesos
(P2,000,000.00) as moral damages and Half a Million Pesos (P500,000.00) by way of
exemplary damages.
(4) The defendant is further ordered to pay the plaintiff attorney's fees in the amount
of P250,000.00 plus costs of this suit.
In due time, ABI appealed to this Court by a petition for certiorari under Rule 45 of
the Rules of Court. The lone issue in this appeal is whether ABI infringes SMC's
trademark: San Miguel Pale Pilsen with Rectangular Hops and Malt Design , and
thereby commits unfair competition against the latter. It is a factual issue (Phil. Nut
Industry Inc. v. Standard Brands Inc., 65 SCRA 575) and as a general rule, the
findings of the Court of Appeals upon factual questions are conclusive and ought not
to be disturbed by us. However, there are exceptions to this general rule, and they
are:
(1) When the conclusion is grounded entirely on speculation, surmises and
conjectures;
(2) When the inference of the Court of Appeals from its findings of fact is manifestly
mistaken, absurd and impossible;
(3) Where there is grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the appellate court, in making its findings, went beyond the issues of the
case, and the same are contrary to the admissions of both the appellant and the
appellee;
(6) When the findings of said court are contrary to those of the trial court;
(7) When the findings are without citation of specific evidence on which they are
based;
(8) When the facts set forth in the petition as well as in the petitioner's main and
reply briefs are not disputed by the respondents; and
(9) When the findings of facts of the Court of Appeals are premised on the absence
of evidence and are contradicted on record. (Reynolds Philippine Corporation vs.
Court of Appeals, 169 SCRA 220, 223 citing, Mendoza vs. Court of Appeals, 156 SCRA
597; Manlapaz vs. Court of Appeals, 147 SCRA 238; Sacay vs. Sandiganbayan, 142
SCRA 593, 609; Guita vs. CA, 139 SCRA 576; Casanayan vs. Court of Appeals, 198
SCRA 333, 336; also Apex Investment and Financing Corp. vs. IAC, 166 SCRA 458
[citing Tolentino vs. De Jesus, 56 SCRA 167; Carolina Industries, Inc. vs. CMS Stock
Brokerage, Inc., 97 SCRA 734; Manero vs. CA, 102 SCRA 817; and Moran, Jr. vs. CA,
133 SCRA 88].)
Under any of these exceptions, the Court has to review the evidence in order to
arrive at the correct findings based on the record (Roman Catholic Bishop of Malolos,
Inc. vs. IAC, 191 SCRA 411, 420.) Where findings of the Court of Appeals and trial
court are contrary to each other, the Supreme Court may scrutinize the evidence on
record. (Cruz vs. CA, 129 SCRA 222, 227.)
The present case is one of the exceptions because there is no concurrence between
the trial court and the Court of Appeals on the lone factual issue of whether ABI, by
manufacturing and selling its BEER PALE PILSEN in amber colored steinie bottles of
320 ml. capacity with a white painted rectangular label has committed trademark
infringement and unfair competition against SMC.
Infringement of trademark is a form of unfair competition (Clarke vs. Manila Candy
Co., 36 Phil. 100, 106). Sec. 22 of Republic Act No. 166, otherwise known as the
Trademark Law, defines what constitutes infringement:
Sec. 22. Infringement, what constitutes. — Any person who shall use, without the
consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of
any registered mark or trade-name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection with which such
use is likely to cause confusion or mistake or to deceive purchasers or others as to
the source or origin of such goods or services, or identity of such business; or
reproduce, counterfeit, copy or colorably imitate any such mark or trade-name and
apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business or services, shall be liable to a civil action
by the registrant for any or all of the remedies herein provided. (Emphasis supplied.)
This definition implies that only registered trade marks, trade names and service
marks are protected against infringement or unauthorized use by another or others.
The use of someone else's registered trademark, trade name or service mark is
unauthorized, hence, actionable, if it is done "without the consent of the registrant."
(Ibid.)
The registered trademark of SMC for its pale pilsen beer is:
San Miguel Pale Pilsen With Rectangular Hops and Malt Design. (Philippine Bureau of
Patents, Trademarks and Technology Transfer Trademark Certificate of Registration
No. 36103, dated 23 Oct. 1986,
(p. 174, Rollo.)
As described by the trial court in its decision (Page 177, Rollo):
. . . . a rectangular design [is] bordered by what appears to be minute grains
arranged in rows of three in which there appear in each corner hop designs . At the
top is a phrase written in small print "Reg. Phil. Pat. Off." and at the bottom "Net
Contents: 320 Ml." The dominant feature is the phrase " San Miguel" written
horizontally at the upper portion. Below are the words "Pale Pilsen" written diagonally
across the middle of the rectangular design. In between is a coat of arms and the
phrase "Expertly Brewed." The "S" in "San" and the "M" of "Miguel," "P" of "Pale" and
"Pilsen" are written in Gothic letters with fine strokes of serifs, the kind that first
appeared in the 1780s in England and used for printing German as distinguished
from Roman and Italic. Below "Pale Pilsen" is the statement "And Bottled by" (first
line, "San Miguel Brewery" (second line), and "Philippines" (third line). (p. 177, Rollo;
Emphasis supplied.)
On the other hand, ABI's trademark, as described by the trial court, consists of:
. . . a rectangular design bordered by what appear to be buds of flowers with leaves.
The dominant feature is "Beer" written across the upper portion of the rectangular
design. The phrase "Pale Pilsen" appears immediately below in smaller block letters.
To the left is a hop design and to the right, written in small prints, is the phrase "Net
Contents 320 ml." Immediately below "Pale Pilsen" is the statement written in three
lines "Especially brewed and bottled by" (first line), "Asia Brewery Incorporated"
(second line), and "Philippines" (third line), (p. 177, Rollo; Emphasis supplied.)
Does ABI's BEER PALE PILSEN label or "design" infringe upon SMC's SAN MIGUEL
PALE PILSEN WITH RECTANGULAR MALT AND HOPS DESIGN? The answer is "No."
Infringement is determined by the "test of dominancy" rather than by differences or
variations in the details of one trademark and of another. The rule was formulated
in Co Tiong Sa vs. Director of Patents, 95 Phil. 1, 4 (1954); reiterated in Lim Hoa vs.
Director of Patents, 100 Phil. 214, 216-217 (1956), thus:
It has been consistently held that the question of infringement of a trademark is to
be determined by the test of dominancy. Similarity in size, form and color, while
relevant, is not conclusive. If the competing trademark contains the main or essential
or dominant features of another, and confusion and deception is likely to result,
infringement takes place. Duplication or imitation is not necessary; nor it is necessary
that the infringing label should suggest an effort to imitate. [C. Neilman Brewing Co.
vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co., vs.
Pflugh (CC) 180 Fed. 579]. The question at issue in cases of infringement of
trademarks is whether the use of the marks involved would be likely to cause
confusion or mistakes in the mind of the public or deceive purchasers . (Auburn
Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; . . . .) (Emphasis
supplied.)
In Forbes, Munn & Co. (Ltd.) vs. Ang San To , 40 Phil. 272, 275, the test was
similarity or "resemblance between the two (trademarks) such as would be likely to
cause the one mark to be mistaken for the other. . . . [But] this is not such similitude
as amounts to identity."
In Phil. Nut Industry Inc. vs. Standard Brands Inc. , 65 SCRA 575, the court was more
specific: the test is "similarity in the dominant features of the trademarks."
What are the dominant features of the competing trademarks before us?
There is hardly any dispute that the dominant feature of SMC's trademark is the
name of the product: SAN MIGUEL PALE PILSEN, written in white Gothic letters with
elaborate serifs at the beginning and end of the letters "S" and "M" on an amber
background across the upper portion of the rectangular design.
On the other hand, the dominant feature of ABI's trademark is the name: BEER PALE
PILSEN, with the word "Beer" written in large amber letters, larger than any of the
letters found in the SMC label.
The trial court perceptively observed that the word "BEER" does not appear in SMC's
trademark, just as the words "SAN MIGUEL" do not appear in ABI's trademark. Hence,
there is absolutely no similarity in the dominant features of both trademarks.
Neither in sound, spelling or appearance can BEER PALE PILSEN be said to be
confusingly similar to SAN MIGUEL PALE PILSEN. No one who purchases BEER PALE
PILSEN can possibly be deceived that it is SAN MIGUEL PALE PILSEN. No evidence
whatsoever was presented by SMC proving otherwise.
Besides the dissimilarity in their names, the following other dissimilarities in the trade
dress or appearance of the competing products abound:
(1) The SAN MIGUEL PALE PILSEN bottle has a slender tapered neck.
The BEER PALE PILSEN bottle has a fat, bulging neck.
(2) The words "pale pilsen" on SMC's label are printed in bold and laced letters along
a diagonal band, whereas the words "pale pilsen" on ABI's bottle are half the size and
printed in slender block letters on a straight horizontal band. (See Exhibit "8-a".).
(3) The names of the manufacturers are prominently printed on their respective
bottles.
SAN MIGUEL PALE PILSEN is "Bottled by the San Miguel Brewery, Philippines,"
whereas BEER PALE PILSEN is "Especially brewed and bottled by Asia Brewery
Incorporated, Philippines."
(4) On the back of ABI's bottle is printed in big, bold letters, under a row of flower
buds and leaves, its copyrighted slogan:
"BEER NA BEER!"
Whereas SMC's bottle carries no slogan.
(5) The back of the SAN MIGUEL PALE PILSEN bottle carries the SMC logo, whereas
the BEER PALE PILSEN bottle has no logo.
(6) The SAN MIGUEL PALE PILSEN bottle cap is stamped with a coat of arms and the
words "San Miguel Brewery Philippines" encircling the same.
The BEER PALE PILSEN bottle cap is stamped with the name "BEER" in the center,
surrounded by the words "Asia Brewery Incorporated Philippines."
(7) Finally, there is a substantial price difference between BEER PALE PILSEN
(currently at P4.25 per bottle) and SAN MIGUEL PALE PILSEN (currently at P7.00 per
bottle). One who pays only P4.25 for a bottle of beer cannot expect to receive San
Miguel Pale Pilsen from the storekeeper or bartender.
The fact that the words pale pilsen are part of ABI's trademark does not constitute an
infringement of SMC's trademark: SAN MIGUEL PALE PILSEN, for "pale pilsen" are
generic words descriptive of the color ("pale"), of a type of beer ("pilsen"), which is a
light bohemian beer with a strong hops flavor that originated in the City of Pilsen in
Czechoslovakia and became famous in the Middle Ages. (Webster's Third New
International Dictionary of the English Language, Unabridged. Edited by Philip
Babcock Gove. Springfield, Mass.: G & C Merriam Co., [c] 1976, page 1716.) "Pilsen"
is a "primarily geographically descriptive word," (Sec. 4, subpar. [e] Republic Act No.
166, as inserted by Sec. 2 of R.A. No. 638) hence, non-registerable and not
appropriable by any beer manufacturer. The Trademark Law provides:
Sec. 4. . . .. The owner of trade-mark, trade-name or service-mark used to
distinguish his goods, business or services from the goods, business or services of
others shall have the right to register the same [on the principal register], unless it:
xxx xxx xxx
(e) Consists of a mark or trade-name which, when applied to or used in connection
with the goods, business or services of the applicant is merely descriptive or
deceptively misdescriptive of them, or when applied to or used in connection with the
goods, business or services of the applicant is primarily geographically descriptive or
deceptively misdescriptive of them, or is primarily merely a surname." (Emphasis
supplied.)
The words "pale pilsen" may not be appropriated by SMC for its exclusive use even if
they are part of its registered trademark: SAN MIGUEL PALE PILSEN, any more than
such descriptive words as "evaporated milk," "tomato ketchup," "cheddar cheese,"
"corn flakes" and "cooking oil" may be appropriated by any single manufacturer of
these food products, for no other reason than that he was the first to use them in his
registered trademark. In Masso Hermanos, S.A. vs. Director of Patents, 94 Phil. 136,
139 (1953), it was held that a dealer in shoes cannot register "Leather Shoes" as his
trademark because that would be merely descriptive and it would be unjust to
deprive other dealers in leather shoes of the right to use the same words with
reference to their merchandise. No one may appropriate generic or descriptive words.
They belong to the public domain (Ong Ai Gui vs. Director of Patents, 96 Phil. 673,
676 [1955]):
A word or a combination of words which is merely descriptive of an article of trade,
or of its composition, characteristics, or qualities, cannot be appropriated and
protected as a trademark to the exclusion of its use by others. . . . inasmuch as all
persons have an equal right to produce and vend similar articles, they also have the
right to describe them properly and to use any appropriate language or words for
that purpose, and no person can appropriate to himself exclusively any word or
expression, properly descriptive of the article, its qualities, ingredients or
characteristics, and thus limit other persons in the use of language appropriate to the
description of their manufactures, the right to the use of such language being
common to all. This rule excluding descriptive terms has also been held to apply to
trade-names. As to whether words employed fall within this prohibition, it is said that
the true test is not whether they are exhaustively descriptive of the article designated,
but whether in themselves, and as they are commonly used by those who
understand their meaning, they are reasonably indicative and descriptive of the thing
intended. If they are thus descriptive, and not arbitrary, they cannot be appropriated
from general use and become the exclusive property of anyone. (52 Am. Jur. 542-
543.)
. . . . Others may use the same or similar descriptive word in connection with their
own wares, provided they take proper steps to prevent the public being deceived.
(Richmond Remedies Co. vs. Dr. Miles Medical Co., 16 E. [2d] 598.)
. . . . A descriptive word may be admittedly distinctive, especially if the user is the
first creator of the article. It will, however, be denied protection, not because it lacks
distinctiveness, but rather because others are equally entitled to its use. (2 Callman.
Unfair Competition and Trademarks, pp. 869-870.)" (Emphasis supplied.)
The circumstance that the manufacturer of BEER PALE PILSEN, Asia Brewery
Incorporated, has printed its name all over the bottle of its beer product: on the label,
on the back of the bottle, as well as on the bottle cap, disproves SMC's charge that
ABI dishonestly and fraudulently intends to palm off its BEER PALE PILSEN as SMC's
product. In view of the visible differences between the two products, the Court
believes it is quite unlikely that a customer of average intelligence would mistake a
bottle of BEER PALE PILSEN for SAN MIGUEL PALE PILSEN.
The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is bottled in amber-
colored steinie bottles of 320 ml. capacity and is also advertised in print, broadcast,
and television media, does not necessarily constitute unfair competition.
Unfair competition is the employment of deception or any other means contrary to
good faith by which a person shall pass off the goods manufactured by him or in
which he deals, or his business, or services, for those of another who has already
established goodwill for his similar goods, business or services, or any acts calculated
to produce the same result. (Sec. 29, Republic Act No. 166, as amended.) The law
further enumerates the more common ways of committing unfair competition, thus:
Sec. 29. . . .
In particular, and without in any way limiting the scope of unfair competition, the
following shall be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general appearance of
goods of another manufacturer or dealer, either as to the goods themselves or in the
wrapping of the packages in which they are contained, or the devices or words
thereon, or in any other feature of their appearance, which would be likely to
influence purchasers to believe that the goods offered are those of a manufacturer or
dealer other than the actual manufacturer or dealer, or who otherwise clothes the
goods with such appearance as shall deceive the public and defraud another of his
legitimate trade, or any subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose.
(b) Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the services of
another who has identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the course of trade or who
shall commit any other act contrary to good faith of a nature calculated to discredit
the goods, business or services of another.
In this case, the question to be determined is whether ABI is using a name or mark
for its beer that has previously come to designate SMC's beer, or whether ABI is
passing off its BEER PALE PILSEN as SMC's SAN MIGUEL PALE PILSEN.
. . ..The universal test question is whether the public is likely to be deceived. Nothing
less than conduct tending to pass off one man's goods or business as that of another
will constitute unfair competition. Actual or probable deception and confusion on the
part of the customers by reason of defendant's practices must always appear. (Shell
Co., of the Philippines, Ltd. vs. Insular Petroleum Refining Co. Ltd. et al., 120 Phil.
434, 439.)
The use of ABI of the steinie bottle, similar but not identical to the SAN MIGUEL PALE
PILSEN bottle, is not unlawful. As pointed out by ABI's counsel, SMC did not invent
but merely borrowed the steinie bottle from abroad and it claims neither patent nor
trademark protection for that bottle shape and design. (See rollo, page 55.) The
Cerveza Especial and the Efes Pale Pilsen use the "steinie" bottle. (See Exhibits 57-D,
57-E.) The trial court found no infringement of SMC's bottle —
The court agrees with defendant that there is no infringement of plaintiff's bottle,
firstly, because according to plaintiff's witness Deogracias Villadolid, it is a standard
type of bottle called steinie, and to witness Jose Antonio Garcia, it is not a San Miguel
Corporation design but a design originally developed in the United States by the
Glass Container Manufacturer's Institute and therefore lacks exclusivity. Secondly, the
shape was never registered as a trademark. Exhibit "C" is not a registration of a beer
bottle design required under Rep. Act 165 but the registration of the name and other
marks of ownership stamped on containers as required by Rep. Act 623. Thirdly, the
neck of defendant's bottle is much larger and has a distinct bulge in its uppermost
part. (p. 186, Rollo.)
The petitioner's contention that bottle size, shape and color may not be the exclusive
property of any one beer manufacturer is well taken. SMC's being the first to use the
steinie bottle does not give SMC a vested right to use it to the exclusion of everyone
else. Being of functional or common use, and not the exclusive invention of any one,
it is available to all who might need to use it within the industry. Nobody can acquire
any exclusive right to market articles supplying simple human needs in containers or
wrappers of the general form, size and character commonly and immediately used in
marketing such articles (Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190, 194-195.)
. . . protection against imitation should be properly confined to nonfunctional features.
Even if purely functional elements are slavishly copied, the resemblance will not
support an action for unfair competition, and the first user cannot claim secondary
meaning protection. Nor can the first user predicate his claim to protection on the
argument that his business was established in reliance on any such unpatented
nonfunctional feature, even "at large expenditure of money." (Callman Unfair
Competition, Trademarks and Monopolies, Sec. 19.33 [4th Ed.].) (Petition for Review,
p. 28.)
ABI does not use SMC's steinie bottle. Neither did ABI copy it. ABI makes its own
steinie bottle which has a fat bulging neck to differentiate it from SMC's bottle. The
amber color is a functional feature of the beer bottle. As pointed out by ABI, all
bottled beer produced in the Philippines is contained and sold in amber-colored
bottles because amber is the most effective color in preventing transmission of light
and provides the maximum protection to beer. As was ruled in California Crushed
Fruit Corporation vs. Taylor B. and Candy Co., 38 F2d 885, a merchant cannot be
enjoined from using a type or color of bottle where the same has the useful purpose
of protecting the contents from the deleterious effects of light rays. Moreover, no one
may have a monopoly of any color. Not only beer, but most medicines, whether in
liquid or tablet form, are sold in amber-colored bottles.
That the ABI bottle has a 320 ml. capacity is not due to a desire to imitate SMC's
bottle because that bottle capacity is the standard prescribed under Metrication
Circular No. 778, dated 4 December 1979, of the Department of Trade, Metric
System Board.
With regard to the white label of both beer bottles, ABI explained that it used the
color white for its label because white presents the strongest contrast to the amber
color of ABI's bottle; it is also the most economical to use on labels, and the easiest
to "bake" in the furnace (p. 16, TSN of September 20, 1988). No one can have a
monopoly of the color amber for bottles, nor of white for labels, nor of the
rectangular shape which is the usual configuration of labels. Needless to say, the
shape of the bottle and of the label is unimportant. What is all important is the name
of the product written on the label of the bottle for that is how one beer may be
distinguished form the others.
In Dy Buncio v. Tan Tiao Bok, 42 Phil. 190, 196-197, where two competing tea
products were both labelled as Formosan tea, both sold in 5-ounce packages made of
ordinary wrapping paper of conventional color, both with labels containing designs
drawn in green ink and Chinese characters written in red ink, one label showing a
double-decked jar in the center, the other, a flower pot, this court found that the
resemblances between the designs were not sufficient to mislead the ordinary
intelligent buyer, hence, there was no unfair competition. The Court held:
. . . . In order that there may be deception of the buying public in the sense
necessary to constitute unfair competition, it is necessary to suppose a public
accustomed to buy, and therefore to some extent familiar with, the goods in question.
The test of fraudulent simulation is to be found in the likelihood of the deception of
persons in some measure acquainted with an established design and desirous of
purchasing the commodity with which that design has been associated. The test is
not found in the deception, or possibility of the deception, of the person who knows
nothing about the design which has been counterfeited, and who must be indifferent
as between that and the other. The simulation, in order to be objectionable, must be
such as appears likely to mislead the ordinarily intelligent buyer who has a need to
supply and is familiar with the article that he seeks to purchase.
The main thrust of SMC's complaint if not infringement of its trademark, but unfair
competition arising form the allegedly "confusing similarity" in the general
appearance or trade dress of ABI's BEER PALE PILSEN beside SMC's SAN MIGUEL
PALE PILSEN (p. 209, Rollo)
SMC claims that the "trade dress" of BEER PALE PILSEN is "confusingly similar" to its
SAN MIGUEL PALE PILSEN because both are bottled in 320 ml. steinie type, amber-
colored bottles with white rectangular labels.
However, when as in this case, the names of the competing products are clearly
different and their respective sources are prominently printed on the label and on
other parts of the bottle, mere similarity in the shape and size of the container and
label, does not constitute unfair competition. The steinie bottle is a standard bottle
for beer and is universally used. SMC did not invent it nor patent it. The fact that
SMC's bottle is registered under R.A. No. 623 (as amended by RA 5700, An Act to
Regulate the Use of Duly Stamped or Marked Bottles, Boxes, Casks, Kegs, Barrels
and Other Similar Containers) simply prohibits manufacturers of other foodstuffs from
the unauthorized use of SMC's bottles by refilling these with their products. It was
not uncommon then for products such as patis (fish sauce) and toyo (soy sauce) to
be sold in recycled SAN MIGUEL PALE PILSEN bottles. Registration of SMC's beer
bottles did not give SMC a patent on the steinie or on bottles of similar size, shape or
color.
Most containers are standardized because they are usually made by the same
manufacturer. Milk, whether in powdered or liquid form, is sold in uniform tin cans.
The same can be said of the standard ketchup or vinegar bottle with its familiar
elongated neck. Many other grocery items such as coffee, mayonnaise, pickles and
peanut butter are sold in standard glass jars. The manufacturers of these foodstuffs
have equal right to use these standards tins, bottles and jars for their products. Only
their respective labels distinguish them from each other. Just as no milk producer
may sue the others for unfair competition because they sell their milk in the same
size and shape of milk can which he uses, neither may SMC claim unfair competition
arising from the fact that ABI's BEER PALE PILSEN is sold, like SMC's SAN MIGUEL
PALE PILSEN in amber steinie bottles.
The record does not bear out SMC's apprehension that BEER PALE PILSEN is being
passed off as SAN MIGUEL PALE PILSEN. This is unlikely to happen for consumers or
buyers of beer generally order their beer by brand. As pointed out by ABI's counsel,
in supermarkets and tiendas, beer is ordered by brand, and the customer surrenders
his empty replacement bottles or pays a deposit to guarantee the return of the
empties. If his empties are SAN MIGUEL PALE PILSEN, he will get SAN MIGUEL PALE
PILSEN as replacement. In sari-sari stores, beer is also ordered from the tindera by
brand. The same is true in restaurants, pubs and beer gardens — beer is ordered
from the waiters by brand. (Op. cit. page 50.)
Considering further that SAN MIGUEL PALE PILSEN has virtually monopolized the
domestic beer market for the past hundred years, those who have been drinking no
other beer but SAN MIGUEL PALE PILSEN these many years certainly know their beer
too well to be deceived by a newcomer in the market. If they gravitate to ABI's
cheaper beer, it will not be because they are confused or deceived, but because they
find the competing product to their taste.
Our decision in this case will not diminish our ruling in "Del Monte Corporation vs.
Court of Appeals and Sunshine Sauce Manufacturing Industries," 181 SCRA 410,
419, 3 that:
. . . to determine whether a trademark has been infringed, we must consider the
mark as a whole and not as dissected. If the buyer is deceived, it is attributable to
the marks as a totality, not usually to any part of it.
That ruling may not apply to all kinds of products. The Court itself cautioned that in
resolving cases of infringement and unfair competition, the courts should "take into
consideration several factors which would affect its conclusion, to wit: the age,
training and education of the usual purchaser, the nature and cost of the article,
whether the article is bought for immediate consumption and also the conditions
under which it is usually purchased" (181 SCRA 410, 418-419).
The Del Monte case involved catsup, a common household item which is bought off
the store shelves by housewives and house help who, if they are illiterate and cannot
identify the product by name or brand, would very likely identify it by mere
recollection of its appearance. Since the competitor, Sunshine Sauce Mfg. Industries,
not only used recycled Del Monte bottles for its catsup (despite the warning
embossed on the bottles: "Del Monte Corporation. Not to be refilled.") but also used
labels which were "a colorable imitation" of Del Monte's label, we held that there was
infringement of Del Monte's trademark and unfair competition by Sunshine.
Our ruling in Del Monte would not apply to beer which is not usually picked from a
store shelf but ordered by brand by the beer drinker himself from the storekeeper or
waiter in a pub or restaurant.
Moreover, SMC's brand or trademark: "SAN MIGUEL PALE PILSEN" is not infringed by
ABI's mark: "BEER NA BEER" or "BEER PALE PILSEN." ABI makes its own bottle with
a bulging neck to differentiate it from SMC's bottle, and prints ABI's name in three (3)
places on said bottle (front, back and bottle cap) to prove that it has no intention to
pass of its "BEER" as "SAN MIGUEL."
There is no confusing similarity between the competing beers for the name of one is
"SAN MIGUEL" while the competitor is plain "BEER" and the points of dissimilarity
between the two outnumber their points of similarity.
Petitioner ABI has neither infringed SMC's trademark nor committed unfair
competition with the latter's SAN MIGUEL PALE PILSEN product. While its BEER PALE
PILSEN admittedly competes with the latter in the open market, that competition is
neither unfair nor fraudulent. Hence, we must deny SMC's prayer to suppress it.
WHEREFORE, finding the petition for review meritorious, the same is hereby granted.
The decision and resolution of the Court of Appeals in CA-G.R. CV No. 28104 are
hereby set aside and that of the trial court is REINSTATED and AFFIRMED. Costs
against the private respondent.
SO ORDERED.
Sterling Products vs. Faber Farbenfabriken AG 27 SCRA
In this, a case for trademark infringement and unfair competition, each of the
principal suitors, namely, plaintiff Sterling Products International, Inc.,1 and
defendant Farbenfabriken Bayer Aktiengesellschaft,2 seeks to exclude the other from
use in the Philippines of the trademarks BAYER and BAYER CROSS IN CIRCLE. SPI
asks this Court to strike down FBA's registration of BAYER CROSS IN CIRCLE covering
industrial and agricultural products — insecticides and other chemicals, not medicines
— from the supplemental register. FBA, for its part, prays for the cancellation from
the principal register of SPI's certificates of registration of the trademarks aforesaid
for medicines.
Contending parties are doing business in the Philippines. SPI markets Bayer Aspirin,
Aspirin for Children and Cafiaspirina. The BAYER and BAYER CROSS IN CIRCLE are
being used by SPI in the Philippines only for said products — Bayer Aspirin,
Cafiaspirina and Bayer Aspirin for Children. On the containers (bottles or printed
celophane strips, which, in turn, are placed in cardboard boxes) of Bayer Aspirin,
Aspirin for Children and Cafiaspirina, SPI features the trademarks BAYER and BAYER
CROSS IN CIRCLE. FBA thru Allied Manufacturing & Trading Co., Inc.3 distributes
"Folidol" and other industrial and agricultural chemicals. FBA's "Folidol" (in steel or
fiber drums or aluminum containers) displays a replica of SPI's trademark BAYER
CROSS IN CIRCLE; on the tin cap and label of the container.
The conflict apparent, suit followed.
The trial court declared itself "in favor of the solution that favors division of the
market rather than monopoly." But to avoid confusion, it directed defendants "to add
a distinctive word, or words in their mark to indicate that their products come from
Germany." The judgment below reads:
IN VIEW WHEREOF, both complaint and counterclaim are dismissed without costs;
the Court sustains plaintiff's right to use the Bayer trademark for its medicines, and
defendants' right to use it for chemicals, insecticides, and other products not
medicines, but the Court orders defendants to add a distinctive word or words in
their mark to indicate that their products come from Germany.4
Both parties appealed: Plaintiff, insofar as the judgment "dismisses plaintiff's
complaint and sustains defendants' right to use the BAYER trademark for their
chemicals, insecticides, and other products not medicines";5 and defendants, from
the portions of the aforementioned decision particularly those which dismiss the
counterclaim of the defendants for the cancellation of the registrations by the plaintiff
of the trademarks Bayer and Bayer Cross and which allow the plaintiff "to continue
using the Bayer trademarks for medicines."6
And now to the facts.
The word BAYER was the surname of Friedrich Bayer, a German, who, on August 1,
1868, organized a drug company bearing his name — Friedr Bayer et comp. — at
Barmen, Germany. The company was at first engaged in the manufacture and sale of
chemicals. At about the year 1888 it started to manufacture pharmaceutical
preparations also. A change of name from Friedr Bayer to Farbenfabriken vorm.
Friedr. Bayer & Co. (FFB, for short) effective July 1, 1881 was followed in 1912 by a
change of principal place of business from Elberfeld to Luverkusen, Germany.7 Its
products came to be known outside Germany. With the discovery in 1899 of the
Bayer Aspirin, the mark BAYER acquired prestige. The time was ripe to register the
trademarks. The record, however, does not clearly show when the word BAYER was
registered as a trademark in Germany. The BAYER CROSS IN CIRCLE trademark was
registered in Germany on January 6, 1904 — No. 65777.8 It was intended to be used
on "medicines for human beings and animals, disinfectants preservatives, tar
dyestuffs and chemical preparations for dyes and for photographic purposes."9 This
registered trademark consists of the BAYER CROSS encircled by the company's name
Farbenfabriken vorm. Friedr. Bayer & Co. Elberfeld.
When the company was merged with other German companies in 1925 to form the
I.G. Farbenindustrie, the name of the former company was deleted from the
trademark and what remained was the present BAYER CROSS IN CIRCLE. A new
registration was effected on June 17, 1929 in Germany and for which it was issued a
certificate with serial no. 404341. The trademark BAYER CROSS IN CIRCLE was
registered by FFB and its subsidiaries in other parts of the world, viz, in Norway,
England, Denmark, and Argentina in 1904; in Japan and the United States in 1908; in
Spain in 1911; in Peru in 1913.
Sometime in 1895, FFB established a subsidiary in New York, United States. It was
named Farbenfabriken of Elberfeld Co. Its purpose was to sell FFB's products in the
United States and Canada. It was this subsidiary that registered the trademarks
BAYER and BAYER CROSS IN CIRCLE in the United States between the years 1907-
1908.
Sometime in 1913, FFB organized another subsidiary — The Bayer Co., Inc. of New
York. This new subsidiary was authorized by FFB to negotiate for and acquire the
trademarks, goodwill, assets and property of Farbenfabriken of Elberfeld Co. By an
agreement dated June 12, 1913 (Exh. 106) Bayer of New York purchased for the sum
of US $750,000.00 Farbenfabriken of Elberfeld Co.'s "right for the sale in the United
States and Canada of the drugs, chemicals, pharmaceuticals and any and all other
products and articles manufactured and (or) controlled by Leverkusen" (FFB) and its
"trademarks, good will and other assets and property."
On April 6, 1917,10 the United States declared war on Germany. Pursuant to the
provisions of the Trading with the Enemy Act, the Alien Property Custodian classified
The Bayer Co., Inc. of New York as an enemy-controlled corporation. Hence, the
Alien Property Custodian seized its assets about the early part of 1918. Between
December 1918 and January 1919, all the assets of The Bayer Co., Inc. of New York
were sold by the Alien Property Custodian to Sterling Drug, Inc. for the sum of US
$5,310,000.00. The Bayer Co., Inc. of New York then became a subsidiary of Sterling
Drug, Inc. Winthrop Chemical Co., Inc. was later organized as a new subsidiary of
Sterling Drug, Inc. to manufacture and sell the physicians' drugs which had been
acquired" by the purchase of the Bayer Co., Inc. Winthrop's operation was evidently
hampered because 'the Germans had kept manufacturing processes secret, so that
the manufacture of physicians' drugs on a commercial scale became an almost
insoluble problem.11
Sterling Drug, Inc. secured registrations of the BAYER trademarks in different
countries of the world.12
It would appear that the trademark BAYER for medicines was known in the
Philippines about the close of the 19th century. This appears on page 88 of the
Revista Farmaceutica de Filipinos Año I, Numero 7, 3 de Julio de 1893. Before World
War I, BAYER products entering the Philippines came from Germany.
In 1922, a worldwide conflict of interests occurred between Farbenfabriken vorm.
Friedrich Bayer & Co. and The Bayer Co., Inc. of New York, in reference to the
trademarks BAYER and BAYER CROSS IN CIRCLE as they were applied to various
products.
Two agreements resolved this conflict, both executed on April 9, 1923 in London,
England: one, between FFB and Winthrop Chemical Co., Inc. (Exh. 66), and the other
between FFB and Bayer New York (Exh. WWW). Under the terms of the agreement
with Winthrop Chemical Co., Inc., FFB stipulated, amongst others: (1) not to contest
anymore Winthrop's right over the trademarks BAYER and BAYER CROSS IN CIRCLE;
(2) to discontinue the use of said trademarks in the United States which was
understood to include the Philippines under par. 16 of said agreement; and (3) to
disclose all secrets of other processes relating to the manufacture of pharmaceuticals.
Paragraph 26 of the FFB — Bayer New York agreement reads —
26. NEW YORK (The Bayer Company, Inc. of New York) agree that they will not sell
or offer for sale any goods other than hereunder or those they may market for
Winthrop as hereinbefore provided and other than Aspirin and compounds of Aspirin
which New York shall continue to market for their own account in the United States
of America, Puerto Rico, the Philippines and Hawaiian Islands and the Panama
Zone.13
In 1925, Farbenfabriken vorm. Friedrich Bayer & Co. became I.G. Farbenindustrie, AG.
This necessitated a new agreement incorporating Exh. 66 with modifications. Said
new agreement was signed on November 15, 1926 between I.G. Farbenindustrie and
Winthrop.
On September 5, 1941, in the anti-trust suits against Sterling Drug, Inc., Winthrop
Chemicals Co. and The Bayer Co., of New York, two consent decrees [Exh. 68 (No.
15-363) and Exh. 69: (No. 15-364)] were promulgated by the U.S. District Court for
Southern New York. Said consent decrees declared the April 9 1923, cartel
agreements violative of the U.S. anti-trust laws. One reason given is that the German
company, FFB (later I.G. Farbenindustrie) — FBA's predecessors — was excluded
from the U.S. pharmaceutical market. The sentence, however, contains a saving
clause, thus —
The Bayer contract of 1923, the Bayer contract of 1926, and any and all amendments
or supplements thereto are declared and adjudged to be unlawful under the Anti-
Trust Laws of the United States, and the defendants Bayer and Sterling, and their
respective successors an subsidiaries, or any of them, be and they are hereby
enjoined and restrained from carrying out or enforcing any of the aforesaid contracts,
or any supplements, amendments or modifications thereof, or from paying to I.G.
Farben, its subsidiaries, successors, or assigns, any royalties or share of profits
pursuant to said contracts with respect to sales following the effective date of this
decree.
Provided, however, that nothing herein contained in this Sec. III shall:lawphi1.nêt
xxx xxx xxx
Affect in any way the rights or title of the defendant Bayer, its successors,
subsidiaries or assigns, in or to the name "Bayer" and the "Bayer Cross" mark or
registrations thereof, or
Affect or diminish any right, title or interest of said defendants, their successor
subsidiaries or assigns, in or to or under any heretofore acquired and presently
existing patents, patent applications, patent licenses, trade-marks, trade-names (such
as the name "Bayer" and the "Bayer Cross" mark and registrations thereof),
processes or formulae relating to the manufacturing, processing, use or sale of
aspirin, aspirin compounds, pharmaceutical or other drug or chemical products, or
impair any rights or remedies of said defendants, their successors, subsidiaries or
assigns, provided by statute or convention, and by suits for damages, injunction or
other remedy with respect to any such patents, patent applications, patent licenses
or trademarks....14
Meanwhile, in 1935, plaintiff Sterling Products International, Inc. (SPI) a Delaware
corporation, a subsidiary of Sterling Drug, Inc. of New York, was issued a license to
do business in the Philippines.15 The trademarks BAYER and BAYER CROSS IN
CIRCLE were then registered in the Philippines under the old Trademark Law (Act
666) by The Bayer Co., Inc.; the BAYER CROSS IN CIRCLE trademark on April 18,
1939 for which it was issued Certificate of Registration No. 13081; the BAYER
trademark on April 22, 1939 for which it was issued Registration Certificate No.
13089. These trademark rights were assigned to SPI on December 30, 1942 and the
assignment was recorded in the Philippines Patent Office on March 5, 1947. With the
passage of Republic Act 166 repealing the old Trademark Law (Act 666), SPI was
issued by the Philippines Patent Office on June 18, 1948 two new certificates of
registration: No. 1260-S for BAYER CROSS IN CIRCLE; No. 1262-S for BAYER. The
registration of these trademarks was only for "Medicines".
Came World War II. I.G. Farbenindustrie AG. was seized by the allied powers. In
1945, after World War II, I.G. Farbenindustrie AG. was decartelized by the Allied High
Commission. The unit known as Farbenfabriken Bayer was transferred in 1953 to
Farbenfabriken Bayer Aktiengesellschaft (FBA), one of the defendants in this case,
which was organized in 1951.
Sometime in 1958, defendant Allied Manufacturing & Trading Co., Inc. (AMATCO)
started selling FBA's products especially "Folidol" a chemical insecticide which bears
the BAYER CROSS IN CIRCLE trademark.16
On November 18, 1959, FBA applied for the registration of the BAYER CROSS IN
CIRCLE trademark with the Philippines Patent Office for animal and plant destroying
agents. The examiner's report dated December 17, 1959 stated that the subject mark
appears to be similar to SPI's registered BAYER trademarks as covered by Certificates
of Registration Nos. 1260-S and 1262-S. He concluded that "[r]egistration of
applicant's mark is proscribed by Section 4-d of the Statute because it would cause
confusion or mistake or [to] deceive purchasers."17 This action of the Philippines
Patent Office drew a reply from FBA. In its letter dated February 1, 1960 applicant
FBA, thru counsel, said that it "offers no question or objection to the assertion of the
Examiner that the registrant's mark and that of the applicant are similar to each other.
It emphasized the fact that it was seeking registration in the Supplemental Register.
Its concluding statement runs thus:.
Being aware of the duties and obligations of a trademark user in the Philippines and
the penalties provided for in the pertinent law on tradermarks and being aware also
that Supplemental Registration is not a prima facie evidence of ownership of mark
but merely a recordation of the use as in fact the mark is actually being used by the
applicant in the Philippines, it is respectfully urged that this [application] be given due
course.18
On February 25, 1960, FBA was issued a certificate of registration in the
Supplemental Register, SR-304.
We now grapple with the problems raised in the separate appeals.
1. A rule widely accepted and firmly entrenched because it has come down through
the years is that actual use in commerce or business is a prerequisite to the
acquisition of the right of ownership over a trademark. This rule is spelled out in our.
Trademark Law thus:
SEC. 2-A. Ownership of trade-marks, trademark names and service-mark; how
acquired. — Anyone who lawfully produces or deals in merchandise of any kind or
who engages in any lawful business, or who renders any lawful service in commerce,
by actual use thereof in manufacture or trade, in business, and in the service
rendered, may appropriate to his, exclusive use a trademark, a trade-name, or a
service-mark not so appropriated by another, to distinguish his merchandise,
business, or service from the merchandise, business or service of others. The
ownership or possession of a trademark, trade-name, service mark, heretofore or
hereafter appropriated, as in this section provided, shall be recognized and protected
in the same manner and to the same extent as are other property rights known to
the law. (As inserted by Section 1 of Republic Act 638)
It would seem quite clear that adoption alone of a trademark would not give
exclusive right thereto. Such right grows out of their actual use."19 Adoption is not
use. One may make advertisements, issue circulars, give out price lists on certain
goods; but these alone would not give exclusive right of use. For trademark is a
creation of use. The underlying reason for all these is that Purchasers have come to
understand the mark as indicating the origin of the wares.20 Flowing from this is the
trader's right to protection in the trade he has built up and the goodwill he has
accumulated from use of the trademark. Registration of a trademark, of course, has
value: it is an administrative act declaratory of a pre-existing right. Registration does
not, however, perfect a trademark right.
The BAYER trademarks registered in the Philippines to which plaintiff SPI may lay
claim, as correctly stated in the decision below, are those which cover medicines only.
For, it was on said goods that the BAYER trademarks were actually used by it in the
Philippines. Therefore, the certificates of registration for medicines issued by the
Director of Patents upon which the protection is enjoyed are only for medicines.
Nothing in those certificates recited would include chemical or insecticides.
But plaintiff insists that the statement of the applicant (The Bayer Co., Inc.) in its
registrations of the BAYER marks states that "the merchandise for which the
trademark is appropriated is d. — Chemicals, Medicines and Pharmaceutical
Preparations." Plaintiff's position is that such statement determines the goods for
which said marks had been registered. Validity does not attach to this proposition.
First, the statement itself admits that "the particular description of the articles
comprised in said class (d) on which the trademark is used is Medicines."21 It is not
used for chemicals.
Then, Section 11 of the Trademark Law requires that the certificate of registration
state "the particular goods . . . for which it is registered." This is controlling. Under
Section 11 aforesaid, likewise to be entered in the certificate of registration is "the
date of the first use in commerce or business. SPI may not claim "first use" of the
trademarks prior to the registrations thereof on any product other than medicines.
Besides, Section 7 of the same Trademark Act directs that upon the filing of the
application and the payment of the required fee, the "Director [of Patents] shall
cause an examination of the application" — for registration of the trademark — "to
be made, and, if on such examination it shall appear that the applicant is entitled to
registration, the Director . . . shall cause the mark . . . to be published in the Official
Gazette." This examination, it would seem to us, is necessary in order that the
Director of Patents may be satisfied that the application conforms to the requirement
of actual use in commerce of the trademark in Section 2 and 2-A of the Trademark
Law; and that the statement in said application — as to the "first use" thereof and
"the goods . . . in connection with which the mark . . . is used" (Section 5) — is true.
Really, if the certificate of registration were to be deemed as including goods not
specified therein, then a situation may arise whereby an applicant may be tempted to
register a trademark on any and all goods which his mind may conceive even if he
had never intended to use the trademark for the said goods. We believe that such
omnibus registration is not contemplated by our Trademark Law.
Because of this and of the fact that the Bayer trademarks were never used in the
Philippines by plaintiff except for medicines — Aspirin, Aspirin for Children and
Cafiaspirina — we find ourselves unwilling to draw a hard and fast rule which would
absolutely and under all circumstances give unqualified protection to plaintiff against
the use of said trademarks by all others on goods other than medicines.
2. Neither will the 1927 registration in the United States of the BAYER trademark for
insecticides serve plaintiff any. The United States is not the Philippines. Registration
in the United States is not registration in the Philippines. At the time of the United
States registration in 1927, we had our own Trademark Law, Act No. 666 aforesaid of
the Philippine Commission, which provided for registration here of trademarks owned
by persons domiciled in the United States.
What is to be secured from unfair competition in a given territory is the trade which
one has in that particular territory. There is where his business is carried on; where
the goodwill symbolized by the trademark has immediate value; where the infringer
may profit by infringement.
There is nothing new in what we now say. Plaintiff itself concedes22 that the
principle of territoriality of the Trademark Law has been recognized in the Philippines,
citing Ingenohl vs. Walter E. Olsen, 71 L. ed. 762. As Callmann puts it, the law of
trademarks "rests upon the doctrine of nationality or territoriality."23
Accordingly, the 1927 registration in the United States of the BAYER trademark would
not of itself afford plaintiff protection for the use by defendants in the Philippines of
the same trademark for the same or different products.
3. A question basic in the field of trademarks and unfair competition is the extent to
which a registrant of a trademark covering one product may invoke the right to
protection against the use by other(s) of the same trademark to identify merchandise
different from those for which the trademark has been appropriated.
Plaintiff's trenchant claim is that it should not be turned away because its case comes
within the protection of the confusion of origin rule. Callmann notes two types of
confusion. The first is the confusion of goods "in which event the ordinarily prudent
purchaser would be induced to purchase one product in the belief that he was
purchasing the other." In which case, "defendant's goods are then bought as the
plaintiff's, and the poorer quality of the former reflects adversely on the plaintiff's
reputation." The other is the confusion of business: "Here though the goods of the
parties are different, the defendant's product is such as might reasonably be
assumed to originate with the plaintiff, and the public would then be deceived either
into that belief or into the belief that there is some connection between the plaintiff
and defendant which, in fact, does not exist."24
A judicial test giving the scope of the rule of confusion of origin is Ang vs.
Teodoro (December 14, 1942), 74 Phil. 50. Briefly, the facts of the just cited case are
as follows: Toribio Teodoro, at first in partnership with Juan Katindig and later as sole
proprietor, had continuously used "Ang Tibay" both as trademark and as tradename
in the manufacture and sale of slippers, shoes and indoor baseballs since 1910. He
formally registered it as a trademark on September 29, 1915 and as a tradename on
January 3, 1933. Ana L. Ang registered the same trademark "Ang Tibay" for pants
and shirts on April 11, 1932 and established a factory for the manufacture of said
articles in 1937. Suit was lodged by Teodoro against Ang to cancel the latter's
registration of the trademark "Ang Tibay" and to perpetually enjoin her from using
the said trademark on goods manufactured and sold by her. The judgment of the
trial court absolved defendant (Ana L. Ang) from the complaint with costs against the
plaintiff. The Court of Appeals reversed. On appeal by certiorari, we affirmed the
judgment of the Court of Appeals. We there said:
"In the present state of development of the law on Trade-Marks, Unfair Competition,
and Unfair Trading, the test employed by the courts to determine whether
noncompeting goods are or are not of the same class is confusion as to the origin of
the goods of the second user. Although two noncompeting articles may be classified
under two different classes by the Patent Office because they are deemed not to
possess the same descriptive properties, they would, nevertheless, be held by the
courts to belong to the same class if the simultaneous use on them of identical or
closely similar trademarks would be likely to cause confusion as to the origin, or
personal source, of the second user's goods. They would be considered as not falling
under the same class only if they are so dissimilar or so foreign to each other as to
make it unlikely that the purchaser would think the first user made the second user's
goods.
Such construction of the law is induced by cogent reasons of equity and fair
dealing. The courts have come to realize that there can be unfair
competition or unfair trading even if the goods are noncompeting, and that
such unfair trading can cause injury or damage to the first user of a given
trademark, first, by prevention of the natural expansion of his business and,
second, by having his business reputation confused with and put at the
mercy of the second user. When noncompetitive products are sold under
the mark, the gradual whittling away or dispersion of the identity and hold
upon the public mind of the mark created by its first user, inevitably results.
The original owner is entitled to the preservation of the vauable link
between him and the public that has been created by his ingenuity and the
merit of his wares or services. Experience has demonstrated that when a
well-known trademark is adopted by another even for a totally different
class of goods, it is done to get the benefit of the reputation and
advertisements of the originator of said mark, to convey to the public a false
impression of some supposed connection between the manufacturer of the
article sold under the original mark and the new articles being tendered to
the public under the same or similar mark. As trade has developed and
commercial changes have come about, the law of unfair competition has
expanded to keep pace with the times and the element of strict competition
in itself has ceased to be the determining factor. The owner of a trademark
or trade-name has a property right in which he is entitled to protection,
since there is damage to him from confusion of reputation or goodwill in the
mind of the public as well as from confusion of goods. The modern trend is
to give emphasis to the unfairness of the acts and to classify and treat the
issue as a fraud.25
The thoughts expressed in Ang Tibay command respect Conduct of business should
conform to ethical business standards. Unfairness is proscribed. The invocation of
equity is bottomed upon the injunction that no one should "reap where he has not
sown."26
Nonetheless, "[i]t has been emphasized that each case presents a unique problem
which must be answered by weighing the conflicting interests of the
litigants."27 With this in mind, we are convinced that the case before us is not to be
analogized with Ang Tibay. The factual setting is different. His Honor, Judge Magno S.
Gatmaitan (now Associate Justice of the Court of Appeals), the trial judge, so found.
He reached a conclusion likewise different. And the reasons, so well stated by His
Honor, are these:
1st). — It was not plaintiff's predecessor but defendant's namely Farbenfabriken or
Bayer Germany that first introduced the medical products into the Philippine market
and household with the Bayer mark half a century ago; this is what the Court gathers
from the testimony of Frederick Umbreit and this is the implication even of Exhs. 48,
49, 66 and as already shown a few pages back;28
2nd). — There is thus reason plausible enough for defendant' plea that as Sterling
was not the "originator" of the Bayer mark, the rule in Ang vs. Teodoro, supra, is not
applicable; and this is correct notwithstanding Exhs. 106 and 63 and even giving unto
these documents full force and virtue, because purchase of the assets of Elberfeld,
defendants' previous affiliate in New York, by Bayer of New York, even if that were to
be held to include purchase of the Bayer mark, did not make the purchaser Bayer of
New York the originator of the mark; especially since Bayer of New York was only
another subsidiary of Bayer Germany or Farbenfabriken which was the real originator;
3rd). — The Court is also impelled to believe that the evidence establishes that
among the common people of the Philippines the "Bayer" medicines come from
Germany; this the Court deduces from the testimony of witness Florisa Pestano who
only reproduced the belief of her grandmother; the Court might as well say that
plaintiff itself has not discouraged that belief because the drug and its literature that
came from the plaintiff and its affiliate would show that it represented its medicines
to have come from defendant29 and were manufactured in Germany with that Bayer
mark; thus Exh. 7030 which is the price list of 1928 of Botica de Sta. Cruz on page 6
indicates that Winthrop Chemical Company of New York, — plaintiff's subsidiary —
was a distributor of I.G. Farbenindustrie, A.G. Leverkusen Germany; Exh. 8031 which
is a medical diary published by Winthrop for 1934 on page 148 manifested that the
journal, "Practical Therapeutics" was published by I.G. Farbenindustrie
Aktiengesellachaft for Winthrop Chemical Company, Inc.; "with particular reference to
the pharmacological products, sera and vaccines originated and prepared in the
laboratories of the I.G. Farbenindustrie A.G."; and Exh. 79 a, b, c, d and e which are
prospectuses for the medicines, Mitigal, Afridol, Aspirins, Novalgina and My-
Salvarsan32 showed that these products were manufactured for Winthrop by I.G.
Farbenindustrie; and then Exh. 81 the Revista Boie of 1928 would show that
Winthrop represented itself as the distributor of the products of Bayer of Germany
otherwise known as I.G. Farbenindustrie, "segun la alta calidad de la marca
original";33 the Court being also impelled to add in this connection that it has to take
judicial notice of a belief of long standing common among the people in the
Philippines that German products are of very high quality and it is only natural for a
distributor or a retailer to take advantage of that, and as it is not debated that
"Bayer" is a German surname, (see plaintiff's rebuttal Exh. QQQQ, see also p. 7
plaintiff's reply memorandum wherein it is said that this surname is a "pretty
common one among members of the Germany race") it is all so very easy to
associate the Bayer trademark with products that come from Germany and to believe
that they are of high quality;
4th). — The rationale of the doctrine in Ang vs. Teodoro, supra being that:
The Courts have come to realize that there can be unfair competition or unfair
trading even if the goods are non-competing, and that such unfair trading can cause
injury or damage to the first user of a given trade mark, first, by prevention of the
natural expansion of his business, and second, by having his business reputation
confused with and put at the mercy of the second user. 74 Phil. 55-56;
and the Court having found out that the 'first user' was Bayer Germany and it was
this that had built up the Bayer mark and plaintiff apparently having itself encouraged
that belief even after it had acquired the Bayer mark in America, thru forced sale, of
defendant's subsidiary there in 1918, Exhs. 79, 80, 81, to apply the Ang Tibay rule in
the manner advocated by Sterling would, the Court fears, produce the reverse result
and the consequence would be not equity but injustice.34
It would seem to us that the fact that plaintiff rode on the German reputation in the
Bayer trademark has diluted the rationally of its exclusionary claim. Not that the free
ride in the name of defendant's German predecessor was sporadic. It is continuing.
Proof of this is the label on the box used by plaintiff (Exhibit U) in the distribution of
Bayer Aspirin. This box bears prominently on the front part the legend "Genuine" in
red color and two arrows: the first pointing to BAYER CROSS IN CIRCLE, and the
second, to BAYER Aspirin. At the back thereof in big letters are the words "BAYER
ASPIRIN", followed in small letters "Used since 1900" and down below the small
words "Mfd. in the Phil. by Winthrop Stearns, Inc. for STERLING PRODUCTS
INTERNATIONAL, INCORPORATED." In plaintiff's prospectus (Exhibit 1) found in the
box of Bayer Aspirin tablets, children's size, there is the significant statement:
"GENUINE BAYER — Each Children's Size Bayer Aspirin tablet is stamped with the
Bayer Cross, the trademark of the genuine Bayer product. This means that your child
is getting the same gentle-to-the-system Bayer Aspirin that has been used for over
50 years by millions of normal people without ill effect."
With the background of prior use in the Philippines of the word BAYER by FBA's
German predecessor and the prior representations that plaintiff's medicines sold in
the Philippines were manufactured in Germany, the facts just recited hammer on the
mind of the public that the Aspirin. Cafiaspirina and Aspirin for Children being
marketed for plaintiff in the Philippines come from the same source — the German
source — and in use since 1900. That this view is far from far-fetched, is illustrated
by the testimony of plaintiff's own witness, Dr. Antonio Vasquez, viz:
Q. Have you ever heard of a pharmaceutical company of Bayer of Germany, or a
company in Germany named Bayer?
A. Yes, sir.
Q. Since when have you heard of this pharmaceutical company in Germany with the
name Bayer, since when have you heard of that?
A. I have always taken the name Bayer as associated with Winthrop & Stearns.
Q. But, you said a while ago....
Witness.
.... Yes .....
xxx xxx xxx
Q. ... that you have heard of a pharmaceutical company with the name of Bayer in
Germany?
A. Yes, sir.
Q. Do you know if this Winthrop & Stearns you mentioned has ever been connected
with Bayer Company of Germany?
A. I have always understood that they were distributing drugs of Bayer &
Company.35
4. The Ang Tibay doctrine, we believe, is not to be read as shunting aside the time-
honored teaching that he who comes into equity must do so with clean
hands.36 Plaintiff cannot now say that the present worth of its BAYER trademarks it
owes solely to its own efforts; it is not insulated from the charge that as it marketed
its medicines it did so with an eye to the goodwill as to quality that defendants'
predecessor had established.
There is no whittling away of the identity of plaintiff's trademarks. Plaintiff is not the
first user thereof in the Philippines. The trademarks do not necessarily link plaintiff
with the public. Plaintiff must show injury; it has not. On the contrary,
representations as to the place of manufacture of plaintiff's medicines were untrue,
misleading. Plaintiff could still be tagged with the same deception "which (it)
complains of in the defendant(s)."37 Appropriate it is to recall here our observation in
the Ang Tibay opinion, viz: "On our part may we add, without meaning to be harsh,
that a self-respecting person does not remain in the shelter of another but builds one
of his own."38
Plaintiff, the owner in this country of the trademarks BAYER for medicines, has thus
forfeited its right to protection from the use of the same trademarks by defendants
for products different therefrom — insecticides and other chemicals.
5. But defendants ask us to delist plaintiff's BAYER trademarks for medicines from the
Principal Register, claiming right thereto for said use. Said trademarks had been
registered since 1939 by plaintiff's predecessor. The Bayer Co., Inc.
Defendants' claim is stale; it suffers from the defect of non-use.39 While it is
conceded that FBA's predecessors first introduced medical products with the BAYER
trademarks in the Philippine market, it is equally true that, after World War I, no
definite evidence there is that defendants or their professors traded in the Philippines
in medicines with the BAYER trademarks thereafter. FBA did not seasonably voice its
objection. Lack of protest thereto connoted acquiescence. And this; notwithstanding
the fact that the 1923 and 1926 agreements were set aside in the anti-trust suits.
Defendants did use the marks; but it was much later, i.e., in 1958 — and on
chemicals and insecticides — not on medicines. FBA only bestirred itself and
challenged plaintiff's right to the trademarks on medicines when this suit was filed.
Vigilantibus non dormientibus equitas subvenit.40
The net result is that, as the trial court aptly observed, plaintiff may hold on to its
BAYER trademarks for medicines. And defendants may continue using the same
trademarks for insecticides and other chemicals, not medicines.
6. Defendants balk at the ruling below which directs them "to add a distinctive word
or words in their mark to indicate that their products come from Germany."41
We are left under no doubt as to the reasonableness of the formula thus fashioned.
It avoids the mischief of confusion of origin — defendant FBA's product would not be
mistaken for those of plaintiff. It reduces friction. We perceive of no prejudice to
defendants. The order does not visit defendant FBA with reprobation or
condemnation. Rather, said defendant would be enhancing the value of and would be
sponsoring its own products. Anyway, a statement that its products come from
Germany is but a statement of fact.
FOR THE REASONS GIVEN, the judgment under review is hereby affirmed. No costs.
So ordered.
Pag-asa Industrial Corp. vs. CA, 118 SCRA 526
This case is about the conflicting claims of Pagasa Industrial Corporation and Yoshida
Kogyo Kabushiki Kaisha for the trademark YKK for zippers.
The Director of Patents issued to Yoshida on November 9, 1961 Certificate of
Registration No. 9331 for the said trademark for slide fasteners and zippers in class
41. It claimed to have used the trademark since September 1, 1950.
Notwithstanding that prior registration, the Director on April 4, 1968, or more than
six years later, issued to Pagasa Certificate of Registration No. 13756 for the same
trademarkfor its zippers, based on alleged use of the trademark since March 1, 1966.
On January 23, 1975, Yoshida asked the Director to cancel the registration in favor of
Pagasa. The trademark, used for the same product by two different entities, has
caused confusion, mistake and deception. The Director explained that the duplicitous
registration was attributable to the fact that his examiner "miserably overlooked" the
anterior registration by Yoshida. Had it not been for such costly oversight, Pagasa's
application would have been rejected.
In his decision of May 5, 1977, the Director cancelled Pagasa's certificate of
registration in accordance with section 4 (d) and chapter IV of Republic Act No. 166.
Pagasa appealed to the Court of Appeals which in its decision dated February 6, 1980
affirmed the cancellation. It found that prior to 1968 Pagasa knew that Yoshida was
the registered owner and user of the YKK trademark which is an acronym of its
corporate name.
Tadao Yoshida, the president of Yoshida, and Tsutomu Isaka the export manager,
visited in 1960 (1965) Pagasa's factory which was manufacturing zippers under the
Royal brand Anacleto Chi, Pagasa's president visited in turn Yoshida's factory in
Toyoma,Japan.
The Appellate Court concluded that Pagasa's knowledge that Yoshida was using the
YKK trademark precludes the application of the equitable principle of laches, estoppel
and acquiescence. It noted that Pagasa acted in bad faith. As observed by Yoshida's
counsel, Pagasa's registration of YKK as its own trademark was an act of ingratitude.
Pagasa appealed to this Court. The Second Division in a decision dated November 19,
1982, reversed the decision of the Appellate Court (118 SCRA 526). Yoshida filed a
motion for reconsideration which was denied in the resolution of January 12, 1983. It
was granted leave to file a second motion for reconsideration over Pagasa's
opposition. The case was transferred to the Banc.
We hold that the second motion for reconsideration should be granted. Pagasa
contended originally that the Appellate Court erred in holding that Pagasa cannot
invoke the equitable principles of laches, estoppel and acquiescence because Yoshida
had not abandoned the YKK trademark and Pagasa was aware of its prior existence
and registration. It allegedly erred further in ruling that registration gives the
registrant a vested right in the trademark.
These contentions are devoid of merit. The appeal should not have been given due
course. The Director of Patents sensibly and correctly cancelled the registration in
favor of Pagasa which has not shown any semblance of justification for usurping the
trademark YKK. The registration in favor of Pagasa was admitted by the Director to
be a mistake. He said that Pagasa's application should have been denied outright.
Pagasa cannot rely on equity because he who comes into equity must come with
clean hands. Equity refuses to lend its aid in any manner to one seeking its active
interposition who has been guilty of unlawful or inequitable conduct in the matter
with relation to which he seeks relief (30 C.J.S. 1009).
"Registration is sufficient prima-facie proof that all acts necessary to entitle the mark
to registration were duly performed" (87 C.J.S. 421). Obviously, Yoshida's prior
registration is superior and must prevail.
WHEREFORE, the decisions of the Director of Patents and the Court of Appeals are
affirmed. Costs against the petitioner.
SO ORDERED.
Mc Donald's Corp. vs. LC Big Mak Burger, GR No. 243993 August 18, 2004
CARPIO, J.:
The Case
This is a petition for review[1] of the Decision dated 26 November 1999 of the Court
of Appeals[2] finding respondent L.C. Big Mak Burger, Inc. not liable for trademark
infringement and unfair competition and ordering petitioners to pay
respondents P1,900,000 in damages, and of its Resolution dated 11 July 2000
denying reconsideration. The Court of Appeals Decision reversed the 5 September
1994 Decision[3] of the Regional Trial Court of Makati, Branch 137, finding
respondent L.C. Big Mak Burger, Inc. liable for trademark infringement and unfair
competition.
The Facts
Petitioner McDonalds Corporation (McDonalds) is a corporation organized under the
laws of Delaware, United States.McDonalds operates, by itself or through its
franchisees, a global chain of fast-food restaurants. McDonalds[4] owns a family of
marks[5] including the Big Mac mark for its double-decker hamburger
sandwich.[6] McDonalds registered this trademark with the United States Trademark
Registry on 16 October 1979.[7] Based on this Home Registration, McDonalds applied
for the registration of the same mark in the Principal Register of the then Philippine
Bureau of Patents, Trademarks and Technology (PBPTT), now the Intellectual
Property Office (IPO). Pending approval of its application, McDonalds introduced its
Big Mac hamburger sandwiches in the Philippine market in September 1981. On 18
July 1985, the PBPTT allowed registration of the Big Mac mark in
the PrincipalRegister based on its Home Registration in the United States.
Like its other marks, McDonalds displays the Big Mac mark in items[8] and
paraphernalia[9] in its restaurants, and in its outdoor and indoor signages. From
1982 to 1990, McDonalds spent P10.5 million in advertisement for Big Mac
hamburger sandwiches alone.[10]
Petitioner McGeorge Food Industries (petitioner McGeorge), a domestic corporation,
is McDonalds Philippine franchisee.[11]
Respondent L.C. Big Mak Burger, Inc. (respondent corporation) is a domestic
corporation which operates fast-food outlets and snack vans in Metro Manila and
nearby provinces.[12] Respondent corporations menu includes hamburger
sandwiches and other food items.[13] Respondents Francis B. Dy, Edna A. Dy, Rene
B. Dy, William B. Dy, Jesus Aycardo, Araceli Aycardo, and Grace Huerto (private
respondents) are the incorporators, stockholders and directors of respondent
corporation.[14]
On 21 October 1988, respondent corporation applied with the PBPTT
for the registration of the Big Mak mark for its hamburger sandwiches. McDonalds
opposed respondent corporations application on the ground that Big Mak was a
colorable imitation of its registered Big Mac mark for the same food products.
McDonalds also informed respondent Francis Dy (respondent Dy), the chairman of
the Board of Directors of respondent corporation, of its exclusive right to the Big Mac
mark and requested him to desistfrom using the Big Mac mark or any similar mark.
Having received no reply from respondent Dy, petitioners on 6 June 1990 sued
respondents in the Regional Trial Court of Makati, Branch 137 (RTC), for trademark
infringement and unfair competition. In its Order of 11 July 1990, the RTC issued a
temporary restraining order (TRO) against respondents enjoining them from using
the Big Mak mark in the operation of their business in the National Capital
Region.[15] On 16 August 1990, the RTC issued a writ of preliminary injunction
replacing the TRO.[16]
In their Answer, respondents admitted that they have been using the name Big Mak
Burger for their fast-food business. Respondents claimed, however, that McDonalds
does not have an exclusive right to the Big Mac mark or to any other similar mark.
Respondents point out that the Isaiyas Group of Corporations (Isaiyas Group)
registered the same mark for hamburger sandwiches with the PBPTT on 31 March
1979. One Rodolfo Topacio (Topacio) similarly registered the same mark on 24 June
1983, prior toMcDonalds registration on 18 July 1985. Alternatively, respondents
claimed that they are not liable for trademark infringement or for unfair competition,
as the Big Mak mark they sought to register does not constitute a colorable imitation
of the Big Mac mark. Respondents asserted that they did not fraudulently pass off
their hamburger sandwiches as those of petitioners Big Mac
hamburgers.[17] Respondents sought damages in their counterclaim.
In their Reply, petitioners denied respondents claim that McDonalds is not the
exclusive owner of the Big Mac mark. Petitioners asserted that while the Isaiyas
Group and Topacio did register the Big Mac mark ahead of McDonalds, the Isaiyas
Group did so only in the Supplemental Register of the PBPTT and such registration
does not provide any protection. McDonalds disclosed that it had acquired Topacios
rights to his registration in a Deed of Assignment dated 18 May 1981.[18]
The Trial Courts Ruling
On 5 September 1994, the RTC rendered judgment (RTC Decision) finding
respondent corporation liable for trademark infringement and unfair
competition. However, the RTC dismissed the complaint against private respondents
and the counterclaim against petitioners for lack of merit and insufficiency of
evidence. The RTC held:
Undeniably, the mark B[ig] M[ac] is a registered trademark for plaintiff
McDonalds, and as such, it is entitled [to] protection against infringement.
xxxx
There exist some distinctions between the names B[ig] M[ac] and B[ig]
M[ak] as appearing in the respective signages, wrappers and containers
of the food products of the parties. But infringement goes beyond the
physical features of the questioned name and the original name. There
are still other factors to be considered.
xxxx
Significantly, the contending parties are both in the business of fast-food
chains and restaurants. An average person who is hungry and wants to
eat a hamburger sandwich may not be discriminating enough to look for a
McDonalds restaurant and buy a B[ig] M[ac] hamburger. Once he sees a
stall selling hamburger sandwich, in all likelihood, he will dip into his
pocket and order a B[ig] M[ak] hamburger sandwich. Plaintiff McDonalds
fast-food chain has attained wide popularity and acceptance by the
consuming public so much so that its air-conditioned food outlets and
restaurants will perhaps not be mistaken by many to be the same as
defendant corporations mobile snack vans located along busy streets or
highways. But the thing is that what is being sold by both contending
parties is a food item a hamburger sandwich which is for immediate
consumption, so that a buyer may easily be confused or deceived into
thinking that the B[ig] M[ak] hamburger sandwich he bought is a food-
product of plaintiff McDonalds, or a subsidiary or allied
outlet thereof. Surely, defendant corporation has its own
secret ingredients to make its hamburger sandwiches as palatable and as
tasty as the other brands in the market, considering the keen competition
among mushrooming hamburger stands and multinational fast-food
chains and restaurants. Hence, the trademark B[ig] M[ac] has been
infringed by defendant corporation when it used the name B[ig] M[ak] in
its signages, wrappers, and containers in connection with its food
business.
xxxx
Did the same acts of defendants in using the name B[ig] M[ak] as a
trademark or tradename in their signages, or in causing the name B[ig]
M[ak] to be printed on the wrappers and containers of their food products
also constitute an act of unfair competition under Section 29 of the
Trademark Law?
The answer is in the affirmative.
xxxx
The xxx provision of the law concerning unfair competition is broader and
more inclusive than the law concerning the infringement of trademark,
which is of more limited range, but within its narrower range recognizes a
more exclusive right derived by the adoption and registration of the
trademark by the person whose goods or services are first
associated therewith. xxx Notwithstanding the distinction between an
action for trademark infringement and an action for unfair competition,
however, the law extends substantially the same relief to the injured
party for both cases. (See Sections 23 and 29 of Republic Act No. 166)
Any conduct may be said to constitute unfair competition if the effect is to
pass off on the public the goods of one man as the goods of another. The
choice of B[ig] M[ak] as tradename by defendant corporation is not
merely for sentimental reasons but was clearly made to take advantage
of the reputation, popularity and the established goodwill of plaintiff
McDonalds. For, as stated in Section 29, a person is guilty of unfair
competition who in selling his goods shall give them the general
appearance, of goods of another manufacturer or dealer, either as
to the goods themselves or in the wrapping of the packages in which they
are contained, or the devices or words thereon, or in anyother feature of
their appearance, which would likely influence purchasers to believe that
the goods offered are those of a manufacturer or dealer other
than the actual manufacturer or dealer. Thus, plaintiffs have established
their valid cause of action against the defendants for trademark
infringement and unfair competition and for damages.[19]
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of plaintiffs McDonalds Corporation and
McGeorge Food Industries, Inc. and against defendant L.C. Big Mak Burger, Inc., as
follows:
1. The writ of preliminary injunction issued in this case on [16 August
1990] is made permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay
plaintiffs actual damages in the amount of P400,000.00, exemplary
damages in the amount of P100,000.00, and attorneys fees and
expenses of litigation in the amount of P100,000.00;
3. The complaint against defendants Francis B. Dy, Edna A. Dy, Rene B.
Dy, Wiliam B. Dy, Jesus Aycardo, Araceli Aycardo and Grace Huerto, as
well as all counter-claims, are dismissed for lack of merit as well as for
insufficiency of evidence.[20]
Respondents appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered judgment (Court of Appeals
Decision) reversing the RTC Decision and ordering McDonalds to pay
respondents P1,600,000 as actual and compensatory damages and P300,000 as
moral damages. The Court of Appeals held:
Plaintiffs-appellees in the instant case would like to impress on this Court
that the use of defendants-appellants of its corporate name the whole L.C.
B[ig] M[ak] B[urger], I[nc]. which appears on their food packages,
signages and advertisements is an infringement of their trademark B[ig]
M[ac] which they use to identify [their] double decker sandwich, sold in a
Styrofoam box packaging material with the McDonalds logo of umbrella M
stamped thereon, together with the printed mark in red bl[o]ck capital
letters, the words being separated by a single space. Specifically,
plaintiffs-appellees argue that defendants-appellants use of their
corporate name is a colorable imitation of their trademark Big Mac.
xxxx
To Our mind, however, this Court is fully convinced that no colorable
imitation exists. As the definition dictates, it is not sufficient that a
similarity exists in both names, but that more importantly, the over-all
presentation, or in their essential, substantive and distinctive parts is such
as would likely MISLEAD or CONFUSE persons in the ordinary course of
purchasing the genuine article. A careful comparison of the way the
trademark B[ig] M[ac] is being used by plaintiffs-appellees and corporate
name L.C. Big Mak Burger, Inc. by defendants-appellants, would
readily reveal that no confusion could take place, or that the ordinary
purchasers would be misled by it. As pointed out by defendants-
appellants, the plaintiffs-appellees trademark is used to designate only
one product, a double decker sandwich sold in a Styrofoam box with the
McDonalds logo. On the other hand, what the defendants-appellants
corporation is using is not a trademark for its food product but a business
or corporate name. They use the business name L.C. Big Mak Burger, Inc.
in their restaurant business which serves diversified food items such as
siopao, noodles, pizza, and sandwiches such as hotdog, ham, fish burger
and hamburger. Secondly, defendants-appellants corporate or business
name appearing in the food packages and signages are written in
silhouette red-orange letters with the b and m in upper case letters.
Above the words Big Mak are the upper case letter L.C.. Below the words
Big Mak are the words Burger, Inc. spelled out in upper case
letters. Furthermore, said corporate or business name appearing in such
food packages and signages is always accompanied by the company
mascot, a young chubby boy named Maky who wears a red T-shirt with
the upper case m appearing therein and a blue lower
garment. Finally, the defendants-appellants food packages are made of
plastic material.
xxxx
xxx [I]t is readily apparent to the naked eye that there appears a vast
difference in the appearance of the product and the manner that the
tradename Big Mak is being used and presented to the public. As earlier
noted, there are glaring dissimilarities between plaintiffs-appellees
trademark and defendants-appellants corporate name. Plaintiffs-appellees
product carrying the trademark B[ig] M[ac] is a double decker sandwich
(depicted in the tray mat containing photographs of the various food
products xxx sold in a Styrofoam box with the McDonalds logo and
trademark in red, bl[o]ck capital letters printed thereon xxx at a price
which is more expensive than the defendants-appellants comparable food
products. In order to buy a Big Mac, a customer needs to visit an air-
conditioned McDonalds restaurant usually located ina nearby commercial
center, advertised and identified by its logo - the umbrella M, and its
mascot Ronald McDonald. A typical McDonaldsrestaurant boasts of a
playground for kids, a second floor to accommodate additional customers,
a drive-thru to allow customers with cars to make orders without alighting
from their vehicles, the interiors of the building are well-lighted, distinctly
decorated and painted with pastel colors xxx. In buying a B[ig] M[ac], it
is necessary to specify it by its trademark. Thus, a customer needs to look
for a McDonalds and enter it first before he can find a hamburger
sandwich which carry the mark Big Mac. On the other hand, defendants-
appellants sell their goods through snack vans xxxx
Anent the allegation that defendants-appellants are guilty of unfair
competition, We likewise find the same untenable.
Unfair competition is defined as the employment of deception
or any other means contrary to good faith by which a person shall pass
off the goods manufactured by him or in which he deals, or his business,
or service, for those of another who has already established good will for
his similar good, business or services, or any acts calculated to produce
the same result (Sec. 29, Rep. Act No. 166, as amended ).
To constitute unfair competition therefore it must necessarily follow that
there was malice and that the entity concerned was in bad faith.
In the case at bar, We find no sufficient evidence adduced by plaintiffs-
appellees that defendants-appellants deliberately tried to pass off the
goods manufactured by them for those of plaintiffs-appellees. The mere
suspected similarity in the sound of the defendants-appellants corporate
name with the plaintiffs-appellees trademark is not sufficient evidence to
conclude unfair competition. Defendants-appellants explained that the
name M[ak] in their corporate name was derived from both the first
names of the mother and father of defendant Francis Dy, whose names
are Maxima and Kimsoy. With this explanation, it is up to the plaintiffs-
appellees to prove bad faith on the part of defendants-appellants. It is a
settled rule that the law always presumes good faith such that any person
who seeks to be awarded damages due to acts of another has the burden
of proving that the latter acted in bad faith or with ill motive. [21]
Petitioners sought reconsideration of the Court of Appeals Decision but the appellate
court denied their motion in its Resolution of 11 July 2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENTS
CORPORATE NAME L.C. BIG MAK BURGER, INC. IS NOT A COLORABLE
IMITATION OF THE MCDONALDS TRADEMARK BIG MAC, SUCH
COLORABLE IMITATION BEING AN ELEMENT OF TRADEMARK
INFRINGEMENT.
A. Respondents use the words Big Mak as trademark for their products
and not merely as their business or corporate name.
B. As a trademark, respondents Big Mak is undeniably and
unquestionably similar to petitioners Big Mac trademark based on the
dominancy test and the idem sonans test resulting inexorably in confusion
on the part of the consuming public.
II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER THE
INHERENT SIMILARITY BETWEEN THE MARK BIG MAK AND THE WORD
MARK BIG MAC AS AN INDICATION OF RESPONDENTS INTENT TO
DECEIVE OR DEFRAUD FOR PURPOSES OF ESTABLISHING UNFAIR
COMPETITION.[22]
Petitioners pray that we set aside the Court of Appeals Decision and
reinstate the RTC Decision. In their Comment to the petition,
respondents question the propriety of this petition as it allegedly raises
only questions of fact. On the merits, respondents contend that the Court
of Appeals committed no reversible error in finding them not liable for
trademark infringement and unfair competition and in ordering petitioners
to pay damages.
The Issues
The issues are:
1. Procedurally, whether the questions raised in this petition are proper for a petition
for review under Rule 45.
2. On the merits, (a) whether respondents used the words Big Mak not only as part
of the corporate name L.C. Big Mak Burger, Inc. but also as a trademark for their
hamburger products, and (b) whether respondent corporation is liable for trademark
infringement and unfair competition.[23]
The Courts Ruling
The petition has merit.
On Whether the Questions Raised in the Petition are Proper for a Petition
for Review
A party intending to appeal from a judgment of the Court of Appeals may file with
this Court a petition for review under Section 1 of Rule 45 (Section 1)[24] raising only
questions of law. A question of law exists when the doubt or difference arises on
what the law is on a certain state of facts. There is a question of fact when the doubt
or difference arises on the truth or falsity of the allegedfacts. [25]
Here, petitioners raise questions of fact and law in assailing the Court of Appeals
findings on respondent corporations non-liability for trademark infringement and
unfair competition. Ordinarily, the Court can deny due course to such a petition. In
view, however, of the contradictory findings of fact of the RTC and Court of Appeals,
the Court opts to accept the petition, this being one of the recognized exceptions to
Section 1.[26] We took a similar course of action in Asia Brewery, Inc. v. Court of
Appeals[27] which also involved a suit for trademark infringement and unfair
competition in which the trial court and the Court of Appeals arrived at conflicting
findings.
On the Manner Respondents Used Big Mak in their Business
Petitioners contend that the Court of Appeals erred in ruling that the corporate name
L.C. Big Mak Burger, Inc. appears in the packaging for respondents hamburger
products and not the words Big Mak only.
The contention has merit.
The evidence presented during the hearings on petitioners motion for the issuance of
a writ of preliminary injunction shows that the plastic wrappings and plastic bags
used by respondents for their hamburger sandwiches bore the words Big Mak. The
other descriptive words burger and 100% pure beef were set in smaller type, along
with the locations of branches.[28] Respondents cash invoices simply refer to their
hamburger sandwiches as Big Mak.[29] It is respondents snack vans that carry the
words L.C. Big Mak Burger, Inc.[30]
It was only during the trial that respondents presented in evidence the plastic
wrappers and bags for their hamburger sandwiches relied on by the Court of
Appeals.[31] Respondents plastic wrappers and bags were identical with those
petitioners presented during the hearings for the injunctive writ except that the
letters L.C. and the words Burger, Inc. in respondents evidence were added above
and below the words Big Mak, respectively. Since petitioners complaint was based on
facts existing before and during the hearings on the injunctive writ, the facts
established during those hearings are the proper factual bases for the disposition of
the issues raised in this petition.
On the Issue of Trademark Infringement
Section 22 (Section 22) of Republic Act No. 166, as amended (RA 166), the law
applicable to this case,[32] defines trademark infringement as follows:
Infringement, what constitutes. Any person who [1] shall use, without the
consent of the registrant, any reproduction, counterfeit, copy or colorable
imitation of any registered mark or trade-name in connection with the
sale, offering for sale, or advertising of any goods, business or services
on or in connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or origin of
such goods or services, or identity of such business; or [2] reproduce,
counterfeit, copy, or colorably imitate any such mark or trade-name and
apply such reproduction, counterfeit, copy, or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended
to be used upon or in connection with such goods, business or
services, shall be liable to a civil action by the registrant for any or all
of the remedies herein provided.[33]
Petitioners base their cause of action under the first part of Section
22, i.e. respondents allegedly used, without petitioners consent, a
colorable imitation of the Big Mac mark in advertising and selling
respondents hamburger sandwiches. This likely caused confusion in the
mind of the purchasing public on the source of the hamburgers or the
identity of the business.
To establish trademark infringement, the following elements must be shown: (1) the
validity of plaintiffs mark; (2) the plaintiffs ownership of the mark; and (3) the use
of the mark or its colorable imitation by the alleged infringer results in likelihood of
confusion.[34] Of these, it is the element of likelihood of confusion that is the
gravamen of trademark infringement.[35]
On the Validity of the Big MacMark and McDonalds Ownership of such Mark
A mark is valid if it is distinctive and thus not barred from registration under Section
4[36] of RA 166 (Section 4). However, once registered, not only the marks validity
but also the registrants ownership of the mark is prima facie presumed.[37]
Respondents contend that of the two words in the Big Mac mark, it is only the word
Mac that is valid because the word Big is generic and descriptive (proscribed under
Section 4[e]), and thus incapable of exclusive appropriation.[38]
The contention has no merit. The Big Mac mark, which should be treated in its
entirety and not dissected word for word,[39] is neither generic nor descriptive.
Generic marks are commonly used as the name or description of
a kind of goods,[40] such as Lite for beer[41] or Chocolate Fudge for chocolate soda
drink.[42] Descriptive marks, on the other hand, convey the characteristics, functions,
qualities or ingredients of a product to one who has never seen it or does not know it
exists,[43] such as Arthriticare for arthritis medication.[44] On the contrary, Big Mac
falls under the class of fanciful or arbitrary marks as it bears no logical relation to
the actual characteristics of the product it represents.[45] As such, it is highly
distinctive and thus valid. Significantly, the trademark Little Debbie for snack cakes
was found arbitrary or fanciful.[46]
The Court also finds that petitioners have duly established McDonalds exclusive
ownership of the Big Mac mark. Although Topacio and the Isaiyas Group registered
the Big Mac mark ahead of McDonalds, Topacio, as petitioners disclosed, had already
assigned his rights to McDonalds. The Isaiyas Group, on the other hand, registered
its trademark only in the Supplemental Register. A mark which is not registered in
the Principal Register, and thus not distinctive, has no real protection.[47] Indeed,
we have held that registration in the Supplemental Register is not even a prima
facie evidence of the validity of the registrants exclusive right to use the mark on the
goods specified in the certificate.[48]
On Types of Confusion
Section 22 covers two types of confusion arising from the use of similar or colorable
imitation marks, namely, confusion of goods (product confusion) and confusion of
business (source or origin confusion). In Sterling Products International,
Incorporated v. Farbenfabriken Bayer Aktiengesellschaft , et al.,[49] the
Court distinguished these two types of confusion, thus:
[Rudolf] Callman notes two types of confusion. The first is the confusion
of goods in which event the ordinarily prudent purchaser would be
induced to purchase one product in the belief that he was purchasing the
other. xxx The other is the confusion of business: Here though the goods
of the parties are different, the defendants product is such as might
reasonably be assumed to originate with the plaintiff, and the public
would then be deceived either into that belief or into the belief that there
is some connection between the plaintiff and defendant which, in fact,
does not exist.
Under Act No. 666,[50] the first trademark law, infringement was limited to
confusion of goods only, when the infringing mark is used on goods of a similar
kind.[51] Thus, no relief was afforded to the party whose registered mark or its
colorable imitation is used on different although related goods. To remedy this
situation, Congress enacted RA 166 on 20 June 1947. In defining trademark
infringement, Section 22 of RA 166 deleted the requirement in question and
expanded its scope to include such use of the mark or its colorable imitation that is
likely to result in confusion on the source or origin of such goods or services, or
identity of such business.[52] Thus, while there is confusion of goods when the
products are competing, confusion of business exists when the products are non-
competing but related enough to produce confusion of affiliation.[53]
On Whether Confusion of Goods and Confusion of Business are Applicable
Petitioners claim that respondents use of the Big Mak mark on respondents
hamburgers results in confusion of goods, particularly with respect to petitioners
hamburgers labeled Big Mac. Thus, petitioners alleged in their complaint:
1.15. Defendants have unduly prejudiced and clearly
infringed upon the property rights of plaintiffs in the McDonalds Marks,
particularly the mark B[ig] M[ac]. Defendants unauthorized acts are likely,
and calculated, to confuse, mislead or deceive the public into believing
that the products and services offered by defendant Big
Mak Burger, and the business it is engaged in, are approved and
sponsored by, or affiliated with, plaintiffs.[54] (Emphasis supplied)
Since respondents used the Big Mak mark on the same
goods, i.e. hamburger sandwiches, that petitioners Big Mac mark is used,
trademark infringement through confusion of goods is a proper issue in
this case.
Petitioners also claim that respondents use of the Big Mak mark in the sale of
hamburgers, the same business that petitioners are engaged in, results in confusion
of business. Petitioners alleged in their complaint:
1.10. For some period of time, and without the consent of plaintiff
McDonalds nor its licensee/franchisee, plaintiff McGeorge, and in clear
violation of plaintiffs exclusive right to use and/or appropriate the
McDonalds marks, defendant Big Mak Burger acting through individual
defendants, has been operating Big Mak Burger, a fast food restaurant
business dealing in the sale of hamburger and cheeseburger sandwiches,
french fries and other food products, and has caused to be printed on the
wrapper of defendants food products and incorporated in its signages the
name Big Mak Burger, which is confusingly similar to and/or is a colorable
imitation of the plaintiff McDonalds mark B[ig] M[ac], xxx. Defendant
Big Mak Burger has thus unjustly created the impression that its
business is approved and sponsored by, or affiliated with,
plaintiffs. xxxx
2.2 As a consequence of the acts committed by defendants, which unduly
prejudice and infringe upon the property rights of plaintiffs McDonalds
and McGeorge as the real owner and rightful proprietor, and the
licensee/franchisee, respectively, of the McDonalds marks, and which are
likely to have caused confusion or deceived the public as to the
true source, sponsorship or affiliation of defendants food
products and restaurant business, plaintiffs have suffered and
continue to suffer actual damages in the form of injury to their business
reputation and goodwill, and of the dilution of the distinctive quality of
the McDonalds marks, in particular, the mark B[ig] M[ac].[55] (Emphasis
supplied)
Respondents admit that their business includes selling hamburger
sandwiches, the same food product that petitioners sell using the Big Mac
mark. Thus, trademark infringement through confusion of business is also
a proper issue in this case.
Respondents assert that their Big Mak hamburgers cater mainly to the low-income
group while petitioners Big Mac hamburgers cater to the middle and upper income
groups. Even if this is true, the likelihood of confusion of business remains, since the
low-income group might be led to believe that the Big Mak hamburgers are the low-
end hamburgers marketed by petitioners.After all, petitioners have the exclusive right
to use the Big Mac mark. On the other hand, respondents would benefit by
associating their low-end hamburgers, through the use of the Big Mak mark, with
petitioners high-end Big Mac hamburgers, leading to likelihood of confusion in the
identity of business. Respondents further claim that petitioners use the Big Mac mark
only on petitioners double-decker hamburgers, while respondents use the Big Mak
mark on hamburgers and other products like siopao, noodles and pizza. Respondents
also point out that petitioners sell their Big Mac double-deckers in a styrofoam box
with the McDonalds logo and trademark in red, block letters at a price more
expensive than the hamburgers of respondents. In contrast, respondents sell their
Big Mak hamburgers in plastic wrappers and plastic bags. Respondents further point
out that petitioners restaurants are air-conditioned buildings with drive-thru service,
compared to respondents mobile vans.
These and other factors respondents cite cannot negate the undisputed fact that
respondents use their Big Mak mark on hamburgers, the same food product that
petitioners sell with the use of their registered mark Big Mac. Whether a hamburger
is single, double or triple-decker, and whether wrapped in plastic or styrofoam, it
remains the same hamburger food product. Even respondents use of the Big Mak
mark on non-hamburger food products cannot excuse their infringement of
petitioners registered mark, otherwise registered marks will lose their protection
under the law. The registered trademark owner may use his mark on the same or
similar products, in different segments of the market, and at different price levels
depending on variations of the products for specific segments of the market. The
Court has recognized that the registered trademark owner enjoys protection in
product and market areas that are the normal potential expansion of his
business.Thus, the Court has declared:
Modern law recognizes that the protection to which the owner of a
trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of the
parties, but extends to all cases in which the use by a junior appropriator
of a trade-mark or trade-name is likely to lead to a confusion of
source, as where prospective purchasers would be misled into
thinking that the complaining party has extended his business
into the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is in any way
connected with the activities of the infringer; or when it forestalls the
normal potential expansion of his business (v. 148 ALR, 77, 84; 52
Am. Jur. 576, 577).[56] (Emphasis supplied)
On Whether Respondents Use of the Big Mak Mark Results in Likelihood of
Confusion
 In determining likelihood of confusion, jurisprudence has developed two tests, the
dominancy test and the holistic test.[57] The dominancy test focuses on the similarity
of the prevalent features of the competing trademarks that might cause confusion. In
contrast, the holistic test requires the court to consider the entirety of the marks as
applied to the products, including the labels and packaging, in determining confusing
similarity.
The Court of Appeals, in finding that there is no likelihood of confusion that could
arise in the use of respondents Big Mak mark on hamburgers, relied on the holistic
test. Thus, the Court of Appeals ruled that it is not sufficient that a similarity exists
in both name(s), but that more importantly, the overall presentation, or in their
essential, substantive and distinctive parts is such as would likely MISLEAD or
CONFUSE persons in the ordinary course of purchasing the genuine article. The
holistic test considers the two marks in their entirety, as they appear on the goods
with their labels and packaging. It is not enough to consider their words and
compare the spelling and pronunciation of the words.[58]
Respondents now vigorously argue that the Court of Appeals application of the
holistic test to this case is correct and in accord with prevailing jurisprudence.
This Court, however, has relied on the dominancy test rather than the holistic test.
The dominancy test considers the dominant features in the competing marks
in determining whether they are confusingly similar. Under the dominancy test,
courts give greater weight to the similarity of the appearance of the product arising
from the adoption of the dominant features of the registered mark,
disregarding minor differences.[59] Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little weight to factors
like prices, quality, sales outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,[60] the Court ruled:
xxx It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity in size,
form and color, while relevant, is not conclusive. If the competing
trademark contains the main or essential or dominant features
of another, and confusion and deception is likely to result,
infringement takes place. Duplication or imitation is not necessary;
nor is it necessary that the infringing label should suggest an effort to
imitate. (G. Heilman Brewing Co. vs. Independent Brewing Co., 191 F.,
489, 495, citing Eagle White Lead Co. vs. Pflugh (CC) 180 Fed. 579). The
question at issue in cases of infringement of trademarks is whether the
use of the marks involved would be likely to cause confusion or mistakes
in the mind of the public or deceive purchasers. (Auburn Rubber
Corporation vs. Honover Rubber Co., 107 F. 2d 588; xxx) (Emphasis
supplied.)
The Court reiterated the dominancy test in Lim Hoa v. Director of
Patents,[61] Phil. Nut Industry, Inc. v. Standard Brands Inc.,[62] Converse
Rubber Corporation v. Universal Rubber Products, Inc.,[63] and Asia
Brewery, Inc. v. Court of Appeals.[64]In the 2001 case of Societe Des
Produits Nestl, S.A. v. Court of Appeals,[65] the Court explicitly rejected the
holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary
postulate of the law on trademarks and unfair competition that
confusing similarity is to be determined on the basis of visual, aural,
connotative comparisons and overall impressions engendered by the
marks in controversy as they are encountered in the realities of the
marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into law in Section 155.1 of the
Intellectual Property Code which defines infringement as the colorable imitation of a
registered mark xxx or a dominant feature thereof.
Applying the dominancy test, the Court finds that respondents use of the Big Mak
mark results in likelihood of confusion.First, Big Mak sounds exactly the same as Big
Mac. Second, the first word in Big Mak is exactly the same as the first word in Big
Mac. Third, the first two letters in Mak are the same as the first two letters in
Mac. Fourth, the last letter in Mak while a k sounds the same as c when the word
Mak is pronounced. Fifth, in Filipino, the letter k replaces c in spelling, thus Caloocan
is spelled Kalookan.
In short, aurally the two marks are the same, with the first word of both marks
phonetically the same, and the second word of both marks also phonetically the
same. Visually, the two marks have both two words and six letters, with the first
word of bothmarks having the same letters and the second word having the same
first two letters. In spelling, considering the Filipino language, even the last letters
of both marks are the same.
Clearly, respondents have adopted in Big Mak not only the dominant but
also almost all the features of Big Mac . Applied to the same food product of
hamburgers, the two marks will likely result in confusion in the public mind.
The Court has taken into account the aural effects of the words and
letters contained in the marks in determining the issue ofconfusing similarity. Thus,
in Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al.,[66] the Court
held:
The following random list of confusingly similar sounds in the matter of
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947,
Vol. 1, will reinforce our view that SALONPAS and LIONPAS are
confusingly similar in sound: Gold Dust and Gold Drop; Jantzen and Jass-
Sea; Silver Flash and Supper Flash; Cascarete and Celborite; Celluloid and
Cellonite; Chartreuse and Charseurs; Cutex and Cuticlean; Hebe and Meje;
Kotex and Femetex; Zuso and Hoo Hoo. Leon Amdur, in his book Trade-
Mark Law and Practice, pp. 419-421, cities, as coming within the purview
of the idem sonans rule, Yusea and U-C-A, Steinway Pianos and Steinberg
Pianos, and Seven-Up and Lemon-Up. In Co Tiong vs. Director of Patents,
this Court unequivocally said that Celdura and Cordura are confusingly
similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil.
795 that the name Lusolin is an infringement of the trademark Sapolin, as
the sound of the two names is almost the same. (Emphasis supplied)
Certainly, Big Mac and Big Mak for hamburgers create even greater confusion, not
only aurally but also visually.
Indeed, a person cannot distinguish Big Mac from Big Mak by their sound. When one
hears a Big Mac or Big Mak hamburger advertisement over the radio, one would not
know whether the Mac or Mak ends with a c or a k.
Petitioners aggressive promotion of the Big Mac mark, as borne by their
advertisement expenses, has built goodwill and reputation for such mark making it
one of the easily recognizable marks in the market today. This increases the
likelihood that consumers will mistakenly associate petitioners hamburgers and
business with those of respondents.
Respondents inability to explain sufficiently how and why they came to choose Big
Mak for their hamburger sandwiches indicatestheir intent to imitate petitioners Big
Mac mark. Contrary to the Court of Appeals finding, respondents claim that their Big
Mak mark was inspired by the first names of respondent Dys mother (Maxima) and
father (Kimsoy) is not credible. As petitioners well noted:
[R]espondents, particularly Respondent Mr. Francis Dy, could have
arrived at a more creative choice for a corporate name by using the
names of his parents, especially since he was allegedly driven by
sentimental reasons. For one, he could have put his fathers name ahead
of his mothers, as is usually done in this patriarchal society, and derived
letters from said names in that order. Or, he could have taken an
equal number of letters (i.e., two) from each name, as is the more usual
thing done. Surely, the more plausible reason behind Respondents choice
of the word M[ak], especially when taken in conjunction with the word
B[ig], was their intent to take advantage of Petitioners xxx B[ig] M[ac]
trademark, with their alleged sentiment-focused explanation merely
thought of as a convenient, albeit unavailing, excuse or defense for such
an unfair choice of name.[67]
Absent proof that respondents adoption of the Big Mak mark was due to honest
mistake or was fortuitous,[68] the inescapable conclusion is that respondent adopted
the Big Mak mark to ride on the coattails of the more established Big Mac
mark.[69] This saves respondents much of the expense in advertising to create
market recognition of their mark and hamburgers.[70]
Thus, we hold that confusion is likely to result in the public mind. We sustain
petitioners claim of trademark infringement.
On the Lack of Proof of Actual Confusion
Petitioners failure to present proof of actual confusion does not negate their claim of
trademark infringement. As noted in American Wire & Cable Co. v. Director of
Patents,[71] Section 22 requires the less stringent standard of likelihood of
confusion only. Whileproof of actual confusion is the best evidence of infringement,
its absence is inconsequential.[72]
On the Issue of Unfair Competition
Section 29 (Section 29)[73] of RA 166 defines unfair competition, thus:
xxxx
Any person who will employ deception or any other means contrary to
good faith by which he shall pass off the goods manufactured by him or
in which he deals, or his business, or services for those of the one having
established such goodwill, or who shall commit any acts calculated to
produce said result, shall be guilty of unfair competition, and shall be
subject to an action therefor.
In particular, and without in any way limiting the scope of unfair
competition, the following shall be deemed guilty of unfair
competition:
(a) Any person, who in selling his goods shall give them the
general appearance of goods of another manufacturer or dealer,
either as to the goods themselves or in the wrapping of the packages
in which they are contained, or the devices or words thereon, or
in anyfeature of their appearance, which would be likely to influence
purchasers to believe that the goods offered are those of a manufacturer
or dealer, other than the actual manufacturer or dealer, or who otherwise
clothes the goods with such appearance as shall deceive the public and
defraud another of his legitimate trade, or any subsequent vendor of such
goods or any agent of any vendor engaged in selling such goods with a
like purpose;
(b) Any person who by any artifice, or device, or who employs any other
means calculated to induce the false belief that such person is offering
the services of another who has identified such services in the mind of
the public; or
(c) Any person who shall make any false statement in the course of trade
or who shall commit any other act contrary to good faith of a nature
calculated to discredit the goods, business or services of another.
(Emphasis supplied)
The essential elements of an action for unfair competition are (1) confusing similarity
in the general appearance of the goods, and (2) intent to deceive the public and
defraud a competitor.[74] The confusing similarity may or may not result from
similarity in the marks, but may result from other external factors in the packaging or
presentation of the goods. The intent to deceive and defraud may be inferred from
the similarity of the appearance of the goods as offered for sale to the
public.[75] Actual fraudulent intent need not be shown.[76]
Unfair competition is broader than trademark infringement and includes passing off
goods with or without trademark infringement. Trademark infringement is a form of
unfair competition.[77] Trademark infringement constitutes unfair competition when
there is not merely likelihood of confusion, but also actual or probable deception on
the public because of the general appearance of the goods. There can be trademark
infringement without unfair competition as when the infringer discloses on the labels
containing the mark that he manufactures the goods, thus preventing the public from
being deceived that the goods originate from the trademark owner.[78]
Moreover, there is no notice to the public that the Big Mak hamburgers are products
of L.C. Big Mak Burger, Inc.Respondents introduced during the trial plastic wrappers
and bags with the words L.C. Big Mak Burger, Inc. to inform the public of the name
of the seller of the hamburgers. However, petitioners introduced during the injunctive
hearings plastic wrappers and bags with the Big Mak mark without the name L.C.
Big Mak Burger, Inc. Respondents belated presentation of plastic wrappers and bags
bearing the name of L.C. Big Mak Burger, Inc. as the seller of the hamburgers is an
after-thought designed to exculpate them from their unfair business conduct. As
earlier stated, we cannot consider respondents evidence since petitioners complaint
was based on facts existing before and during the injunctive hearings.
Thus, there is actually no notice to the public that the Big Mak hamburgers are
products of L.C. Big Mak Burger, Inc. and not those of petitioners who have the
exclusive right to the Big Mac mark. This clearly shows respondents intent to deceive
the public.Had respondents placed a notice on their plastic wrappers and bags that
the hamburgers are sold by L.C. Big Mak Burger, Inc., then they could validly claim
that they did not intend to deceive the public. In such case, there is only trademark
infringement but no unfair competition.[82] Respondents, however, did not give such
notice. We hold that as found by the RTC, respondent corporation is liable for unfair
competition.
The Remedies Available to Petitioners
Under Section 23[83] (Section 23) in relation to Section 29 of RA 166, a plaintiff who
successfully maintains trademark infringement and unfair competition claims is
entitled to injunctive and monetary reliefs. Here, the RTC did not err in issuing the
injunctive writ of 16 August 1990 (made permanent in its Decision of 5 September
1994) and in ordering the payment of P400,000 actual damages in favor of
petitioners. The injunctive writ is indispensable to prevent further acts of
infringement by respondent corporation. Also, the amount of actual damages is a
reasonable percentage (11.9%) of respondent corporations gross sales for three
(1988-1989 and 1991) of the six years (1984-1990) respondents have used the Big
Mak mark.[84]

To support their claim of unfair competition, petitioners allege that respondents The RTC also did not err in awarding exemplary damages by way of correction for
fraudulently passed off their hamburgers as Big Mac hamburgers. Petitioners add that the public good[85] in view of the finding of unfair competition where intent to
respondents fraudulent intent can be inferred from the similarity of the marks in deceive the public is essential. The award of attorneys fees and expenses of litigation
question.[79] is also in order.[86]

Passing off (or palming off) takes place where the defendant, by imitative devices on
the general appearance of the goods, misleads prospective purchasers into buying his
merchandise under the impression that they are buying that of his
competitors.[80]Thus, the defendant gives his goods the general appearance of the
goods of his competitor with the intention of deceiving the public that the goods are
those of his competitor.
The RTC described the respective marks and the goods of petitioners and
respondents in this wise:
WHEREFORE, we GRANT the instant petition. We SET ASIDE the Decision dated
26 November 1999 of the Court of Appeals and its Resolution dated 11 July 2000
and REINSTATE the Decision dated 5 September 1994 of the Regional Trial Court of
Makati, Branch 137, finding respondent L.C. Big Mak Burger, Inc. liable for trademark
infringement and unfair competition.
SO ORDERED.

The mark B[ig] M[ac] is used by plaintiff McDonalds to identify its double
decker hamburger sandwich. The packaging material is a styrofoam
box with the McDonalds logo and trademark in red with block capital
letters printed on it. All letters of the B[ig] M[ac] mark are also in red and
block capital letters. On the other hand, defendants B[ig] M[ak] script
print is in orange with only the letter B and M being capitalized and the
packaging material is plastic wrapper. xxxx Further, plaintiffs logo and
mascot are the umbrella M and Ronald McDonalds, respectively,
compared to the mascot of defendant Corporation which is a chubby boy
called Macky displayed or printed between the words Big and
Mak.[81] (Emphasis supplied)

Respondents point to these dissimilarities as proof that they did not give their
hamburgers the general appearance of petitioners Big Mac hamburgers.

The dissimilarities in the packaging are minor compared to the stark similarities in
the words that give respondents Big Mak hamburgers the general appearance of
petitioners Big Mac hamburgers. Section 29(a) expressly provides that the similarity
in the general appearance of the goods may be in the devices or words used on the
wrappings. Respondents have applied on their plastic wrappers and bags almost
the same words that petitioners use on their styrofoam box. What attracts the
attention of the buying public are the words Big Mak which are almost the same,
aurally and visually, as the words Big Mac. The dissimilarities in the material and
other devices are insignificant compared to the glaring similarity in the words used in
the wrappings.

Section 29(a) also provides that the defendant gives his goods the general
appearance of goods of another manufacturer.Respondents goods are hamburgers
which are also the goods of petitioners. If respondents sold egg sandwiches
only instead ofhamburger sandwiches, their use of the Big Mak mark would not give
their goods the general appearance of petitioners Big Mac hamburgers. In such case,
there is only trademark infringement but no unfair competition. However, since
respondents chose to apply the Big Mak mark on hamburgers, just like petitioners
use of the Big Mac mark on hamburgers, respondents have obviouslyclothed their
goods with the general appearance of petitioners goods.