IPL Class Atty. Vera, Assignments for September 30 and August 7, 2014: Assignment for September 30 and October 7, 2014

ASSIGNMENT FOR SEPTEMBER 30, 2014

Continuation of Trademarks

False Designation

Sec. 169

Espiritu, et. al. vs. Petron Corporation, G.R. No. 170891, November 24, 2009

Criminal Penalties

Sec. 170

Manolo Samson vs. Caterpillar, G.R. No. 169882, August 12, 2007

Levis Strauss vs. Tony Lim, G.R. No. 162311, December 4, 2008

Sketchers, USA vs. Inter Pacific Industrial, G.R. NO. 164321, March 23, 2011

PATENTS

Definitions

Sec. 20 & 21

Restrictions

Sec. 22

Patentability

Subject Matter

Diamond vs. Chakrabarty, 447 US 303 LINK

Novelty

Sec. 23

Rosaire vs. National Lead Co., 218 F.2d 72 LINK

Inventive Step

Sec 26

Aguas vs. De Leon, G.R. No. L-32160, January 30, 1982

Industrial Applicability

Sec. 27

Brenner vs. Manson, 383 US 519 LINK

Juicy Whip vs. Orange Bang, 185 F.3d 1364 LINK

Enablement

Priority

Sec. 31

Application

Secs. 32 to 39

Duration

Sec. 54

Cancellation

Sec. 61

Manzano vs. CA & Madolaria, G.R. No. G.R. No. 113388. September 5, 1997

SECOND DIVISIONMANUEL C. ESPIRITU, JR., AUDIEG.R. No. 170891LLONA, FREIDA F. ESPIRITU,CARLO F. ESPIRITU, RAFAEL F.ESPIRITU, ROLANDO M. MIRABUNA,HERMILYN A. MIRABUNA, KIMROLAND A. MIRABUNA, KAYEANN A. MIRABUNA, KEN RYAN A.MIRABUNA, JUANITO P. DECASTRO, GERONIMA A. ALMONITEand MANUEL C. DEE, who are theofficers and directors of BICOL GASREFILLING PLANT CORPORATION,Petitioners,Present:

Carpio,J., Chairperson,

- versus -Leonardo-De Castro,Brion,Del Castillo, andAbad,JJ.PETRON CORPORATION andCARMEN J. DOLOIRAS, doingbusiness under the name KRISTINAPromulgated:PATRICIA ENTERPRISES,Respondents.November 24, 2009x ---------------------------------------------------------------------------------------- xDECISIONABAD,J.:

This case is about the offense or offenses that arise from the reloading of the liquefied petroleum gas cylinder container of one brand with the liquefied petroleum gas of another brand.The Facts and the CaseRespondent Petron Corporation (Petron) sold and distributed liquefied petroleum gas (LPG) in cylinder tanks that carried its trademark Gasul.[1]Respondent Carmen J. Doloiras owned and operated Kristina Patricia Enterprises (KPE), the exclusive distributor of Gasul LPGs in the whole of Sorsogon.[2]Jose Nelson Doloiras (Jose) served as KPEs manager.Bicol Gas Refilling Plant Corporation (Bicol Gas) was also in the business of selling and distributing LPGs in Sorsogon but theirs carried the trademark Bicol Savers Gas.Petitioner Audie Llona managed Bicol Gas.In the course of trade and competition, any given distributor of LPGs at times acquired possession of LPG cylinder tanks belonging to other distributors operating in the same area.They called these captured cylinders.According to Jose, KPEs manager, in April 2001 Bicol Gas agreed with KPE for the swapping of captured cylinders since one distributor could not refill captured cylinders with its own brand of LPG.At one time, in the course of implementing this arrangement, KPEs Jose visited the Bicol Gas refilling plant.While there, he noticed several Gasul tanks in Bicol Gas possession.He requested a swap but Audie Llona of Bicol Gas replied that he first needed to ask the permission of the Bicol Gas owners.That permission was given and they had a swap involving around 30 Gasul tanks held by Bicol Gas in exchange for assorted tanks held by KPE.KPEs Jose noticed, however, that Bicol Gas still had a number of Gasul tanks in its yard.He offered to make a swap for these but Llona declined, saying the Bicol Gas owners wanted to send those tanks to Batangas.Later Bicol Gas told Jose that it had no more Gasul tanks left in its possession.Jose observed on almost a daily basis, however, that Bicol Gas trucks which plied the streets of the province carried a load of Gasul tanks.He noted that KPEs volume of sales dropped significantly from June to July 2001.On August 4, 2001 KPEs Jose saw a particular Bicol Gas truck on theMaharlika Highway.While the truck carried mostly Bicol Savers LPG tanks, it had on it one unsealed 50-kg Gasul tank and one 50-kg Shellane tank.Jose followed the truck and when it stopped at a store, he asked the driver, Jun Leorena, and the Bicol Gas sales representative, Jerome Misal, about the Gasul tank in their truck.They said it was empty but, when Jose turned open its valve, he noted that it was not.Misal and Leorena then admitted that the Gasul and Shellane tanks on their truck belonged to a customer who had them filled up by Bicol Gas.Misal then mentioned that his manager was a certain Rolly Mirabena.Because of the above incident, KPE filed a complaint[3]for violations of Republic Act (R.A.) 623 (illegally filling up registered cylinder tanks), as amended, and Sections 155 (infringement of trade marks) and 169.1 (unfair competition) of the Intellectual Property Code (R.A. 8293).The complaint charged the following: Jerome Misal, Jun Leorena, Rolly Mirabena, Audie Llona, and several John and Jane Does, described as the directors, officers, and stockholders of Bicol Gas.These directors, officers, and stockholders were eventually identified during the preliminary investigation.Subsequently, the provincial prosecutor ruled that there was probable cause only for violation of R.A. 623 (unlawfully filling up registered tanks) and that only the four Bicol Gas employees, Mirabena, Misal, Leorena, and petitioner Llona, could be charged.The charge against the other petitioners who were the stockholders and directors of the company was dismissed.Dissatisfied, Petron and KPE filed a petition for review with the Office of the Regional State Prosecutor, Region V, which initially denied the petition but partially granted it on motion for reconsideration.The Office of the Regional State Prosecutor ordered the filing of additional informations against the four employees of Bicol Gas for unfair competition.It ruled, however, that no case for trademark infringement was present.The Secretary of Justice denied the appeal of Petron and KPE and their motion for reconsideration.Undaunted, Petron and KPE filed a special civil action forcertiorariwith the Court of Appeals[4]but the Bicol Gas employees and stockholders concerned opposed it, assailing the inadequacy in its certificate of non-forum shopping, given that only Atty. Joel Angelo C. Cruz signed it on behalf of Petron.In its Decision[5]dated October 17, 2005, the Court of Appeals ruled, however, that Atty. Cruzs certification constituted sufficient compliance.As to the substantive aspect of the case, the Court of Appeals reversed the Secretary of Justices ruling.It held that unfair competition does not necessarily absorb trademark infringement.Consequently, the court ordered the filing of additional charges of trademark infringement against the concerned Bicol Gas employees as well.Since the Bicol Gas employees presumably acted under the direct order and control of its owners, the Court of Appeals also ordered the inclusion of the stockholders of Bicol Gas in the various charges, bringing to 16 the number of persons to be charged, now including petitioners Manuel C. Espiritu, Jr., Freida F. Espiritu, Carlo F. Espiritu, Rafael F. Espiritu, Rolando M. Mirabuna, Hermilyn A. Mirabuna, Kim Roland A. Mirabuna, Kaye Ann A. Mirabuna, Ken Ryan A. Mirabuna, Juanito P. de Castro, Geronima A. Almonite, and Manuel C. Dee (together with Audie Llona), collectively, petitioners Espiritu,et al.The court denied the motion for reconsideration of these employees and stockholders in its Resolution dated January 6, 2006, hence, the present petition for review[6]before this Court.The Issues PresentedThe petition presents the following issues:1.Whether or not the certificate of non-forum shopping that accompanied the petition filed with the Court of Appeals, signed only by Atty. Cruz on behalf of Petron, complied with what the rules require;2.Whether or not the facts of the case warranted the filing of charges against the Bicol Gas people for:a)Filling up the LPG tanks registered to another manufacturer without the latters consent in violation of R.A. 623, as amended;b)Trademark infringement consisting in Bicol Gas use of a trademark that is confusingly similar to Petrons registered Gasul trademark in violation of section 155 also of R.A. 8293; andc)Unfair competition consisting in passing off Bicol Gas-produced LPGs for Petron-produced Gasul LPG in violation of Section 168.3 of R.A. 8293.The Courts RulingsFirst.Petitioners Espiritu,et al. point out that the certificate of non-forum shopping that respondents KPE and Petron attached to the petition they filed with the Court of Appeals was inadequate, having been signed only by Petron, through Atty. Cruz.But, while procedural requirements such as that of submittal of a certificate of non-forum shopping cannot be totally disregarded, they may be deemed substantially complied with under justifiable circumstances.[7]One of these circumstances is where the petitioners filed a collective action in which they share a common interest in its subject matter or raise a common cause of action.In such a case, the certification by one of the petitioners may be deemed sufficient.[8]Here, KPE and Petron shared a common cause of action against petitioners Espiritu,et al., namely, the violation of their proprietary rights with respect to the use of Gasul tanks and trademark.Furthermore, Atty. Cruz said in his certification that he was executing it for and on behalf of the Corporation, and co-petitioner Carmen J. Doloiras.[9]Thus, the object of the requirement to ensure that a party takes no recourse to multiple forums was substantially achieved.Besides, the failure of KPE to sign the certificate of non-forum shopping does not render the petition defective with respect to Petron which signed it through Atty. Cruz.[10]The Court of Appeals, therefore, acted correctly in giving due course to the petition before it.Second.The Court of Appeals held that under the facts of the case, there is probable cause that petitioners Espiritu,et al. committed all three crimes: (a) illegally filling up an LPG tank registered to Petron without the latters consent in violation of R.A. 623, as amended; (b) trademark infringement which consists in Bicol Gas use of a trademark that is confusingly similar to Petrons registered Gasul trademark in violation of Section 155 of R.A. 8293; and (c) unfair competition which consists in petitioners Espiritu,et al. passing off Bicol Gas-produced LPGs for Petron-produced Gasul LPG in violation of Section 168.3 of R.A. 8293.Here, the complaint adduced at the preliminary investigation shows that the one 50-kg Petron Gasul LPG tank found on the Bicol Gas truck belonged to [a Bicol Gas] customer who had the same filled up by BICOL GAS.[11]In other words, the customer had that one Gasul LPG tank brought to Bicol Gas for refilling and the latter obliged.R.A. 623, as amended,[12]punishes any person who, without the written consent of the manufacturer or seller of gases contained in duly registered steel cylinders or tanks, fills the steel cylinder or tank, for the purpose of sale, disposal or trafficking, other than the purpose for which the manufacturer or seller registered the same.This was what happened in this case, assuming the allegations of KPEs manager to be true.Bicol Gas employees filled up with their firms gas the tank registered to Petron and bearing its mark without the latters written authority.Consequently, they may be prosecuted for that offense.But, as for the crime of trademark infringement, Section 155 of R.A. 8293 (in relation to Section 170[13]) provides that it is committed by any person who shall, without the consent of the owner of the registered mark:1.Use in commerce any reproduction, counterfeit, copy or colorable imitation of a registered mark or the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or2.Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.KPE and Petron have to show that the alleged infringer, the responsible officers and staff of Bicol Gas, used Petrons Gasul trademark or a confusingly similar trademark on Bicol Gas tanks with intent to deceive the public and defraud its competitor as to what it is selling.[14]Examples of this would be the acts of an underground shoe manufacturer in Malabon producing Nike branded rubber shoes or the acts of a local shirt company with no connection to La Coste, producing and selling shirts that bear the stitched logos of an open-jawed alligator.Here, however, the allegations in the complaint do not show that Bicol Gas painted on its own tanks Petrons Gasul trademark or a confusingly similar version of the same to deceive its customers and cheat Petron.Indeed, in this case, the one tank bearing the mark of Petron Gasul found in a truck full of Bicol Gas tanks was a genuine Petron Gasul tank, more of a captured cylinder belonging to competition.No proof has been shown that Bicol Gas has gone into the business of distributing imitation Petron Gasul LPGs.As to the charge of unfair competition, Section 168.3 (a) of R.A. 8293 (also in relation to Section 170) describes the acts constituting the offense as follows:168.3.In particular, and without in any way limiting the scope of protection against unfair competition, the following shall be deemed guilty of unfair competition:

(a)Any person, who is selling his goods and gives 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;

Essentially, what the law punishes is the act of giving ones goods the general appearance of the goods of another, which would likely mislead the buyer into believing that such goods belong to the latter.Examples of this would be the act of manufacturing or selling shirts bearing the logo of an alligator, similar in design to the open-jawed alligator in La Coste shirts, except that the jaw of the alligator in the former is closed, or the act of a producer or seller of tea bags with red tags showing the shadow of a black dog when his competitor is producing or selling popular tea bags with red tags showing the shadow of a black cat.Here, there is no showing that Bicol Gas has been giving its LPG tanks the general appearance of the tanks of Petrons Gasul.As already stated, the truckfull of Bicol Gas tanks that the KPE manager arrested on a road in Sorsogon just happened to have mixed up with them one authentic Gasul tank that belonged to Petron.The only point left is the question of the liability of the stockholders and members of the board of directors of Bicol Gas with respect to the charge of unlawfully filling up a steel cylinder or tank that belonged to Petron.The Court of Appeals ruled that they should be charged along with the Bicol Gas employees who were pointed to as directly involved in overt acts constituting the offense.Bicol Gas is a corporation.As such, it is an entity separate and distinct from the persons of its officers, directors, and stockholders.It has been held, however, that corporate officers or employees, through whose act, default or omission the corporation commits a crime, may themselves be individually held answerable for the crime.[15]Jose claimed in his affidavit that, when he negotiated the swapping of captured cylinders with Bicol Gas, its manager, petitioner Audie Llona, claimed that he would be consulting with the owners of Bicol Gas about it.Subsequently, Bicol Gas declined the offer to swap cylinders for the reason that the owners wanted to send their captured cylinders to Batangas.The Court of Appeals seized on this as evidence that the employees of Bicol Gas acted under the direct orders of its owners and that the owners of Bicol Gas have full control of the operations of the business.[16]The owners of a corporate organization are its stockholders and they are to be distinguished from its directors and officers.The petitioners here, with the exception of Audie Llona, are being charged in their capacities as stockholders of Bicol Gas.But the Court of Appeals forgets that in a corporation, the management of its business is generally vested in its board of directors, not its stockholders.[17]Stockholders are basically investors in a corporation.They do not have a hand in running the day-to-day business operations of the corporation unless they are at the same time directors or officers of the corporation.Before a stockholder may be held criminally liable for acts committed by the corporation, therefore, it must be shown that he had knowledge of the criminal act committed in the name of the corporation and that he took part in the same or gave his consent to its commission, whether by action or inaction.The finding of the Court of Appeals that the employees could not have committed the crimes without the consent, [abetment], permission, or participation of the owners of Bicol Gas[18]is a sweeping speculation especially since, as demonstrated above, what was involved was just one Petron Gasul tank found in a truck filled with Bicol Gas tanks.Although the KPE manager heard petitioner Llona say that he was going to consult the owners of Bicol Gas regarding the offer to swap additional captured cylinders, no indication was given as to which Bicol Gas stockholders Llona consulted.It would be unfair to charge all the stockholders involved, some of whom were proved to be minors.[19]No evidence was presented establishing the names of the stockholders who were charged with running the operations of Bicol Gas.The complaint even failed to allege who among the stockholders sat in the board of directors of the company or served as its officers.The Court of Appeals of course specifically mentioned petitioner stockholder Manuel C. Espiritu, Jr. as the registered owner of the truck that the KPE manager brought to the police for investigation because that truck carried a tank of Petron Gasul.But the act that R.A. 623 punishes is the unlawful filling up of registered tanks of another.It does not punish the act of transporting such tanks.And the complaint did not allege that the truck owner connived with those responsible for filling up that Gasul tank with Bicol Gas LPG.WHEREFORE, the CourtREVERSES and SETS ASIDEthe Decision of the Court of Appeals in CA-G.R. SP 87711 dated October 17, 2005 as well as its Resolution dated January 6, 2006, the Resolutions of the Secretary of Justice dated March 11, 2004 and August 31, 2004, and the Order of the Office of the Regional State Prosecutor, Region V, dated February 19, 2003.The CourtREINSTATESthe Resolution of the Office of the Provincial Prosecutor of Sorsogon in I.S. 2001-9231 (inadvertently referred in the Resolution itself as I.S. 2001-9234), dated February 26, 2002.The names of petitioners Manuel C. Espiritu, Jr., Freida F. Espititu, Carlo F. Espiritu, Rafael F. Espiritu, Rolando M. Mirabuna, Hermilyn A. Mirabuna, Kim Roland A. Mirabuna, Kaye Ann A. Mirabuna, Ken Ryan A. Mirabuna, Juanito P. De Castro, Geronima A. Almonite and Manuel C. Dee areORDEREDexcluded from the charge.SO ORDERED.THIRD DIVISIONMANOLO P. SAMSON,Petitioner,-versus-CATERPILLAR, INC.,Respondent.G.R. No. 169882

Present:YNARES-SANTIAGO,J.,Chairperson,AUSTRIA-MARTINEZ,CHICO-NAZARIO,NACHURA, andREYES,JJ.Promulgated:September 12, 2007

x - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - xD E C I S I O NCHICO-NAZARIO,J.:This is a Petition for Review onCertiorariunder Rule 45 of the Rules of Court, assailing the Amended Decision[1]dated 8 August 2005, rendered by the Court of Appeals in CA-G.R. SP No. 80532, (1) reversing its Decision,[2]dated 13 December 2004, in which it set aside the Order dated 31 January 2003 of Branch 211 of theMandaluyongRegional Trial Court (RTC), dismissing Criminal Case No. MC02-5019 filed against petitionerManoloP. Samson (Samson) for violation of Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines, specifically Section 168.3(a) on Unfair Competition, Section 123.1 (e) and Section 131.3 on registration of trademarks, in relation to Section 170 thereof; and (2) directing theMandaluyongRTC to conduct an independent assessment of whether the Motion to Withdraw Information filed by the state prosecutor is warranted.Samson is the owner of retail outlets within thePhilippines, which sell, among other things, footwear, clothing, bags and other similar items, bearing the mark Caterpillar and Cat.Samson registered the aforementioned marks for shoes, slippers, sandals and boots with the Bureau of Patents, Trademarks & Technology Transfer (whose functions are presently exercised by Intellectual Property Office) in 1997.[3]Caterpillar is a foreign corporation, primarily in the business of manufacturing equipment used in construction, mining, road building and agricultural industries.Since the 1960s, however, it had expanded its product line to clothing and, since 1988, to footwear.Caterpillar alleges that it is a widely known brand name and that its products are being internationally distributed.[4]As early as26 July 2000, Branch 56 of theMakatiRTC,issued Search Warrants No. 00-022 to No. 00-032 against establishments owned by Samson.This led to the seizure of various retail items such as footwear, clothing, accessories, andleatherwarefor Unfair Competition under the Intellectual Property Code.Caterpillar filed criminal complaints before the Department of Justice (DOJ).In addition, Caterpillar filed a civil action on31 July 2000, heard before Branch 90 of theQuezonCity RTC for Unfair Competition, Damages and Cancellation of Trademark with an Application for a Temporary Restraining Order and/or Writ of Preliminary Injunction docketed as Civil Case No.Q-00-41445.[5]Since Samson allegedly continued to sell and distribute merchandise which bore the disputed Caterpillar marks, Caterpillar sought the issuance of another set of search warrants against Samson.On18 December 2000, Branch 172 of the Valenzuela RTC in Search Warrants No. 12-V-00 to No. 37-V-00 issued 26 writs of search warrants under which various clothing items were seized by National Bureau of Investigation (NBI) agents as evidence of violations of the law on unfair competition.On23 January 2001, Caterpillar, through its legal counsel, filed 26 criminal complaints against Samson before the DOJ, for alleged violations of Section 168.3(a) on Unfair Competition, Section 123.1(e) and Section 131.3 on registration of trademarks, in relation to Section 170 of the Intellectual Property Code.[6]The complaints were docketed as I.S. Nos. 2001-42 to 2001-67 and assigned to State ProsecutorZenaidaLim of the Task Force on Anti-Intellectual Property Piracy.But before the determination by the DOJ on whether Samson should be criminally charged with Unfair Competition,the Valenzuela RTC already issued an Order, dated26 June 2001, quashing the search warrants issued in Search Warrants No. 12-V-00 to No. 37-V-00.[7]The DOJ, through State Prosecutor Lim, subsequently issued a Joint Resolution, dated 28 September 2001, recommending that Samson be criminally charged with unfair competition under Section 168.3(a), in relation to Section 131.1, 123.1 and 170 of the Intellectual Property Code.Resulting from the said Resolution, Criminal Case No.MC02-5019 was filed with theMandaluyongRTC.[8]Samson filed a Petition for Review of the foregoing Joint Resolution, with the Secretary of Justice.His petition was granted.In a Resolution dated13 January 2003, the Acting Secretary of Justice,MerceditasGutierrez, recommended the withdrawal of the criminalinformationsfiled against Samson before various courts on the ground that there was lack of probable cause.Caterpillar filed a Motion for Reconsideration, which was denied by Acting Secretary of Justice Gutierrez on25 September 2003.An appeal questioning the DOJ Resolution dated13 January 2003of Acting Secretary of Justice Gutierrez was filed by Caterpillar before the Court of Appeals docketed as CA-G.R. No. 79937.[9]Meanwhile, pursuant to the Resolution dated13 January 2003of Acting Secretary of Justice Gutierrez, State Prosecutor Lim filed anExParteMotion to Withdraw Information in Criminal Case No.MC02-5019 before theMandaluyongRTC.On31 January 2003, theMandaluyongRTC issued an Order granting the withdrawal of the Information against Samson.[10]The entire text of the said Decision reads:

This refers to the Ex-ParteMotion to Withdraw Information filed onJanuary 31, 2003by State ProsecutionZenaidaM. Lim of the Department of Justice in connection with Resolution No. 011, Series of 2003,datedJanuary 13, 2003of the Acting Secretary of Justice Ma.MerceditasN. Gutierrez reversing and setting aside the resolution of said state prosecutor and directed the Chief State ProsecutorJovencitoR.Zuoto withdraw theinformationsfiled in this court againstManoloSamson.

WHEREFORE, finding the said motion to be in order and it appearing that accused has not yet been arraigned and therefore the court has not yet acquired jurisdiction over the subject accused, the court hereby grants the withdrawal of the information in the above-entitled case as it is hereby ordered withdrawn form the record files of the court.[11]Caterpillar filed a Motion for Reconsideration, which was denied by theMandaluyongRTC in an Order dated27 August 2003:For resolution is a Motion for Reconsideration of the order of the court datedJanuary 31, 2003granting the withdrawal of the information from the record files of the court, filed onFebruary 21, 2003, by the plaintiff in the above-entitled case.

Hearing on the motion together with the opposition thereto was held after which, the same was submitted for resolution.

After the court examined with great care the bases advanced by both parties in the aforesaid motion, the court was unable to find any cogent justification to overturn or set aside its previous order, there being no new issues raised and the same are rehash of its previous pleadings.

WHEREFORE, premises considered, plaintiffs Motion for Reconsideration is hereby DENIED.[12]

Caterpillar filed with the Court of Appeals a Petition forCertiorariunder Rule 65 of the Rules of Court, assailing the Order dated31 January 2003of theMandaluyongRTC, docketed as CA-G.R. SP No. 80532.The Court of Appeals, in a Decision dated13 December 2004, dismissed the Petition on the ground that Caterpillar lacked the legal standing to question the proceedings involving the criminal aspect of the case, and that its participation is limited only to the recovery of civil liability.The appellate court also took into account the denial by the Acting Secretary of Justice Gutierrez of Caterpillars Motion for Reconsideration of her order to withdraw theInformationsagainst Samson and, thus, ruled that this rendered the case moot and academic.[13]Caterpillar filed a Motion for Reconsideration of the aforementioned Decision rendered by the Court of Appeals.In its Amended Decision dated 8 August 2005, the Court of Appeals reversed its earlier ruling and declared that theMandaluyongRTC gravely abused its discretion when it merely relied on the Resolution, dated 13 January 2003 of Acting Secretary of Justice Gutierrez in ordering the withdrawal of the information filed before it without making an independent assessment of the case.[14]In thedispositiveportion of its Amended Decision, the Court of Appeals ruled that:

WHEREFORE, in view [of] the foregoingrationications, the petitioners Motion for Reconsideration is hereby GRANTED.The decision of this Court dated 13 December 2004, as well as the assailed orders of the respondent court dated 31 January 2003 and 27 August 2003 are hereby REVERSED and SET ASIDE.

The respondent court is hereby ordered to CONDUCT an independent assessment of whether the motion to withdraw information filed by the state prosecutor is warranted under the circumstances obtaining in the case.[15]

Samson filed with the Court of Appeals a Motion for Reconsideration of the Amended Decision, dated8 August 2005, which was denied on27 September 2005.Hence, the present Petition, where he is raising thefollowing issues:I

THE COURT OF APPEALS GROSSLY ERRED IN RULING THAT THE RESPONDENT JUDGE IN CA-G.R. NO. SP 80532 FAILED IN HER BOUNDEN DUTY TO DETERMINE THE MERITS OF THE PROSECUTIONS EX-PARTE MOTION TO WITHDRAW; and

II

THE COURT OF APPEALS LIKEWISE ERRED IN IGNORING ITS OWN DECISION FINDING RESPONDENT CATERPILLAR, INC., AS PRIVATE COMPLAINANT, BEREFT OF AUTHORITY TO ASSAIL THE STATE PROSECUTORS EX-PARTE MOTION TO WITHDRAW THE INFORMATION BECAUSE THE CRIMINAL ASPECT OF A CRIMINAL CASE IS UNDER THE DIRECTION AND CONTROL OF THE PROSECUTION AND, CONSEQUENTLY, PRIVATE COMPLAINANT HAS NO BUSINESS WHATSEOEVER IN THE PROCEEDINGS.[16]

Before discussing the merits of the Petition at bar, this Court notes that on15 February 2005, the Court of Appeals rendered a Decision in CA-G.R. SP No. 79937 in favor of Caterpillar.To recall, this was the petition filed by Caterpillar to assail the Resolution of Acting Secretary of Justice Gutierrez dated13 January 2003, directing the Chief State Prosecutor to cause the withdrawal ofInformationsagainst Samson.The appellate court reversed said Resolution and pronounced that sufficient probable cause existed to justify the filing ofInformationsagainst Samson.Thus, it ordered the re-filing of theInformationsbefore the proper trial courts.[17]In its Decision in CA-G.R. SP No. 79937, the Court of Appeals held that the withdrawal of theInformationsagainst Samson, predicated on thequashalof the search warrants, was a manifest error.Consistent with the doctrine laid out inSolid Triangle Sales Corporation v. The Sheriff of RTC,QuezonCity, Branch 93,[18]the appellate court ruled that the earlier finding of probable cause against Samson was not affected by thequashalof the warrants since independent evidence gathered by the NBI from the 24 test-buy operations it conducted in 1999 is sufficient to support such finding.It reiterated the findings of State Prosecutor Lim:Respondents use of depictions of heavy machinery and equipment, such as tractors, to market his products, would verily show that he is passing off his products as those of Caterpillars xxx. Meanwhile, the similarity in the appearance of the goods manufactured or sold by respondent with those of Caterpillars footwear products would demonstrate that he is passing off his product as those of genuine Caterpillar footwear products.Accordingly, where the similarity in the appearance of the goods as packed and offered for sale is so striking, this fact shows intent on the part of defendant to deceive the public and defraud plaintiff out of his trade.The intent to deceive may be inferred from the similarity of the goods as packed and offered for sale, and an action will lie to restrain such unfair competition and for damages. xxx[19].

On appeal docketed as G.R. No. 169199, this Court ruled that the Court of Appeals did not commit any reversible error.By sustaining the Decision of the Court of Appeals in said case, this Court, in a Resolution dated17 October 2005, had already ruled that probable cause exists for the re-filing of a criminal case against Samson for unfair competition under the Intellectual Property Code.Samson filed a Motion for Reconsideration of this Courts Resolution, which was denied with finality on20 March 2006.Entry of judgment was already made in said case on18 April 2006; hence, rendering said judgment final andexecutory.The repeated confirmation of the finding of probable cause against Samson, which this Court cannot now overturn, effectively and decisively determines the issues in this petition.The findings of the Court of Appeals in CA-G.R. SP No. 79937, affirmed by this Court in G.R. No. 169199, have rendered the present petition moot and academic.It is a rule that is unanimously observed that courts of justice will take cognizance only ofjusticiablecontroversies wherein actual and not merely hypothetical issues are involved.[20]A case becomes moot and academic when there is no more actual controversy between the parties and no useful purpose can be served in passing upon the merits.[21]Since this Court, in affirming the said Decision of the Court of Appeals, already found it imperative for the Chief State Prosecutor to re-file theInformationsagainst Samson for unfair competition, Criminal Case No. MC02-5019 should be re-opened and heard by theMandaluyongRTC.The rendering of a decision on the merits of this case would be of no practical value.Hence, this case is dismissible.[22]IN VIEW OF THE FOREGOING, the instant Petition isDENIEDand the assailed Amended Decision of the Court of Appeals in CA-G.R. SP No. 80532, promulgated on8 August 2005, isAFFIRMED WITH MODIFICATION.The Order of the Court of Appeals in C.A.-G.R. SP No. 80532 directing Branch 211 of theMandaluyongRegional Trial Court to conduct an independent assessment is REVERSED.This CourtORDERSBranch 211 of theMandaluyongRegional Trial Court to re-open and hear Criminal Case No.MC02-5019.Costs against the petitioner.SO ORDERED.Republic of thePhilippinesSupreme CourtManilaTHIRD DIVISIONLEVI STRAUSS (PHILS.), INC.,G.R. No. 162311Petitioner,Present:YNARES-SANTIAGO,J.,Chairperson,-versus-AUSTRIA-MARTINEZ,CHICO-NAZARIO,NACHURA, andREYES,JJ.Promulgated:TONY LIM,Respondent.December 4, 2008x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - xD E C I S I O NREYES, R.T.,J.:THE remedy of a party desiring to elevate to the appellate court an adverse resolution of the Secretary of Justice is a petition forcertiorariunder Rule 65.A Rule 43 petition for review is a wrong mode of appeal.[1]During preliminary investigation, the prosecutor is vested with authority and discretion to determine if there is sufficient evidence to justify the filing of an information.If he finds probable cause to indict the respondent for a criminal offense, it is his duty to file the corresponding information in court.However, it is equally his duty not to prosecute when after an investigation, the evidence adduced is not sufficient to establish aprima faciecase.[2]Before the Court is a petition for review oncertiorari[3]of the Decision[4]and Resolution[5]of the Court of Appeals (CA), affirming the resolutions of the Department of Justice (DOJ) finding that there is no probable cause to indict respondent Tony Lim, a.k.a. Antonio Guevarra, for unfair competition.The FactsPetitioner Levi Strauss (Phils.), Inc. is a duly-registered domestic corporation.It is a wholly-owned subsidiary of Levi Strauss & Co. (LS & Co.) aDelaware,USAcompany.In 1972, LS & Co. granted petitioner a non-exclusive license to use its registered trademarks and trade names[6]for the manufacture and sale of various garment products, primarily pants, jackets, and shirts, in the Philippines.[7]Presently, it is the only company that has authority to manufacture, distribute, and sell products bearing the LEVIS trademarks or to use such trademarks in thePhilippines.These trademarks are registered

in over 130 countries, including thePhilippines,[8]and were first used in commerce in thePhilippinesin 1946.[9]Sometime in 1995, petitioner lodged a complaint[10]before the Inter-Agency Committee on Intellectual Property Rights, allegingthatacertain establishment in Metro Manila was manufacturing garments using colorable imitations of the LEVIS trademarks.[11]Thus, surveillance was conducted on the premises of respondent Tony Lim, doing business under the name Vogue Traders Clothing Company.[12]The investigation revealed that respondent was engaged in the manufacture, sale, and distribution of products similar to those of petitioner and under the brand name LIVES.[13]OnDecember 13, 1995, operatives of the Philippine National Police (PNP) Criminal Investigation Unit[14]served search warrants[15]on respondents premises at 1042 and1082 Carmen Planas Street, Tondo,Manila.As a result, several items[16]were seized from the premises.[17]ThePNPCriminal Investigation Command (PNPCIC) then filed a complaint[18]against respondent before the DOJ for unfair competition[19]under the old Article 189 of the Revised Penal Code, prior to its repeal by Section 239 of Republic Act (RA) No. 8293.[20]ThePNPCIC claimed that a confusing similarity could be noted between petitioners LEVIs jeans and respondents LIVES denim jeans and pants.In his counter-affidavit,[21]respondent alleged, among others, that(1) his products bearing the LIVES brand name are not fake LEVIS garments; (2) LIVES is a registered trademark,[22]while the patch pocket design for LIVES pants has copyright registration,[23]thus conferring legal protection on his own intellectual property rights, which stand on equal footing as LEVIS; (3) confusing similarity, the central issue in the trademark cancellation proceedings[24]lodged by petitioner, is a prejudicial question that complainant, the police, and the court that issued the search warrants cannot determine without denial of due process or encroachment on the jurisdiction of the agencies concerned; and (4) his goods are not clothed with an appearance which is likely to deceive the ordinary purchaser exercising ordinary care.[25]In its reply-affidavit, petitioner maintained that there is likelihood of confusion between the competing products because: (1) a slavish imitation of petitioners arcuate trademark has been stitched on the backpocket of LIVES jeans; (2) the appearance of the mark 105 on respondents product is obviously a play on petitioners 501 trademark; (3) the appearance of the word/phrase LIVES and LIVES ORIGINAL JEANS is confusingly similar to petitioners LEVIS trademark; (4) a red tab, made of fabric, attached at the left seam of the right backpocket of petitioners standard five-pocket jeans, also appears at the same place on LIVES jeans; (5) the patch used on LIVES jeans (depicting three men on each side attempting to pull apart a pair of jeans) obviously thrives on petitioners own patch showing two horses being whipped by two men in an attempt to tear apart a pair of jeans; and (6) LEVIS jeans are packaged and sold with carton tickets, which are slavishly copied by respondent in his own carton ticket bearing the marks LIVES, 105, the horse mark, and basic features of petitioners ticket designs, such as two red arrows curving and pointing outward, the arcuate stitching pattern, and a rectangular portion with intricate border orientation.[26]DOJ RulingsOnOctober 8, 1996, Prosecution Attorney Florencio D. Dela Cruz recommended the dismissal[27]of the complaint.The prosecutor agreed with respondent that his products are not clothed with an appearance which is likely to deceive the ordinary purchaser exercising ordinary care.The recommendation was approved by Assistant Chief State Prosecutor Lualhati R. Buenafe.On appeal, then DOJ Secretary Teofisto Guingona affirmed the prosecutors dismissalofthecomplaint onJanuary 9, 1998.[28]Prescinding from the basic rule that to be found guilty of unfair competition, a person shall, by imitation or any unfair device, induce the public to believe that his goods are those of another, Secretary Guingona stated:In the case at bar, complainant has not shown that anyone was actually deceived by respondent.Respondents product, which bears the trademark LIVEs, has an entirelydifferent spelling and meaningwith the trademark owned by complainant which is LEVIs. Complainants trademark comes from a Jewish name while that of respondent is merely an adjective word. Both, when read and pronounced, would resonate different sounds. While respondents LIVEs trademark may appear similar, such could not have been intended by the respondent to deceive since he had the same registered with the appropriate government agencies. Grantingarguendo, that respondents trademark or products possessed similar characteristics with the trademark and products of complainant, on that score alone, without evidence or proof that such was a device of respondent to deceive the public to the damage of complainant no unfair competition is committed.[29]OnFebruary 13, 1998, petitioner filed a motion for reconsideration of Secretary Guingonas resolution, alleging, among others, that only a likelihood of confusion is required to sustain a charge of unfair competition.It also submitted the results of a consumer survey[30]involving a comparison of petitioners and respondents products.OnJune 5, 1998, Justice Secretary Silvestre BelloIII, Guingonas successor, granted petitioners motion and directed the filing of an information against respondent.[31]WHEREFORE, our resolution dated9 January 1998is hereby reversed and set aside. You are directed to file an information for unfair competition under Article 189 of the Revised Penal Code, as amended, against respondent Tony Lim. Report the action taken thereon within ten (10) days from receipt hereof.[32]Secretary Bello reasoned that under Article 189 of the Revised Penal Code, as amended, exact similarity of the competing products is not required.However, Justice Guingonas resolutionincorrectly dweltonthe specific differences in the details of the products.[33]Secretary Bellos own factual findings revealed:x x x [I]t is not difficult to discern that respondent gave his products the general appearance as that of the product of the complainant.This was established by the respondents use of the complainants arcuate backpocket design trademark; the 105 mark which apparently is a spin-off of the 501 mark of the complainant; the patch which was clearly patterned after that of the complainants two horse patch design trademark; the red tab on the right backpocket; the wordings which were crafted to look similar with the Levis trademark of the complainant; and even the packaging.In appropriating himself the general appearance of the product of the complainant, the respondent clearly intended to deceive the buying public. Verily, any person who shall employ deception or any other means contrary to good faith by which he shall pass of the goods manufactured by him or in which he deals, or his business, or services for those of the one having established good will shall guilty of unfair competition.

Respondents registration of his trademark can not afford him any remedy. Unfair competition may still be prosecuted despite such registration.[34](Citation omitted)

Respondent then filed his own motion for reconsideration of theBelloresolution. OnMay 7, 1999, new DOJ Secretary Serafin Cuevas granted respondents motion and ordered the dismissal of the charges against him.[35]CA DispositionDissatisfied with the DOJ rulings, petitioner sought recourse with the CA via a petition for review under Rule 43 of the 1997 Rules of Civil Procedure.OnOctober 17, 2003, the appellate court affirmed the dismissal of the unfair competition complaint.WHEREFORE, premises considered, the petition for review is DENIED and is accordingly DISMISSED for lack of merit.

SO ORDERED.[36]The CA pointed out that to determine the likelihood of confusion, mistake or deception, all relevant factors and circumstances should be taken into consideration, such as the circumstances under which the goods are

sold, the class of purchasers, and the actual occurrence or absence of confusion.[37]Thus, the existenceofsomesimilaritiesbetweenLIVES jeans and LEVIS garments would notipso factoequate to fraudulent intent on the part of respondent. The CA noted that respondent used affirmative and precautionary distinguishing features in his products for differentiation.The appellate court considered the spelling and pronunciation of the marks; the difference in the designs of the back pockets; the dissimilarity between the carton tickets; and the pricing and sale of petitioners products in upscale exclusive specialty shops.The CA also disregarded the theory of post-sale confusion propounded by petitioner, relying instead on the view that the probability of deception must be determined at the point of sale.[38]IssuesPetitioner submits that the CA committed the following errors:I.

THE COURT OF APPEALS GRAVELY ERREDIN RULING THAT ACTUAL CONFUSION IS NECESSARYTO SUSTAIN A CHARGE OF UNFAIR COMPETITION,ANDTHAT THERE MUST BE DIRECT EVIDENCE OR PROOF OF INTENT TO DECEIVE THE PUBLIC.

II.

THE COURT OF APPEALS GRAVELY ERREDIN RULING THAT RESPONDENTS LIVES JEANS DO NOT UNFAIRLY COMPETEWITH LEVIS JEANSAND/OR THAT THERE IS NO POSSIBILITY THAT THE FORMER WILL BE CONFUSED FOR THE LATTER, CONSIDERING THAT RESPONDENTS LIVES JEANS BLATANTLYCOPYOR COLORABLY IMITATE NO LESS THAN SIX (6) TRADEMARKS OF LEVIS JEANS.

III.

THE COURT OF APPEALS GRAVELY ERREDIN DISREGARDING THE EVIDENCE ON RECORD, CONSISTING OF THE SCIENTIFICALLY CONDUCTED MARKET SURVEYANDTHE AFFIDAVIT OF THE EXPERT WITNESS ON THE RESULTS THEREOF, WHICHSHOWTHAT RESPONDENTS LIVES JEANSARE, INFACT, BEING CONFUSED FOR LEVIS JEANS.

IV.

THE COURT OF APPEALS GRAVELY ERREDIN RULING THAT THE ISSUE OF CONFUSION SHOULD ONLY BE DETERMINED AT THE POINT OFSALE.

V.

THE COURT OF APPEALS GRAVELY ERREDIN FAILING TO DIRECT THE SECRETARY OF JUSTICE TO CAUSE THE FILINGOF THE APPROPRIATE INFORMATION IN COURT AGAINST THE RESPONDENT.[39](Underscoring supplied)

Our RulingIn essence, petitioner asks this Court to determine if probable cause exists to charge respondent with the crime of unfair competition under Article 189(1) of the Revised Penal Code, prior to its repeal by Section 239 of RA No. 8293.However, that is a factual issue[40]the resolution of which is improper in a Rule 45 petition.[41]The only legal issue left for the Court to determine is whether the issue of confusion shouldbedeterminedonlyatthepointof sale.Nonetheless, there is sufficient reason for this Court to dismiss this petition merely by looking at the procedural avenue petitioner used to have the DOJ resolutions reviewed by the CA.Petitioner filed with the CA a petition for review under Rule 43 of the 1997 Rules of Civil Procedure.[42]Rule 43 governs all appeals from [the Court of Tax Appeals and] quasi-judicial bodies to the CA.Its Section 1 provides:Section 1.Scope.This Rule shall apply to appeals from [judgments or final orders of the Court of Tax Appeals and from] awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission,OfficeofthePresident, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Department of Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law.[43]Clearly, the DOJ is not one of the agencies enumerated in Section 1 of Rule 43 whose awards, judgments, final orders, or resolutions may be appealed to the CA.The Court has consistently ruled that thefiling with the CA of a petition for review under Rule 43to question the Justice Secretarys resolution regarding the determination of probable causeis an improper remedy.[44]Under the 1993 Revised Rules on Appeals from Resolutions in Preliminary Investigations or Reinvestigations,[45]the resolution of the investigating prosecutor is subject to appeal to the Justice Secretary[46]who, under the Revised Administrative Code, exercises the power of control and supervision over said Investigating Prosecutor; and who may affirm, nullify, reverse, or modify the ruling of such prosecutor.[47]If the appeal is dismissed, and after the subsequent motion for reconsideration is resolved, a party has no more appeal or other remedy available in the ordinary course of law.[48]Thus, the Resolution of the Justice Secretary affirming, modifying or reversing the resolution of the Investigating Prosecutor is final.[49]There being no more appeal or other remedy available in the ordinary course of law, the remedy of the aggrieved party is to file a petition forcertiorariunder Rule 65.Thus, while theCAmay review the resolution of the Justice Secretary, itmay do soonlyinapetitionforcertiorariunder Rule 65 of the 1997 Rules of Civil Procedure,solelyon the ground that the Secretary of Justice committed grave abuse of discretion amounting to excess or lack of jurisdiction.[50]Verily, when respondent filed a petition for review under Rule 43 instead of a petition forcertiorariunder Rule 65, the CA should have dismisseditoutright.However, the appellate court chose to determine if DOJ Secretaries Guingona and Cuevas correctly determined the absence of probable cause.Now, even if We brush aside technicalities and consider the petition for review filed with the CA as one under Rule 65, the petition must fail just the same.While the resolution of the Justice Secretary may be reviewed by the Court, it is not empowered to substitute its judgment for that of the executive branchwhen there is no grave abuse of discretion.[51]Courts are without power to directly decide matters over which full discretionary authority has been delegated to the legislative or executive branch of the government.[52]The determination of probable cause is one

such matter because that authority has been given to the executive branch, through the DOJ.[53]It bears stressing that the main function of a government prosecutor is to determine the existence of probable cause and to file the corresponding information should he find it to be so.[54]Thus, the decision whether or not to dismiss the criminal complaint against respondent is necessarily dependent on the sound discretion of the investigating prosecutor and ultimately, that of the Secretary of Justice.[55]A prosecutor, by the nature of his office, is under no compulsion to file a particular criminal information where he is not convinced that he has evidence to prop up its averments, or that the evidence at hand points to a different conclusion. This is not to discount the possibility of the commission of abuses on the part of the prosecutor.But this Court must recognize that a prosecutor should not be unduly compelled to work against his conviction.Although the power and prerogative of the prosecutor to determine whether or not the evidence at hand is sufficient to form a reasonable belief that a person committed an offense is not absolute but subject to judicial review, it would be embarrassing for him to be compelled to prosecute a case when he is in no position to do so, because in his opinion he does not have the necessary evidence to secure a conviction, or he is not convinced of the merits of the case.[56]In finding that respondents goods were not clothed with an appearance which is likely to deceive the ordinary purchaser exercising ordinary care, the investigating prosecutor exercised the discretion lodged in him by law.He found that:First,theLIVES mark of the respondents goods is spelled and pronounced differently from the LEVIS mark of the complainant.

Second, the backpocket design allegedly copied by the respondent from the registered arcuate design of the complainant, appears to be different in view of the longer curved arms that stretch deep downward to a point of convergence where the stitches form a rectangle. The arcuate design for complainant LEVIs jeans form a diamond instead. And assumingarguendothat there is similarity in the design of backpockets between the respondents goods and that of the complainant, this alone does not establish that respondents jeans were intended to copy the complainants goods and pass them off as the latters products as this design is simple and may not be said to be strikingly distinct absent the other LEVIS trademark such as the prints on the button, rivets, tags and the like. x x x Further, the presence of accessories bearing Levis trademark was not established as there were no such accessories seized from the respondent and instead genuine LIVES hangtags, button and patches were confiscated during the search of latters premises.

Second, the design of the patches attached to the backpockets of the respondents goods depicts three men on either side of a pair of jeans attempting to pull apart said jeans, while the goods manufactured by complainant with patches also attached at the right backpockets depicts two horses being whipped by two men in an attempt to tear apart a pair of jeans.It is very clear therefore that the design of the backpocket patches by the respondent is different from that of the complainant, in the former the men were trying to pull apart the pants while in the latter horses are the ones doing the job.Obviously, there is a great difference between a man and a horse and this will naturally not escape the eyes of an ordinary purchaser.

Third, the manner by which Levis jeans are packed and sold with carton tickets attached to the products cannot be appropriated solely by complainant to the exclusion of all other manufacturers of same class.It frequently happens that goods of a particular class are labeled by all manufacturer[s] in a common manner. In cases of that sort, no manufacturer may appropriate for himself the method of labeling or packaging [of] his merchandise and then enjoin other merchants from using it. x x x.

Fourth, evidence shows that there is a copyright registration issued by the National Library over the backpocket design of the respondent. And this copyright registration gives the respondent the right to use the same in his goods x x x.[57]The determination of probable cause is part of the discretion granted to the investigating prosecutor and ultimately, the Secretary of Justice.Courts are not empowered to substitute their own judgment for that of the executive branch.[58]The courts duty in an appropriate case is confined to a determination of whether the assailed executive or judicial determination of probable cause was done without or in excess of jurisdiction or with grave abuse of discretion amounting to want of jurisdiction.[59]For grave abuse of discretion to prosper as a ground forcertiorari, it must be demonstrated that the lower court or tribunal has exercised its power in an arbitrary and despotic manner, by reason of passion or personal hostility, and it must be patent and gross as would amount to an evasion or to a unilateral refusal to perform the duty enjoined or to act in contemplation of law.[60]In the case at bar, no grave abuse of discretion on the part of the DOJ was shown.Petitioner merely harps on the error committed by the DOJ and the CA in arriving at their factual finding that there is no confusing similarity between petitioners and respondents products. While it is possible that the investigating prosecutor and Secretaries Guingona and Cuevaserroneouslyexercised their discretion when they found that unfair competition was not committed, this by itself does not render their acts amenable to correction and annulment by the extraordinary remedy ofcertiorari.There must be a showing ofgrave abuseof discretion amounting to lack or excess of jurisdiction.[61]We are disinclined to find that grave of abuse of discretion was committed when records show that the finding of no probable cause is supported by the evidence, law, and jurisprudence.Generally, unfair competition consists in employing deception or any other means contrary to good faith by which any person shall pass off the goods manufactured by him or in which he deals, or his business, or services

for those of the one having established goodwill, or committing any acts calculated to produce such result.[62]The elements of unfair competition under Article 189(1)[63]of the Revised Penal Code are:(a)That the offender gives his goods the general appearance of the goods of another manufacturer or dealer;

(b)That the general appearance is shown in the (1) goods themselves, or in the (2) wrapping of their packages, or in the (3) device or words therein, or in (4) any other feature of their appearance;

(c)That the offender offers to sell or sells those goods or gives other persons a chance or opportunity to do the same with a like purpose; and

(d)That there is actual intent to deceive the public or defraud a competitor.[64]All these elements must be proven.[65]In finding that probable cause for unfair competition does not exist, the investigating prosecutor and Secretaries Guingona and Cuevas arrived at the same conclusion that there is insufficient evidence to prove all the elements of the crime that would allow them to secure a conviction.Secretary Guingona discounted the element of actual intent to deceive by taking into consideration the differences in spelling, meaning, and phonetics between LIVES and LEVIS, aswellasthefactthat respondent had registered his own mark.[66]While it is true that there may be unfair competition even if the competing mark is registered in the Intellectual Property Office, it is equally true that the same may showprima faciegood faith.[67]Indeed,registrationdoesnotnegate unfair competition where the goods are packed or offered for sale and passed off as those of complainant.[68]However, the marks registration, coupled with the stark differences between the competing marks, negate the existence of actual intent to deceive, in this particular case.For his part, Justice Cuevas failed to find the possibility of confusion and of intent to deceive the public, relying onEmerald Garment Manufacturing Corporation v. Court of Appeals.[69]InEmerald, the Court explained that sincemaongpantsorjeansarenotinexpensive, the casual buyer is more cautious and discerning and would prefer to mull over his purchase, making confusion and deception less likely.We cannot subscribe to petitioners stance thatEmerald Garmentcannot apply because there was only one point of comparison, i.e., LEE as it appears in Emerald Garments STYLISTIC MR.LEE.Emerald Garmentis instructive in explaining the attitude of the buyer when it comes to products that are not inexpensive, such as jeans.In fact, theEmerald Garmentrationale is supported byDel Monte Corporation v. Court of Appeals,[70]where the Court explained that the attitude of the purchaser is determined by the cost of the goods.There is no reason not to apply the rationale in those cases here even if only by analogy.The rule laid down inEmerald GarmentandDel Monteis consistent withAsia Brewery, Inc. v. Court of Appeals,[71]where the Court held that in resolving cases of infringement and unfair competition, the courts should take into considerationseveralfactors 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.[72]Petitioner argues that the element of intent to deceive may be inferred from the similarity of the goods or their appearance.[73]The argument is specious on two fronts.First, where the similarity in the appearance of the goods as packed and offered for sale is sostriking,intent to deceive may be inferred.[74]However, as found by the investigating prosecutor and the DOJ Secretaries, striking similarity between the competing goods is not present.Second, the confusing similarity of the goods was precisely in issue during the preliminary investigation.As such, the element of intent to deceivecouldnotarisewithouttheinvestigating prosecutors or the DOJ Secretarysfindingthatsuchconfusing similarity exists.Since confusing similarity was not found, the element of fraud or deception could not be inferred.We cannot sustain Secretary Bellos opinion that to establish probable cause, it is enough that the respondent gave to his product the general appearance of the product[75]of petitioner.It bears stressing that that is only one element of unfair competition.All others must be shown to exist.More importantly, the likelihood of confusion exists not only if there is confusing similarity.It should also be likely to cause confusion or mistake or deceive purchasers.[76]Thus, the CA correctly ruled that the mere fact that some resemblance can be pointed out between the marks used does not in itself prove unfair competition.[77]To reiterate, the resemblance must be such as is likely to deceive the ordinary purchaser exercising ordinary care.[78]The consumer survey alone does not equate to actual confusion.We note that the survey was made by showing the interviewees actual samples of petitioners and respondents respective products,approximately five feet awayfrom them.Fromthatdistance, they were asked to identify the jeans brand andstate the reasons for thinking so.[79]This method discounted the possibility that the ordinary intelligent buyer would be able to closely scrutinize, and even fit, the jeans to determine if they were LEVIS or not.It also ignored that a consumer would consider the price of the competing goods when choosing a brand of jeans.It is undisputed that LIVES jeans are priced much lower than LEVIS.The Courts observations inEmerald Garmentare illuminating on this score:First, the products involved in the case at bar are, in the main, various kinds of jeans. x x xMaong pants or jeans are not inexpensive.Accordingly, the casual buyer is predisposed to be more cautious and discriminating in and would prefer to mull over his purchase.Confusion and deception, then, is less likely.InDel Monte Corporation v. Court of Appeals,we noted that:

Among these, what essentially determines the attitudes of the purchaser, specifically his inclination to be cautious, is the cost of the goods.To be sure, a person who buys a box of candies will not exercise as much care as one who buys an expensive watch. As a general rule, an ordinary buyer does not exercise as much prudence in buying an article for which he pays a few centavos as he does in purchasing a more valuable thing.Expensive and valuable items are normally bought only after deliberate, comparative and analytical investigation.But mass products, low priced articles in wide use, and matters of everyday purchase requiring frequent replacement are bought by the casual consumer without great care.[80](Emphasis supplied)

We find no reason to go beyond the point of sale to determine if there is probable cause for unfair competition. The CA observations along this line are worth restating:We also find no basis to give weight to petitioners contention that the post sale confusion that might be triggered by the perceived similarities between the two products must be considered in the action for unfair competition against respondent.

No inflexible rule can be laid down as to what will constitute unfair competition.Each case is, inthemeasure, a law unto itself. Unfair competition is always a question of fact.The question to be determined in every case is whether or not, asa matter of fact, the name or mark used by the defendant has previously cometoindicate and designate plaintiffs goods, or, to state it in another way, whether defendant, as a matter of fact, is, by his conduct, passing off defendants goods as plaintiffs goods or his business as plaintiffsbusiness.The universal test question is whether the public is likely to be deceived.

Inthecase before us, we are of the view that the probability of deception must be tested at the point of sale since it is at this point that the ordinary purchaser mulls upon the product and is likely to buy the same under the belief that he is buying another. The test of fraudulent simulation is to be found in the likelihood of deception, or the possibility of deception of some persons in some measure acquainted with an established design and desirous of purchasing the commodity with which that design has been associated.[81]In sum, absent a grave abuse of discretion on the part of the executive branch tasked with the determination of probable cause during preliminary investigation, We cannot nullify acts done in the exercise of the executive officers discretion. Otherwise, We shall violate the principle that the purpose of a preliminary investigation is to secure the innocent against hasty, malicious and oppressive prosecution, and to protect him from an open and public accusation of crime, from the trouble, expense and anxiety of a public trial, and also to protect the State from useless and expensive trials.[82]WHEREFORE, the petition isDENIEDand the appealed Decision of the Court of AppealsAFFIRMED.SO ORDERED.Republic of the PhilippinesSUPREME COURTBaguio City

SECOND DIVISION

G.R. No. 164321 March 23, 2011SKECHERS, U.S.A., INC.,Petitioner,vs.INTER PACIFIC INDUSTRIAL TRADING CORP., and/or INTER PACIFIC TRADING CORP. and/or STRONG SPORTS GEAR CO., LTD., and/or STRONGSHOES WAREHOUSE and/or STRONG FASHION SHOES TRADING and/or TAN TUAN HONG and/or VIOLETA T. MAGAYAGA and/or JEFFREY R. MORALES and/or any of its other proprietor/s, directors, officers, employees and/or occupants of its premises located at S-7, Ed & Joe's Commercial Arcade, No. 153 Quirino Avenue, Paraaque City,Respondents.

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TRENDWORKS INTERNATIONAL CORPORATION,Petitioner-Intervenor,vs.INTER PACIFIC INDUSTRIAL TRADING CORP. and/or INTER PACIFIC TRADING CORP. and/or STRONG SPORTS GEAR CO., LTD., and/or STRONGSHOES WAREHOUSE and/or STRONG FASHION SHOES TRADING and/or TAN TUAN HONG and/or VIOLETA T. MAGAYAGA and/or JEFFREY R. MORALES and/or any of its other proprietor/s, directors, officers, employees and/or occupants of its premises located at S-7, Ed & Joe's Commercial Arcade, No. 153 Quirino Avenue, Paraaque City,Respondents.

R E S O L U T I O N

PERALTA,J.:For resolution are the twin Motions for Reconsideration1filed by petitioner and petitioner-intervenor from the Decision rendered in favor of respondents, dated November 30, 2006.

At the outset, a brief narration of the factual and procedural antecedents that transpired and led to the filing of the motions is in order.

The present controversy arose when petitioner filed with Branch 24 of the Regional Trial Court (RTC) of Manila an application for the issuance of search warrants against an outlet and warehouse operated by respondents for infringement of trademark under Section 155, in relation to Section 170 of Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines.2In the course of its business, petitioner has registered the trademark "SKECHERS"3and the trademark "S" (within an oval design)4with the Intellectual Property Office (IPO).

Two search warrants5were issued by the RTC and were served on the premises of respondents. As a result of the raid, more than 6,000 pairs of shoes bearing the "S" logo were seized.

Later, respondents moved to quash the search warrants, arguing that there was no confusing similarity between petitioners "Skechers" rubber shoes and its "Strong" rubber shoes.

On November 7, 2002, the RTC issued an Order6quashing the search warrants and directing the NBI to return the seized goods. The RTC agreed with respondents view that Skechers rubber shoes and Strong rubber shoes have glaring differences such that an ordinary prudent purchaser would not likely be misled or confused in purchasing the wrong article.

Aggrieved, petitioner filed a petition for certiorari7with the Court of Appeals (CA) assailing the RTC Order. On November 17, 2003, the CA issued a Decision8affirming the ruling of the RTC.

Subsequently, petitioner filed the present petition9before this Court which puts forth the following assignment of errors:

A. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN CONSIDERING MATTERS OF DEFENSE IN A CRIMINAL TRIAL FOR TRADEMARK INFRINGEMENT IN PASSING UPON THE VALIDITY OF THE SEARCH WARRANT WHEN IT SHOULD HAVE LIMITED ITSELF TO A DETERMINATION OF WHETHER THE TRIAL COURT COMMITTED GRAVE ABUSE OF DISCRETION IN QUASHING THE SEARCH WARRANTS.

B. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN FINDING THAT RESPONDENTS ARE NOT GUILTY OF TRADEMARK INFRINGEMENT IN THE CASE WHERE THE SOLE TRIABLE ISSUE IS THE EXISTENCE OF PROBABLE CAUSE TO ISSUE A SEARCH WARRANT.10In the meantime, petitioner-intervenor filed a Petition-in-Intervention11with this Court claiming to be the sole licensed distributor of Skechers products here in the Philippines.

On November 30, 2006, this Court rendered a Decision12dismissing the petition.

Both petitioner and petitioner-intervenor filed separate motions for reconsideration.

In petitioners motion for reconsideration, petitioner moved for a reconsideration of the earlier decision on the following grounds:

(a) THIS HONORABLE COURT MUST RE-EXAMINE THE FACTS OF THIS CASE DUE TO THE SIGNIFICANCE AND REPERCUSSIONS OF ITS DECISION.

(b) COMMERCIAL QUANTITIES OF THE SEIZED ITEMS WITH THE UNAUTHORIZED REPRODUCTIONS OF THE "S" TRADEMARK OWNED BY PETITIONER WERE INTENDED FOR DISTRIBUTION IN THE PHILIPPINE MARKET TO THE DETRIMENT OF PETITIONER RETURNING THE GOODS TO RESPONDENTS WILL ADVERSELY AFFECT THE GOODWILL AND REPUTATION OF PETITIONER.

(c) THE SEARCH WARRANT COURT AND THE COURT OF APPEALS BOTH ACTED WITH GRAVE ABUSE OF DISCRETION.

(d) THE SEARCH WARRANT COURT DID NOT PROPERLY RE-EVALUATE THE EVIDENCE PRESENTED DURING THE SEARCH WARRANT APPLICATION PROCEEDINGS.

(e) THE SOLID TRIANGLE CASE IS NOT APPLICABLE IN THIS CASE, AS IT IS BASED ON A DIFFERENT FACTUAL MILIEU. PRELIMINARY FINDING OF GUILT (OR ABSENCE THEREOF) MADE BY THE SEARCH WARRANT COURT AND THE COURT OF APPEALS WAS IMPROPER.

(f) THE SEARCH WARRANT COURT OVERSTEPPED ITS DISCRETION. THE LAW IS CLEAR. THE DOMINANCY TEST SHOULD BE USED.

(g) THE COURT OF APPEALS COMMITTED ERRORS OF JURISDICTION.13On the other hand, petitioner-intervenors motion for reconsideration raises the following errors for this Courts consideration, to wit:

(a) THE COURT OF APPEALS AND THE SEARCH WARRANT COURT ACTED CONTRARY TO LAW AND JURISPRUDENCE IN ADOPTING THE ALREADY-REJECTED HOLISTIC TEST IN DETERMINING THE ISSUE OF CONFUSING SIMILARITY;

(b) THE COURT OF APPEALS AND THE SEARCH WARRANT COURT ACTED CONTRARY TO LAW IN HOLDING THAT THERE IS NO PROBABLE CAUSE FOR TRADEMARK INFRINGEMENT; AND

(c) THE COURT OF APPEALS SANCTIONED THE TRIAL COURTS DEPARTURE FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL PROCEEDINGS WHEN IT UPHELD THE QUASHAL OF THE SEARCH WARRANT ON THE BASIS SOLELY OF A FINDING THAT THERE IS NO CONFUSING SIMILARITY.14A perusal of the motions submitted by petitioner and petitioner-intervenor would show that the primary issue posed by them dwells on the issue of whether or not respondent is guilty of trademark infringement.

After a thorough review of the arguments raised herein, this Court reconsiders its earlier decision.

The basic law on trademark, infringement, and unfair competition is Republic Act (R.A.) No. 8293. Specifically, Section 155 of R.A. No. 8293 states:

Remedies; Infringement. Any person who shall, without the consent of the owner of the registered mark:

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of any goods or services including other preparatory steps necessary to carry out the sale of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the moment any of the acts stated in Subsection 155.1 or this subsection are committed regardless of whether there is actual sale of goods or services using the infringing material.15The essential element of infringement under R.A. No. 8293 is that the infringing mark is likely to cause confusion. In determining similarity and likelihood of confusion, jurisprudence has developed tests the Dominancy Test and the Holistic or Totality Test. The Dominancy Test focuses on the similarity of the prevalent or dominant features of the competing trademarks that might cause confusion, mistake, and deception in the mind of the purchasing public. Duplication or imitation is not necessary; neither is it required that the mark sought to be registered suggests an effort to imitate. Given more consideration are the aural and visual impressions created by the marks on the buyers of goods, giving little weight to factors like prices, quality, sales outlets, and market segments.16In contrast, the Holistic or Totality Test necessitates a consideration of the entirety of the marks as applied to the products, including the labels and packaging, in determining confusing similarity. The discerning eye of the observer must focus not only on the predominant words, but also on the other features appearing on both labels so that the observer may draw conclusion on whether one is confusingly similar to the other.17Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2) types of confusion, viz.: (1) confusion of goods (product confusion), where the ordinarily prudent purchaser would be induced to purchase one product in the belief that he was purchasing the other; and (2) confusion of business (source or origin confusion), where, although the goods of the parties are different, the product, the mark of which registration is applied for by one party, is such as might reasonably be assumed to originate with the registrant of an earlier product, and the public would then be deceived either into that belief or into the belief that there is some connection between the two parties, though inexistent.18Applying the Dominancy Test to the case at bar, this Court finds that the use of the stylized "S" by respondent in its Strong rubber shoes infringes on the mark already registered by petitioner with the IPO. While it is undisputed that petitioners stylized "S" is within an oval design, to this Courts mind, the dominant feature of the trademark is the stylized "S," as it is precisely the stylized "S" which catches the eye of the purchaser. Thus, even if respondent did not use an oval design, the mere fact that it used the same stylized "S", the same being the dominant feature of petitioners trademark, already constitutes infringement under the Dominancy Test.

This Court cannot agree with the observation of the CA that the use of the letter "S" could hardly be considered as highly identifiable to the products of petitioner alone. The CA even supported its conclusion by stating that the letter "S" has been used in so many existing trademarks, the most popular of which is the trademark "S" enclosed by an inverted triangle, which the CA says is identifiable to Superman. Such reasoning, however, misses the entire point, which is that respondent had used astylized"S," which is the samestylized"S" which petitioner has a registered trademark for. The letter "S" used in the Superman logo, on the other hand, has a block-like tip on the upper portion and a round elongated tip on the lower portion. Accordingly, the comparison made by the CA of the letter "S" used in the Superman trademark with petitioners stylized "S" is not appropriate to the case at bar.

Furthermore, respondent did not simply use the letter "S," but it appears to this Court that based on the font and the size of the lettering, the stylized "S" utilized by respondent is the very same stylized "S" used by petitioner; a stylized "S" which is unique and distinguishes petitioners trademark. Indubitably, the likelihood of confusion is present as purchasers will associate the respondents use of the stylized "S" as having been authorized by petitioner or that respondents product is connected with petitioners business.

Both the RTC and the CA applied the Holistic Test in ruling that respondent had not infringed petitioners trademark. For its part, the RTC noted the following supposed dissimilarities between the shoes, to wit:

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

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

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

4. Strong shoes are modestly priced compared to the costs of Skechers Shoes.19While there may be dissimilarities between the appearances of the shoes, to this Courts mind such dissimilarities do not outweigh the stark and blatant similarities in their general features. As can be readily observed by simply comparing petitioners Energy20model and respondents Strong21rubber shoes, respondent also used the color scheme of blue, white and gray utilized by petitioner. Even the design and "wavelike" pattern of the midsole and outer sole of respondents shoes are very similar to petitioners shoes, if not exact patterns thereof. At the side of the midsole near the heel of both shoes are two elongated designs in practically the same location. Even the outer soles of both shoes have the same number of ridges, five at the back and six in front. On the side of respondents shoes, near the upper part, appears the stylized "S," placed in the exact location as that of the stylized "S" on petitioners shoes. On top of the "tongue" of both shoes appears the stylized "S" in practically the same location and size. Moreover, at the back of petitioners shoes, near the heel counter, appears "Skechers Sport Trail" written in white lettering. However, on respondents shoes appears "Strong Sport Trail" noticeably written in the same white lettering, font size, direction and orientation as that of petitioners shoes. On top of the heel collar of petitioners shoes are two grayish-white semi-transparent circles. Not surprisingly, respondents shoes also have two grayish-white semi-transparent circles in the exact same location.lihpwa1Based on the foregoing, this Court is at a loss as to how the RTC and the CA, in applying the holistic test, ruled that there was no colorable imitation, when it cannot be any more clear and apparent to this Court that there is colorable imitation. The dissimilarities between the shoes are too trifling and frivolous that it is indubitable that respondents products will cause confusion and mistake in the eyes of the public. Respondents shoes may not be an exact replica of petitioners shoes, but the features and overall design are so similar and alike that confusion is highly likely.1avvphi1In Converse Rubber Corporation v. Jacinto Rubber & Plastic Co., Inc.,22this Court, in a case for unfair competition, had opined that even if not all the details are identical, as long as the general appearance of the two products are such that any ordinary purchaser would be deceived, the imitator should be liable, to wit:

From said examination, We find the shoes manufactured by defendants to contain, as found by the trial court, practically all the features of those of the plaintiff Converse Rubber Corporation and manufactured, sold or marketed by plaintiff Edwardson Manufacturing Corporation, except for their respective brands, of course. We fully agree with the trial court that "the respective designs, shapes, the colors of the ankle patches, the bands, the toe patch and the soles of the two products are exactly the same ... (such that) at a distance of a few meters, it is impossible to distinguish "Custombuilt" from "Chuck Taylor." These elements are more than sufficient to serve as basis for a charge of unfair competition. Even if not all the details just mentioned were identical, with the general appearances alone of the two products, any ordinary, or even perhaps even a not too perceptive and discriminating customer could be deceived, and, therefore, Custombuilt could easily be passed off for Chuck Taylor. Jurisprudence supports the view that under such circumstances, the imitator must be held liable. x x x23Neither can the difference in price be a complete defense in trademark infringement. In McDonalds Corporation v. L.C. Big Mak Burger. Inc.,24this Court held:

Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to guarding his goods or business from actual market competition with identical or similar products of the parties, but extends to all cases in which the use by a junior appropriator of a trade-mark or trade-name is likely to lead to a confusion of source, as where prospective purchasers would be misled into thinking that the complaining party has extended his business into the field (see 148 ALR 56 et seq; 53 Am. Jur. 576) or is in any way connected with the activities of the infringer; or when it forestalls the normal potential expansion of his business (v. 148 ALR 77, 84; 52 Am. Jur. 576, 577). x x x25Indeed, the registered trademark owner may use its mark on the same or similar products, in different segments of the market, and at different price levels depending on variations of the products for specific segments of the market.26The purchasing public might be mistaken in thinking that petitioner had ventured into a lower market segment such that it is not inconceivable for the public to think that Strong or Strong Sport Trail might be associated or connected with petitioners brand, which scenario is plausible especially since both petitioner and respondent manufacture rubber shoes.

Withal, the protection of trademarks as intellectual property is intended not only to preserve the goodwill and reputation of the business established on the goods bearing the mark through actual use over a period of time, but also to safeguard the public as consumers against confusion on these goods.27While respondents shoes contain some dissimilarities with petitioners shoes, this Court cannot close its eye to the fact that for all intents and purpose, respondent had deliberately attempted to copy petitioners mark and overall design and features of the shoes. Let it be remembered, that defendants in cases of infringement do not normally copy but only make colorable changes.28The most successful form of copying is to employ enough points of similarity to confuse the public, with enough points of difference to confuse the courts.29WHEREFORE, premises considered, the Motion for Reconsideration is GRANTED. The Decision dated November 30, 2006 is RECONSIDERED and SET ASIDE.

SO ORDERED.

U.S. Supreme Court

DIAMOND v. CHAKRABARTY, 447 U.S. 303 (1980)

447 U.S. 303DIAMOND, COMMISSIONER OF PATENTS AND TRADEMARKS v. CHAKRABARTY.CERTIORARI TO THE UNITED STATES COURT OF CUSTOMS AND PATENT APPEALS.

No. 79-136.

Argued March 17, 1980.Decided June 16, 1980.Title 35 U.S.C. 101 provides for the issuance of a patent to a person who invents or discovers "any" new and useful "manufacture" or "composition of matter." Respondent filed a patent application relating to his invention of a human-made, genetically engineered bacterium capable of breaking down crude oil, a property which is possessed by no naturally occurring bacteria. A patent examiner's rejection of the patent application's claims for the new bacteria was affirmed by the Patent Office Board of Appeals on the ground that living things are not patentable subject matter under 101. The Court of Customs and Patent Appeals reversed, concluding that the fact that micro-organisms are alive is without legal significance for purposes of the patent law.

Held:A live, human-made micro-organism is patentable subject matter under 101. Respondent's micro-organism constitutes a "manufacture" or "composition of matter" within that statute. Pp. 308-318.

(a) In choosing such expansive terms as "manufacture" and "composition of matter," modified by the comprehensive "any," Congress contemplated that the patent laws should be given wide scope, and the relevant legislative history also supports a broad construction. While laws of nature, physical phenomena, and abstract ideas are not patentable, respondent's claim is not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter - a product of human ingenuity "having a distinctive name, character [and] use." Hartranft v. Wiegmann,121 U.S. 609, 615. Funk Brothers Seed Co. v. Kalo Inoculant Co.,333 U.S. 127, distinguished. Pp. 308-310.

(b) The passage of the 1930 Plant Patent Act, which afforded patent protection to certain asexually reproduced plants, and the 1970 Plant Variety Protection Act, which authorized protection for certain sexually reproduced plants but excluded bacteria from its protection, does not evidence congressional understanding that the terms "manufacture" or "composition of matter" in 101 do not include living things. Pp. 310-314.[447 U.S. 303, 304](c) Nor does the fact that genetic technology was unforeseen when Congress enacted 101 require the conclusion that micro-organisms cannot qualify as patentable subject matter until Congress expressly authorizes such protection. The unambiguous language of 101 fairly embraces respondent's invention. Arguments against patentability under 101, based on potential hazards that may be generated by genetic research, should be addressed to the Congress and the Executive, not to the Judiciary. Pp. 314-318.

596 F.2d 952, affirmed.BURGER, C. J., delivered the opinion of the Court, in which STEWART, BLACKMUN, REHNQUIST, and STEVENS, JJ., joined. BRENNAN, J., filed a dissenting opinion, in which WHITE, MARSHALL, and POWELL, JJ., joined, post, p. 318.

Deputy Solicitor General Wallace argued the cause for petitioner. With him on the brief were Solicitor General McCree, Assistant Attorney General Shenefield, Harriet S. Shapiro, Robert B. Nicholson, Frederic Freilicher, and Joseph F. Nakamura.

Edward F. McKie, Jr., argued the cause for respondent. With him on the brief were Leo I. MaLossi, William E. Schuyler, Jr., and Dale H. Hoscheit.*

[Footnote *] Leonard S. Rubenstein filed a brief for the Peoples Business Commission as amicus curiae urging reversal.

Briefs of amici curiae urging affirmance were filed by George W. Whitney, Bruce M. Collins, and Karl F. Jorda for the American Patent Law Association, Inc.; by Thomas D. Kiley for Genentech, Inc.; by Jerome G. Lee, William F. Dudine, Jr., and Paul H. Heller for the New York Patent Law Association, Inc.; by Peter R. Taft, Joseph A. Keyes, Jr., and Sheldon Elloit Steinbach for Dr. Leroy E. Hood et al.; and by Lorance L. Greenlee for Dr. George Pieczenik.

Briefs of amici curiae were filed by William I. Althen for the American Society for Microbiology; by Donald R. Dunner for the Pharmaceutical Manufacturers Association; by Edward S. Irons, Mary Helen Sears, and Donald Reidhaar for the Regents of the University of California; and by Cornell D. Cornish, pro se.[447 U.S. 303, 305]MR. CHIEF JUSTICE BURGER delivered the opinion of the Court.

We granted certiorari to determine whether a live, human-made