Manzano vs. Court of Appeals and MandolariaGR NO. 113388, September 5, 1997

FACTS:

A case of cancellation of Letters of Patent for a gas burner before the PatentOffice was filed by one Angelita Manzano against Melecia Mandolaris.The petitioner made the following allegations:

A. The utility model of the gas burner covered in this patent was not inventive or useful;

B. The specification of the letters of patent did not comply with the requirements of Sec 14, RA No. 165, as amended;

C. Melecia was not the original, true and actual inventor of the utility model;

D. The letters was secured thru fraud;E. The utility model has been in existence years before her

application for patent was filed.

Respondent Mandolaria presented lone witness, Rolando, where the latter claimed that he used to work as a supervisor before the United Foundry was was involved in the construction of several models of burners, that after several attempts, they were finally able to perfect the process of manufacturing lampburners and consequently, filed the patent before the office.

On 7-7-86, the Director of Patents issued a decision denying the petition for cancellation and holding that the evidence was not convincing enough.

The case was brought before the Court of Appeals which upheld the decision of the Patent Office.

A petition for Certiorari was subsequently filed before the Supreme Court.

ISSUE: Whether the dismissal is proper where the patent applied for has no substantial difference between the model to be patented and those sold by petitioner.

 RULING: The element of novelty is an essential requisite of the patentability of an invention or discovery. If a device or process has been known or used by others prior to its invention or discovery by the applicant, an application for a patent therefor should be denied; and if the application has been granted, the court, in a judicial proceeding in which the validity of the patent is drawn in question, will hold it void and ineffective. It has been repeatedly held that an invention must possess the essential elements of novelty, originality and precedence, and for the patentee to be entitled to the protection the invention must be new to the world.However, The validity of the patent issued by the Philippine Patent Office in favor of private respondent and the question over the inventiveness, novelty and usefulness of the improved model of the LPG burner are matters which are better determined by the Patent Office. The technical staff of the Philippine Patent Office composed of experts in their field has by the issuance of the patent in question accepted private respondent’s model of

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gas burner as a discovery. There is a presumption that the Office has correctly determined the patentability of the model and such action must not be interfered with in the absence of competent evidence to the contrary. The rule is settled that the findings of fact of the Director of Patents, especially when affirmed by the Court of Appeals, are conclusive on this Court when supported by substantial evidence. Petitioner has failed to show compelling grounds for a reversal of the findings and conclusions of the Patent Office and the Court of Appeals. Petition DISMISSED.

ROBERTO L. DEL ROSARIO vs. COURT OF APPEALS AND JANITO CORPORATION

G.R. No. 115106 March 15, 1996

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FACTS:

Roberto del Rosario petitions this Court to review the decision of the Court of Appeals 1 which set aside the order of the Regional Trial Court of Makati granting a writ of preliminary injunction in his favor.

The antecedents: On 18 January 1993 petitioner filed a complaint for patent infringement against private respondent Janito Corporation. Roberto L. del Rosario alleged that he was a patentee of an audio equipment and improved audio equipment commonly known as the sing-along System or karaoke under Letters Patent No. UM-5269 dated 2 June 1983 as well as Letters Patent No. UM-6237 dated 14 November 1986 issued by the Director of Patents. The effectivity of both Letters Patents was for five (5) years and was extended for another five (5) years starting 2 June 1988 and 14 November 1991, respectively. He described his sing-along system as a handy multi-purpose compact machine which incorporates an amplifier speaker, one or two tape mechanisms, optional tuner or radio and microphone mixer with features to enhance one's voice, such as the echo or reverb to stimulate an opera hall or a studio sound, with the whole system enclosed in one cabinet casing.

In the early part of 1990 petitioner learned that private respondent was manufacturing a sing-along system bearing the trademark miyata or miyata karaoke substantially similar if not identical to the sing-along system covered by the patents issued in his favor.

ISSUE:

Whether respondent Court of Appeals erred in finding the trial court to have committed grave abuse of discretion in enjoining private respondent from manufacturing, selling and advertising the miyata karaoke brand sing-along system for being substantially similar if not identical to the audio equipment covered by letters patent issued to petitioner.

HELD:

For the writ to issue the interest of petitioner in the controversy or the right he seeks to be protected must be a present right, a legal right which must be shown to be clear and positive.Admittedly, petitioner is a holder of Letters Patent No. UM-5629 dated 2 June 1985 issued for a term of five (5) years from the grant of a Utility Model herein described —

The construction of an audio equipment comprising a substantially cubical casing having a window at its rear and upper corner fitted with a slightly inclined control panel, said cubical (casing) having a vertical partition wall therein defining a rear compartment and a front compartment, and said front compartment serving as a speaker baffle; a transistorized amplifier circuit having an echo section and writhed in at least the printed circuit boards placed inside said rear compartment of said casing and attached to said vertical partition wall, said transistorized amplifier circuit capable of being operated from outside, through various controls mounted on said control panel of such casing; a loud speaker fitted inside said front compartment of said casing and connected to the output of the main audio amplifier section of said transistorized amplifier circuit and a tape player mounted on the top

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wall of said casing and said tape player being connected in conventional manner to said transistorized amplifier circuit.

Petitioner established before the trial court that respondent Janito Corporation was manufacturing a similar sing-along system bearing the trademark miyata which infringed his patented models. He also alleged that both his own patented audio equipment and respondent's sing-along system were constructed in a casing with a control panel, the casing having a vertical partition wall defining the rear compartment from the front compartment, with the front compartment consisting of a loud speaker baffle, both containing a transistorized amplifier circuit capable of being operated from outside through various controls mounted on the control panel, and that both had loud speakers fitted inside the front compartment of the casing and connected to the output of the main audio amplifier section both having a tape recorder and a tape player mounted on the control panel with the tape recorder and tape player being both connected to the transistorized amplifier circuit.

It may be noted that respondent corporation failed to present before the trial court a clear, competent and reliable comparison between its own model and that of petitioner, and disregarded completely petitioner's utility Model No. 6237 which improved on his first patented model. Notwithstanding the differences cited by respondent corporation, it did not refute and disprove the allegations of petitioner before the trial court that: (a) both are used by a singer to sing and amplify his voice; (b) both are used to sing with a minus-one or multiplex tapes, or that both are used to play minus-one or standard cassette tapes for singing or for listening to; (c) both are used to sing with a minus-one tape and multiplex tape and to record the singing and the accompaniment; (d) both are used to sing with live accompaniment and to record the same; (e) both are used to enhance the voice of the singer using echo effect, treble, bass and other controls; (g) both are equipped with cassette tape decks which are installed with one being used for playback and the other, for recording the singer and the accompaniment, and both may also be used to record a speaker's voice or instrumental playing, like the guitar and other instruments; (h) both are encased in a box-like cabinets; and, (i) both can be used with one or more microphones.

The trial court is directed to continue with the proceedings on the main action pending before it in order to resolve with dispatch the issues therein presented.

ASARI YOKO CO., LTD. vs. KEE BOCG.R. No. L-14086 January 20, 1961

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FACTS:

On August 27, 1953, Kee Boc, a Chinese citizen, filed a petition for the registration of the trade mark "RACE" and design to be used in shirts and undershirts manufactured by him. He claims to have first used the trade mark in commerce on May 17, 1952, basing the design on a movie picture he had seen with Domingo Cabatingan, his employee, who corroborated to this fact. Opposition was interposed by Asari Yoko Co., Ltd., a Japanese corporation, on the ground that it is the owner if the trade mark because the same is registered in Japan and in the Philippines, registration in the latter having been made in August, 1929, under the provisions of Act No. 666 and is valid for 30 years; that the trade mark as been in continuous use in commerce in, and trade with the Philippines since its registration until the early art of 1942, and then again after the liberation of the Philippines up to the present; that the trade mark was ever abandoned by the registrant and that it will be damaged by the registration of the same.After due hearing, the Director of Patents dismissed the opposition and adjudged applicant Kee Boc. the owner the trade mark.

ISSUE:

Whether or not formal commercial agreement between two nations must exist before the trademark must be recognized?

HELD:

No. The lawful entry into the Philippines of goods bearing the trade mark since 1949 should entitle the owner of the trade mark to the right to use the same to the exclusion of others. Modern trade and commerce demands that depredations on legitimate trade marks of non-nationals should not be countenanced. The strict condition imposed in the decision of the Director of Patents that a formal commercial agreement between two nations must, exist before the trade mark of one may be recognized in the other, is inconsistent with the freedom of trade recognized in modern times.

It appears that even prior to the trade agreement between the Supreme Commander for the Allied Powers (SCAP) and the Republic of the Philippines, the first of which was entered into on March 3, 1951, goods bearing the trade mark in question have already come into the Philippines. The agreement between Occupied Japan and the Philippines had not yet been entered into. But Japan was occupied by the United States since 1945 and was therefore under its lawful control; and since this country has always had commercial relations with the United State, it cannot be said that the entry of goods from Occupied Japan to the Philippines is illegal, or is not legitimate trade or commerce which can give rise to any rights to trade marks. The view of this subject by the Director of Patents, that the trade relations between Japan and the Philippines is not lawful or legal, is so narrow to be justified by the relations existing between the United States and the Philippines. Since 1949 up to the present time, commercial relations with Japan had existed and continued, and the importations of commodities bearing the trade mark in question into the Philippines had taken place..= There is no question that the trade mark "RACE BRAND" applied for is exactly the same as the trade mark "RACE BRAND" registered in Tokyo, Japan on June 11, 1937 by Kojiro Asri (Not only is the trade mark, sought to be registered the actual trade marks for Japanese shirts and undershirts,

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belonging to Kojiro Asari, but the very names printed on the boxes containing shirts and undershirts sold by petitioner "Race Brand Gentlemen's Underwear" are exactly identical to those appearing in the boxes used by underwear he manufactures applicant for the underwear he manufactures.

The very facsimile of the trade mark filed by the applicant before the director in connection with his petition for registration, was taken from a mark actually used on goods imported from Japan to the Philippines, except that the former does not contain the inscriptions "REGISTERED TRADE MARK" and "Made in Occupied Japan", because the inscriptions are covered by a thin piece of paper pasted on the inscriptions. The trade mark sought to be registered already belongs to Kojiro Asari, as shown by the certificate of registration thereof in Tokyo, Japan on February 27, 1987 and June 11, 1937.The trade mark sought to be registered is actually used an boxes of shirts and undershirts imported to the Philippines from Japan see. Shirts and undershirts bearing said trade mark appear to have been imported to the Philippines and said trade mark were also imported by Wan Lian Trading of Manila.The trademarks sought to be registered are registered in Tokyo, Japan on February, 1937 and June, 1937, and the same have been used on shirts and undershirts imported into the Philippines as early as the year 1949, and continuously up to the date of the trial. It follows from all the above that as petitioner-oppositor was the first user of the trade mark in question in the Philippines and it will be damaged by the registration of the trade mark in the name of Kee Boc.

ASIA BREWERY, INC.vs. COURT OF APPEALSG.R. No. 103543 July 5, 1993

FACTS:

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

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competing with SMC's SAN MIGUEL PALE PILSEN for a share of the local beer market.

The registered trademark of SMC for its pale pilsen beer is: San Miguel Pale Pilsen With Rectangular Hops and Malt Design. The dominant feature is the phrase "San Miguel" written horizontally at the upper portion.On the other hand, ABI's trademark is consist 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.

A decision was rendered by the trial Court dismissing SMC's complaint because ABI has not committed trademark infringement or unfair competition against. SMC appealed to the Court of Appeals which reversed the decision of the trial court. ABI appealed to the Supreme Court by a petition for certiorari.

ISSUE:

Whether or not ABI's BEER PALE PILSEN label or "design" infringes upon SMC's SAN MIGUEL PALE PILSEN WITH RECTANGULAR MALT AND HOPS DESIGN and thereby commits unfair competition against the latter.

HELD:

No. Infringement is determined by the "test of dominancy" rather than by differences or variations in the details of one trademark and of another. 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. 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.

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.

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. "Pilsen" is a "primarily geographically descriptive word," hence, non-registerable and not appropriable by any beer manufacturer. The words

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"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.

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.

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. 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. 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. 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 from the others.

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.

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246 CORPORATION vs. HON. REYNALDO B. DAWAYG.R. No. 157216 November 20, 2003

FACTS:

A case for trademark infringement was filed by Montres Rolex S.A. and Rolex Centre Phil., Ltd against 246 Corporation because the latter used, without authority from the former, the mark “Rolex” in its KTV business which was named “Rolex Music Lounge” as advertised in the newspaper.

246 Corp raised the following affirmative defenses: that there is no cause of action; that there is no confusion since the business of 246 Corp is not

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related to the business of Rolex S.A.; and that the complaint is not properly verified and certified according to the rules on pleading.

However, the motion for preliminary hearing on the affirmative defenses filed by 246 was denied by the court. Similarly, the motion for reconsideration was also denied. The CA also dismissed the petition. Hence, the certiorari to the SC.

ISSUE:

Whether or not the use of a mark owned by and registered to corporation by another corporation in a business which is not similar to the business of the original owner of the mark constitutes infringement.

HELD:

Under the old Trademark Law where the goods for which the identical marks are used are unrelated, there can be no likelihood of confusion and there is therefore no infringement in the use by the junior user of the registered mark on the entirely different goods. This ruling, however, has been to some extent, modified by Section 123.1(f) of the Intellectual Property Code (Republic Act No. 8293), which took effect on January 1, 1998. The said section reads:

Sec. 123. Registrability. – 123.1. A mark cannot be registered if it:

x x x x x x x x x

(f) Is identical with, or confusingly similar to, or constitutes a translation of a mark considered well-known in accordance with the preceding paragraph, which is registered in the Philippines with respect to goods or services which are not similar to those with respect to which registration is applied for: Provided, That use of the mark in relation to those goods or services would indicate a connection between those goods or services, and the owner of the registered mark: Provided, further, That the interest of the owner of the registered mark are likely to be damaged by such use; (Emphasis supplied)

A junior user of a well-known mark on goods or services which are not similar to the goods or services, and are therefore unrelated, to those specified in the certificate of registration of the well-known mark is precluded from using the same on the entirely unrelated goods or services, subject to the following requisites, to wit:

1. The mark is well-known internationally and in the Philippines. Under Rule 102 of the Rules and Regulations on Trademarks, Service Marks, Trade Names and Marked or Stamped Containers, in determining whether a mark is well known, the following criteria or any combination thereof may be taken into account:

(a) the duration, extent and geographical area of any use of the mark, in particular, the duration, extent and geographical area of any promotion of the mark, including advertising or publicity and presentation, at fairs or exhibitions, of the goods and/or services to which the mark applies;

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(b) the market share in the Philippines and in other countries, of the goods and/or services to which the mark applies;

(c) the degree of the inherent or acquired distinction of the mark;

(d) the quality-image or reputation acquired by the mark;

(e) the extent to which the mark has been registered in the world;

(f) the exclusivity of the registration attained by the mark in the world;

(g) the extent to which the mark has been used in the world;

(h) the exclusivity of use attained by the mark in the world;

(i) the commercial value attributed to the mark in the world;

(j) the record of successful protection of the rights in the mark;

(k) the outcome of litigations dealing with the issue of whether the mark is a well-known mark; and

(l) the presence of absence of identical or similar marks validly registered for or used on identical or similar goods or services and owned by persons other than the person claiming that his mark is a well-known mark.

2. The use of the well-known mark on the entirely unrelated goods or services would indicate a connection between such unrelated goods or services and those goods or services specified in the certificate of registration in the well known mark. This requirement refers to the likelihood of confusion of origin or business or some business connection or relationship between the registrant and the user of the mark.

3. The interests of the owner of the well-known mark are likely to be damaged. For instance, if the registrant will be precluded from expanding its business to those unrelated good or services, or if the interests of the registrant of the well-known mark will be damaged because of the inferior quality of the good or services of the user.18

Section 123.1(f) is clearly in point because the Music Lounge of petitioner is entirely unrelated to respondents’ business involving watches, clocks, bracelets, etc. However, the Court cannot yet resolve the merits of the present controversy considering that the requisites for the application of Section 123.1(f), which constitute the kernel issue at bar, clearly require determination facts of which need to be resolved at the trial court. The existence or absence of these requisites should be addressed in a full blown hearing and not on a mere preliminary hearing. The respondent must be given ample opportunity to prove its claim, and the petitioner to debunk the same.

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SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT LTD vs. THE COURT OF APPEALS

G.R. No. 111580 June 21, 2001;

DEVELOPERS GROUP OF COMPANIES, INC. vs. THE COURT OF APPEALS

G.R. No. 114802 June 21, 2001

FACTS:

On June 21, 1988, the Shangri-La International Hotel Management, Ltd., Shangri-La Properties, Inc., Makati Shangri-La Hotel and Resort, Inc. and Kuok Philippine Properties, Inc. (hereinafter collectively referred as the "Shangri-La Group"), filed with the Bureau of Patents, Trademarks and

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Technology Transfer (BPTTT) a petition praying for the cancellation of the registration of the "Shangri-La" mark and "S" device/logo issued to the Developers Group of Companies, Inc., on the ground that the same was illegally and fraudulently obtained and appropriated for the latter's restaurant business.

The Shangri-La Group filed with the BPTTT its own application for registration of the subject mark and logo. The Developers Group filed an opposition to the application, which was docketed as Inter Partes Case No. 3529.On April 15, 1991, the Developers Group instituted with the Regional Trial Court of Quezon City, Branch 99, a complaint for infringement and damages with prayer for injunction, docketed as Civil Case No. Q-91-8476, against the Shangri-La Group.

On January 8, 1992, the Shangri-La Group moved for the suspension of the proceedings in the infringement case on account of the pendency of the administrative proceedings before the BPTTT. This was denied by the trial court in a Resolution issued on January 16, 1992.

ISSUE:

Whether or not despite the institution of a case for cancellation of a mark with the IPO by one party, the adverse party can file a subsequent action for infringement with the regular courts of justice in connection with the same registered mark.

HELD:

Yes. The adverse party can file a subsequent action for infringement with the regular courts of justice despite the institution of a case for cancellation of a mark with the IPO by one party.

As provided for by Section 151.2 of the Intellectual Property Code,“Notwithstanding the foregoing provisions, the court or the administrative agency vested with jurisdiction to hear and adjudicate any action to enforce the rights to a registered mark shall likewise exercise jurisdiction to determine whether the registration of said mark may be cancelled in accordance with this Act. The filing of a suit to enforce the registered mark with the proper court or agency shall exclude any other court or agency from assuming jurisdiction over a subsequently filed petition to cancel the same mark. On the other hand, the earlier filing of petition to cancel the mark with the Bureau of Legal Affairs shall not constitute a prejudicial question that must be resolved before an action to enforce the rights to same registered mark may be decided.”

Similarly, Rule 8, Section 7, of the Regulations on Inter Partes Proceedings, provides to wit –“Effect of filing of a suit before the Bureau or with the proper court – The filing of a suit to enforce the registered mark with the proper court or Bureau shall exclude any other court or agency from assuming jurisdiction over a subsequently filed petition to cancel the same mark. On the other hand, the earlier filing of petition to cancel the mark with the Bureau shall not constitute a prejudicial question that must be resolved before an action to enforce the rights to same registered mark may be decided.”

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The earlier institution of an Inter Partes case by the Shangri-La Group for the cancellation of the "Shangri-La" mark and "S" device/logo with the BPTTT cannot effectively bar the subsequent filing of an infringement case by registrant Developers Group. The law and the rules are explicit.

The rationale is plain: Certificate of Registration No. 31904, upon which the infringement case is based, remains valid and subsisting for as long as it has not been cancelled by the Bureau or by an infringement court. As such, Developers Group's Certificate of Registration in the principal register continues as "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." Since the certificate still subsists, Developers Group may thus file a corresponding infringement suit and recover damages from any person who infringes upon the former's rights.

SANRIO vs. LIMG.R. No. 168662 February 19, 2008

FACTS:

Sanrio (Sanrio) Company Limited filed before the Task-Force on Anti-Intellectual Property Piracy (TAPP) of the Department of Justice (DOJ) a complaint against Edgar Lim, doing business as Orignamura Trading for violation of Section 217 of the Intellectual Property Code on the grounds of infringement of copyrighted animated characters through selling imitations of products bearing said works.

Lim, respondent in this case, avers such allegation as he was only a retailer of the said products and that he obtained his merchandise from JC Lucas Creative Products, Inc., Paper Line Graphics, Inc. and Melawares

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Manufacturing Corporation, which are authorized local manufacturers of such Sanrio products.

However, evidence showed that some of the items seized during the search are not among those products which Gift Gate, Inc., exclusive distributor of Sanrio in the Philippines, authorized these manufacturers to produce.

The TAPP, DOJ and the Court of Appeals all denied favor to petitioner Sanrio as these quasi-judicial and judicial bodies stood on the failure of the petitioner to comply with the requisites of Section 217, to wit: (1) possession of the infringing copy; and (2) knowledge or suspicion that the copy is an infringement of the genuine article. The petitioner failed to prove that respondent knew that the merchandise he sold was a counterfeit. Respondent, on the other hand, was able to show that he obtained these goods from legitimate sources.

As such, the petitioner filed a petition for certiorari to set aside the decision of the Court of Appeals.

ISSUE:

Whether or not for someone to be guilty of infringement of a copyrighted product, such must have knowledge of that such product is only a counterfeit of the original and that such must not come from legitimate sources.

HELD:

No. Any person is liable for copyright infringement, even if he did not know and/ or he obtained his merchandise from legitimate sources, as long as he sold counterfeit goods.

IN-N-OUT BURGER, INC, vs SEHWANI, INCORPORATED AND/OR BENITA’S FRITES, INC.,

G.R. No. 179127 December 24, 2008

FACTS:

Petitioner IN-N-OUT BURGER, INC., a business entity incorporated under the laws of California, United States (US) of America, which is a signatory to the Convention of Paris on Protection of Industrial Property and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). Petitioner is engaged mainly in the restaurant business, but it has never engaged in business in the Philippines.

On 2 June 1997, petitioner filed trademark and service mark applications with the Bureau of Trademarks (BOT) of the IPO for "IN-N-OUT" and "IN-N-

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OUT Burger & Arrow Design." Petitioner later found out, through the Official Action Papers issued by the IPO on 31 May 2000, that respondent Sehwani, Incorporated had already obtained Trademark Registration for the mark "IN N OUT (the inside of the letter "O" formed like a star)." By virtue of a licensing agreement, Benita Frites, Inc. was able to use the registered mark of respondent Sehwani, Incorporated. Petitioner pointed out that its internationally well-known trademarks and the mark of the respondents are all registered for the restaurant business and are clearly identical and confusingly similar. Petitioner claimed that respondents are making it appear that their goods and services are those of the petitioner, thus, misleading ordinary and unsuspecting consumers that they are purchasing petitioner’s products.

However, respondent’ is claiming good faith and that they have openly and continuously used the subject mark since 1982 and is in the process of expanding its business. They contend that assuming that there is value in the foreign registrations presented as evidence by the petitioner, the purported exclusive right to the use of the subject mark based on such foreign registrations is not essential to a right of action for unfair competition. Respondents also claim that actual or probable deception and confusion on the part of customers by reason of respondents’ practices must always appear, and in the present case, the Bureau of Legal Affairs (BLA) of the IPO has found none.

ISSUE:

Whether or not Sehwani, Incorporated and/or Benita’s Frites, Inc. are guilty of unfair competition

HELD:

Yes. The essential elements of an action for unfair competition are (1) confusing similarity in the general appearance of the goods and (2) intent to deceive the public and defraud a competitor. The confusing similarity may or may not result from similarity in the marks, but may result from other external factors in the packaging or presentation of the goods. The intent to deceive and defraud may be inferred from the similarity of the appearance of the goods as offered for sale to the public. Actual fraudulent intent need not be shown.With such finding, the award of damages in favor of petitioner is but proper.  This is in accordance with Section 168.4 of the Intellectual Property Code, which provides that the remedies under Sections 156, 157 and 161 for infringement shall apply mutatis mutandis to unfair competition.  The remedies provided under Section 156 include the right to damages, to be computed in the following manner:

 Section 156.  Actions, and Damages and Injunction for Infringement.--156.1 The owner of a registered mark may recover damages from any person who infringes his rights, and the measure of the damages suffered shall be either the reasonable profit which the complaining party would have made, had the defendant not infringed his rights, or the profit which the defendant actually made out of the infringement, or in the event such measure of damages cannot be readily ascertained with reasonable certainty, then the court may award as damages a reasonable percentage based upon the amount of gross sales of the defendant or the value of the services in connection with which

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the mark or trade name was used in the infringement of the rights of the complaining party.

LEVI STRAUSS (PHILS.), INC. vs. VOGUE TRADERS CLOTHINGCOMPANY,

G.R. No. 132993 June 29, 2005

FACTS:

In 1972, Levi Strauss & Co., the principal based in Delaware, United States of America, granted petitioner Levi Strauss (Phils.) a non-exclusive license to use LEVI’S trademark, design, and name in the manufacturing, marketing, distribution, and sale of its clothing and other goods, this includes the use of the following: "LEVI’S"; "501"; "Two Horse Design"; "Two Horse Label"; "Two Horse Patch"1; "Two Horse Label with Patterned Design"; " Design"12; and the composite trademarks, namely, "Tab," and "Two Horse Patch." The petitioner discovered the existence of some trademark registrations belonging to respondent Vogue Traders Clothing Company, owned by one Tony Lim. In its view, were confusingly similar to its trademarks, thus, it

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instituted two (2) cases for the cancellation of respondent’s trademark registrations.

The petitioner then applied for the issuance of a search warrant on the premises of respondent Vogue Traders Clothing Company with the Regional Trial Court of Manila. In finding probable cause for the violation of Article 189 of the Revised Penal Code, seizure was made on the said premises and it confiscated several goods belonging to the respondent

Further, criminal charges were filed against Tony Lim in the Department of Justice, but the same were eventually dismissed and the search warrants were quashed. Consequently, on February 1, 1996, respondent filed a complaint for damages in the Regional Trial Court of Manila, Branch 50, against petitioner. Respondent sought to recover the seized assorted sewing materials, equipment, and finished products or the value thereof, in case the same had been destroyed or impaired as a result of the seizure. Respondent also prayed that, after due trial, judgment be rendered ordering the petitioner to pay compensatory damages of P320,000 with an additional amount of damages of P11,000 per day until the seized properties are restored; P2,000,000 as exemplary damages; P100,000 for attorney’s fees with an additional amount of P100,000 in the event of an appeal plus P1,500 per court appearance and the costs of the suit.

The petitioner the filed an answer with counterclaim, and it sought to cancel respondent’s Copyright Registration No. I-3838 and enjoin the respondent from further manufacturing, selling, offering for sale, and advertising the denim jeans or slacks by using a design substantially, if not exactly similar to, or a colorable imitation of the trademarks of petitioner.

Subsequently, the case was re-raffled among the courts designated as Special Courts to try and decide cases involving violations of Intellectual Property Rights pursuant to Administrative Order No. 113-95, dated October 2, 1995. On May 17, 1996, Branch 23 issued an order directing that the case be forwarded to Branch 1 (a designated Special Court per said administrative order) for further proceedings. The writ of preliminary injunction was also granted by the lower court against the respondent.

The Court of Appeals, however, annulled and set aside the order for the issuance of preliminary injunction due to grave abuse of discretion and in excess of jurisdiction. Further, it ordered the lower court to desist from further proceedings until the Bureau of Patents, Trademarks, and Technology Transfer (BPTT) has finally resolved the case.Thus the petition for review on certiorari seeking to annul the decision of the Court of Appeals, dated August 13, 1997, which annulled and set aside the orders issued by the Regional Trial Court of Manila, Branch 1

ISSUE:

Whether or not the decision of the Court of Appeal is valid to stop the lower court order, pending the decision of the BPTT?

HELD:

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No the Appellate court erred that the trial court never had the authority to hear and grant petitioner's prayer for injunctive relief nor to proceed with the hearing of the case in view of the pendency of the two inter partes cases.

As provided in the case of Conrad and Company, Inc. v. Court of Appeals and Shangri-La International Hotel Management Ltd. v. Court of Appeals the Court clarified that while an administrative cancellation of a registered trademark, on any of the grounds under Section 17 of R.A. No. 166, is within the ambit of the BPTTT, an action for infringement or any other incidental remedy sought is within the jurisdiction of the ordinary courts:

“. . It might be mentioned that while an application for the administrative cancellation of a registered trademark on any of the grounds enumerated in Section 17 of Republic Act No. 166, as amended, otherwise known as the Trade-Mark Law, falls under the exclusive cognizance of BPTTT (Sec. 19, Trade-Mark Law), an action, however, for infringement or unfair competition, as well as the remedy of injunction and relief for damages, is explicitly and unquestionably within the competence and jurisdiction of ordinary courts.. . .Surely, an application with BPTTT for an administrative cancellation of a registered trade mark cannot per se have the effect of restraining or preventing the courts from the exercise of their lawfully conferred jurisdiction.”

Further, the Supreme Court mentioned several provisions Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines (Sections 155 (2), 156, and 163), wherein such action is provided as the remedy of an owner of a registered mark to institute an action for infringement or damages against a person or entity that may 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. The High Court stressed that an action for infringement or unfair competition, including the available remedies of injunction and damages, in the regular courts can proceed independently or simultaneously with an action for the administrative cancellation of a registered trademark in the BPTTT.

The writ, as an interlocutory order, did not have the effect of prejudging or disposing of the merits of the case, but merely enjoined the respondent's acts of manufacturing, distributing, selling, or offering for sale the jeans which had allegedly incorporated exact or colorable imitations of the products belonging to petitioner.

LEVI STRAUSS & CO., & LEVI STRAUSS (PHILS.), INC. vs. CLINTON APPARELLE, INC.,

G.R. No. 138900 September 20, 2005

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FACTS:

This case stemmed from the Complaint for Trademark Infringement, Injunction and Damages filed by petitioners LS & Co. and LSPI against respondent Clinton Apparelle, Inc.together with an alternative defendant, Olympian Garments, Inc. before the Regional Trial Court of Quezon City.. The Complaint was docketed as Civil Case No. Q-98-34252, entitled "Levi Strauss & Co. and Levi Strauss (Phils.), Inc. vs. Clinton Aparelle, Inc. and/or Olympian Garments, Inc."

The Complaint alleged that LS & Co., a foreign corporation duly organized and existing under the laws of the State of Delaware, U.S.A., and engaged in the apparel business, is the owner by prior adoption and use since 1986 of the internationally famous "Dockers and Design" trademark. This ownership is evidenced by its valid and existing registrations in various member countries of the Paris Convention. In the Philippines, it has a Certificate of Registration No. 46619 in the Principal Register for use of said trademark on pants, shirts, blouses, skirts, shorts, sweatshirts and jackets under Class 25. The "Dockers and Design" trademark was first used in the Philippines in or about May 1988, by LSPI, a domestic corporation engaged in the manufacture, sale and distribution of various products bearing trademarks owned by LS & Co. To date, LSPI continues to manufacture and sell Dockers Pants with the "Dockers and Design" trademark.

LS & Co. and LSPI alleged that they discovered the presence in the local market of jeans under the brand name "Paddocks" using a device which is substantially, if not exactly, similar to the "Dockers and Design" trademark owned by and registered in the name of LS & Co., without its consent. Based on their information and belief, they added, Clinton Apparelle manufactured and continues to manufacture such "Paddocks" jeans and other apparel.

ISSUE:

Whether or not the single registration of the trademark "Dockers and Design" confers on the owner the right to prevent the use of a fraction thereof.

HELD:

Petitioners anchor their legal right to "Dockers and Design" trademark on the Certificate of Registration issued in their favor by the Bureau of Patents, Trademarks and Technology Transfer. According to Section 138 of Republic Act No. 8293, this Certificate of Registration is prima facie evidence of the validity of the registration, the registrant's ownership of the mark and of the exclusive right to use the same in connection with the goods or services and those that are related thereto specified in the certificate. Section 147.1 of said law likewise grants the owner of the registered mark the exclusive right to prevent all third parties not having the owner's consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered if such use results in a likelihood of confusion.

However, attention should be given to the fact that petitioners' registered trademark consists of two elements: (1) the word mark "Dockers" and (2) the wing-shaped design or logo. Notably, there is only one registration for both features of the trademark giving the impression that the two should be

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considered as a single unit. Clinton Apparelle's trademark, on the other hand, uses the "Paddocks" word mark on top of a logo which according to petitioners is a slavish imitation of the "Dockers" design. The two trademarks apparently differ in their word marks ("Dockers" and "Paddocks"), but again according to petitioners, they employ similar or identical logos. It could thus be said that respondent only "appropriates" petitioners' logo and not the word mark "Dockers"; it uses only a portion of the registered trademark and not the whole.

Given the single registration of the trademark "Dockers and Design" and considering that respondent only uses the assailed device but a different word mark, the right to prevent the latter from using the challenged "Paddocks" device is far from clear. Stated otherwise, it is not evident whether the single registration of the trademark "Dockers and Design" confers on the owner the right to prevent the use of a fraction thereof in the course of trade. It is also unclear whether the use without the owner's consent of a portion of a trademark registered in its entirety constitutes material or substantial invasion of the owner's right.

It is likewise not settled whether the wing-shaped logo, as opposed to the word mark, is the dominant or central feature of petitioners' trademark — the feature that prevails or is retained in the minds of the public — an imitation of which creates the likelihood of deceiving the public and constitutes trademark infringement. In sum, there are vital matters which have yet and may only be established through a full-blown trial.

Trademark dilution is the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of: (1) competition between the owner of the famous mark and other parties; or (2) likelihood of confusion, mistake or deception. Subject to the principles of equity, the owner of a famous mark is entitled to an injunction "against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark." This is intended to protect famous marks from subsequent uses that blur distinctiveness of the mark or tarnish or disparage it.

Based on the foregoing, to be eligible for protection from dilution, there has to be a finding that: (1) the trademark sought to be protected is famous and distinctive; (2) the use by respondent of "Paddocks and Design" began after the petitioners' mark became famous; and (3) such subsequent use defames petitioners' mark. In the case at bar, petitioners have yet to establish whether "Dockers and Design" has acquired a strong degree of distinctiveness and whether the other two elements are present for their cause to fall within the ambit of the invoked protection. The Trends MBL Survey Report which petitioners presented in a bid to establish that there was confusing similarity between two marks is not sufficient proof of any dilution that the trial court must enjoin.

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McDONALD’S CORPORATION v. MACJOY FASTFOOD CORPORATIONG.R. No. 166115 February 2, 2007

FACTS:

On 14 March 1991, respondent MacJoy Fastfood Corporation, a domestic corporation engaged in the sale of fast food products in Cebu City, filed with the then Bureau of Patents, Trademarks and Technology Transfer (BPTT), now the Intellectual Property Office (IPO), an application for the registration of the trademark "MACJOY & DEVICE" for fried chicken, chicken barbeque, burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo and steaks under classes 29 and 30 of the International Classification of Goods.

Petitioner McDonald’s Corporation, filed a verified Notice of Opposition against the respondent’s application claiming that the trademark "MACJOY & DEVICE" so resembles its corporate logo, otherwise known as the Golden Arches or "M" design, and its marks "McDonalds," Mc Chicken," "MacFries," etc. (hereinafter MCDONALD’S marks) such that when used on identical or related goods, the trademark applied for would confuse or deceive purchasers into believing that the goods originate from the same source or origin.

Also, petitioner alleged that the respondent’s use and adoption in bad faith of the "MACJOY & DEVICE" mark would falsely tend to suggest a connection or affiliation with petitioner’s restaurant services and food products, thus, constituting a fraud upon the general public and further cause the dilution of the distinctiveness of petitioner’s registered and internationally recognized MCDONALD’S marks to its prejudice and irreparable damage.

IPO ruled that the predominance of the letter "M," and the prefixes "Mac/Mc" in both the "MACJOY" and the "MCDONALDS" marks lead to the conclusion that there is confusing similarity between them especially since both are used on almost the same products falling under classes 29 and 30 of the International Classification of Goods, i.e., food and ingredients of food, sustained the petitioner’s opposition and rejected the respondent’s application. (IPO used the dominancy test)

IPO denied MR. CA reversed the IPO decision, ruling that there was no confusing similarity between the marks "MACJOY" and "MCDONALD’S," for the ff. reasons:

1. The word "MacJoy" is written in round script while the word "McDonald’s" is written in single stroke gothic;2. The word "MacJoy" comes with the picture of a chicken head with cap and bowtie and wings sprouting on both sides, while the word "McDonald’s" comes with an arches "M" in gold colors, and absolutely without any picture of a chicken;3. The word "MacJoy" is set in deep pink and white color scheme while "McDonald’s" is written in red, yellow and black color combination;4. The façade of the respective stores of the parties are entirely different. Respondent’s restaurant is set also in the same bold, brilliant and notice able color scheme as that of its wrappers, containers, cups, etc., while

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Petitioner’s restaurant is in yellow and red colors, and with the mascot of "Ronald McDonald" being prominently displayed therein."

ISSUES:

1. Whether or not the dominancy test should be applied, instead of the holistic test.

2. Whether or not there is a confusing similarity between MACJOY and MCDONALDS trademarks as to justify the IPO’s rejection of Macjoy’s trademark application

HELD:

1. YES. In determining similarity and likelihood of confusion, jurisprudence has developed two tests, the dominancy test and the holistic test. The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion or deception. 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. In recent cases with a similar factual milieu as here, the Court has consistently used and applied the dominancy test in determining confusing similarity or likelihood of confusion between competing trademarks.

Under the dominancy test, courts give greater weight to the similarity of the appearance of the product arising from the adoption of the dominant features of the registered mark, disregarding minor differences. Courts will consider more the aural and visual impressions created by the marks in the public mind, giving little weight to factors like prices, quality, sales outlets and market segments.

Applying the dominancy test to the instant case, the Court finds that herein petitioner’s "MCDONALD’S" and respondent’s "MACJOY" marks are confusingly similar with each other such that an ordinary purchaser can conclude an association or relation between the marks

2. YES. Both marks use the corporate "M" design logo and the prefixes "Mc" and/or"Mac" as dominant features. The first letter "M" in both marks puts emphasis on the prefixes "Mc" and/or "Mac" by the similar way in which they are depicted i.e. in an arch-like, capitalized and stylized manner.

It is the prefix "Mc," an abbreviation of "Mac," which visually and aurally catches the attention of the consuming public. Both trademarks are used in the sale of fast food products. Indisputably, the respondent’s trademark application for the "MACJOY & DEVICE" trademark covers goods under Classes 29 and 30 of the International Classification of Goods, namely, fried chicken, chicken barbeque, burgers, fries, spaghetti, etc. McDonald’s registered trademark covers goods similar if not identical to those covered by the respondent’s application.

Predominant features such as the "M," "Mc," and "Mac" appearing in both McDonald’s marks and the MACJOY & DEVICE" easily attract the attention of would-be customers. Even non-regular customers of their fast food restaurants would readily notice the predominance of the "M" design,

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"Mc/Mac" prefixes shown in both marks. Such that the common awareness or perception of customers that the trademarks McDonalds mark and MACJOY & DEVICE are one and the same, or an affiliate, or under the sponsorship of the other is not far-fetched.

By reason of the respondent’s implausible and insufficient explanation as to how and why out of the many choices of words it could have used for its trade-name and/or trademark, it chose the word "MACJOY," the only logical conclusion deducible there from is that the respondent would want to ride high on the established reputation and goodwill of the MCDONALD’s marks, which, as applied to petitioner’s restaurant business and food products, is undoubtedly beyond question.

When one applies for the registration of a trademark or label which is almost the same or very closely resembles one already used and registered by another, the application should be rejected and dismissed outright, even without any opposition on the part of the owner and user of a previously registered label or trademark, this not only to avoid confusion on the part of the public, but also to protect an already used and registered trademark and an established goodwill.

PEARL & DEAN (PHIL.), INCORPORATED vs. SHOEMART, INCORPORATED

G.R. No. 148222 August 15, 2003

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FACTS:

“Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units simply referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with back lights. Pearl and Dean was able to secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated display units. The advertising light boxes were marketed under the trademark “Poster Ads”. The application for registration of the trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved only on September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro Industrial Services to manufacture its advertising displays.Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that time, SMI offered as an alternative, SM Makati and SM Cubao, to which Pearl and Dean agreed.

Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered to construct light boxes for Shoemart’s chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in 1991.

Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and in the fastfood section of SM Cubao. Upon investigation, Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes similar to those it manufactures were also installed in two (2) other SM stores. It further discovered that defendant-appellant North Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising space in lighted display units located in SMI’s different branches. Pearl and Dean noted that NEMI is a sister company of SMI.Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes and NEMI took down its advertisements for “Poster Ads” from the lighted display units in SMI’s stores. Claiming that both SMI and NEMI failed to meet all its demands, Pearl and Dean filed this instant case for infringement of trademark and copyright, unfair competition and damages.

In denying the charges hurled against it, SMI maintained that it independently developed its poster panels using commonly known techniques and available technology, without notice of or reference to Pearl and Dean’s copyright. SMI noted that the registration of the mark “Poster Ads” was only for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word “Poster Ads” is a generic term which cannot be appropriated as a trademark, and, as such, registration of such mark is invalid. It also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since its advertising display units contained no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that the suit was purely intended to malign SMI’s good name. On this basis, SMI, aside from praying

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for the dismissal of the case, also counterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl and Dean’s Certification of Copyright Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988.

NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in the business of advertising. It repleaded SMI’s averments, admissions and denials and prayed for similar reliefs and counterclaims as SMI.”

ISSUES

(1) if the engineering or technical drawings of an advertising display unit (light box) are granted copyright protection (copyright certificate of registration) by the National Library, is the light box depicted in such engineering drawings ipso facto also protected by such copyright?

(2) or should the light box be registered separately and protected by a patent issued by the Bureau of Patents Trademarks and Technology Transfer (now Intellectual Property Office) — in addition to the copyright of the engineering drawings?

(3) can the owner of a registered trademark legally prevent others from using such trademark if it is a mere abbreviation of a term descriptive of his goods, services or business?

HELD:

ON THE ISSUE OF COPYRIGHT INFRINGEMENTTrademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. A trademark is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of goods. In relation thereto, a trade name means the name or designation identifying or distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to literary and artistic works which are original intellectual creations in the literary and artistic domain protected from the moment of their creation. Patentable inventions, on the other hand, refer to any technical solution of a problem in any field of human activity which is new, involves an inventive step and is industrially applicable.

ON THE ISSUE OF PATENT INFRINGEMENTThe law attempts to strike an ideal balance between the two interests:

“(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new useful and non-obvious advances in technology and design, in return for the exclusive right to practice the invention for a number of years. The inventor may keep his invention secret and reap its fruits indefinitely. In consideration of its disclosure and the consequent benefit to the community, the patent is granted. An exclusive enjoyment is guaranteed him for 17 years, but upon the expiration of that period, the knowledge of the invention inures to the people, who are thus enabled to practice it and profit by its use.”

The patent law has a three-fold purpose: “first, patent law seeks to foster and reward invention; second, it promotes disclosures of inventions to

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stimulate further innovation and to permit the public to practice the invention once the patent expires; third, the stringent requirements for patent protection seek to ensure that ideas in the public domain remain there for the free use of the public.”

ON THE ISSUE OF TRADEMARK INFRINGEMENTThis issue concerns the use by respondents of the mark “Poster Ads” which petitioner’s president said was a contraction of “poster advertising.” P & D was able to secure a trademark certificate for it, but one where the goods specified were “stationeries such as letterheads, envelopes, calling cards and newsletters.”Petitioner admitted it did not commercially engage in or market these goods. On the contrary, it dealt in electrically operated backlit advertising units and the sale of advertising spaces thereon, which, however, were not at all specified in the trademark certificate.

Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate Court,[23] where we, invoking Section 20 of the old Trademark Law, ruled that “the certificate of registration issued by the Director of Patents can confer (upon petitioner) the exclusive right to use its own symbol only to those goods specified in the certificate, subject to any conditions and limitations specified in the certificate x x x. One who has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are of a different description.”[24] Faberge, Inc. was correct and was in fact recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.Assuming arguendo that “Poster Ads” could validly qualify as a trademark, the failure of P & D to secure a trademark registration for specific use on the light boxes meant that there could not have been any trademark infringement since registration was an essential element thereof.

ON THE ISSUE OF UNFAIR COMPETITIONBy the nature of things, there can be no unfair competition under the law on copyrights although it is applicable to disputes over the use of trademarks. Even a name or phrase incapable of appropriation as a trademark or tradename may, by long and exclusive use by a business (such that the name or phrase becomes associated with the business or product in the mind of the purchasing public), be entitled to protection against unfair competition.[27] In this case, there was no evidence that P & D’s use of “Poster Ads” was distinctive or well-known. As noted by the Court of Appeals, petitioner’s expert witnesses himself had testified that “ ‘Poster Ads’ was too generic a name. So it was difficult to identify it with any company, honestly speaking.”[28] This crucial admission by its own expert witness that “Poster Ads” could not be associated with P & D showed that, in the mind of the public, the goods and services carrying the trademark “Poster Ads” could not be distinguished from the goods and services of other entities.

This fact also prevented the application of the doctrine of secondary meaning. “Poster Ads” was generic and incapable of being used as a trademark because it was used in the field of poster advertising, the very business engaged in by petitioner. “Secondary meaning” means that a word or phrase originally incapable of exclusive appropriation with reference to an article in the market (because it is geographically or otherwise descriptive) might nevertheless have been used for so long and so exclusively by one producer with reference to his article that, in the trade and to that branch of the purchasing public, the word or phrase has come to mean that the article was his property.[29] The admission by petitioner’s own expert witness that

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he himself could not associate “Poster Ads” with petitioner P & D because it was “too generic” definitely precluded the application of this exception.

PHILIPS EXPORT B.V. VS. COURT OF APPEALSG.R. No. 96161, February 21,1992

FACTS:

Petitioner Philips Export B.V.(PEBV),a foreign corporation organized under the laws of the Netherlands, although not engaged in business here, is the registered owner of the trademarks PHILIPS and PHILIPS SHIELD EMBLEM under Certificates Of Registration nos.R-1641 and R-1674, respectively issued by the Philippine Patent Office. Petitioners Philips Electrical Lamps, Inc. and Philips Industrial Development, Inc. authorized users of the trademarks PHILIPS and PHILIPS SHIELD EMBLEM, were incorporated on 29

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August 1956 and 25 May 1956, respectively. All petitioner corporations belong to the PHILIPS Group of companies.

Respondent Standard Philips Corporation, on the other hand, was issued a Certificate of Registration by respondent Commission on 19 May 1982.

On 24 September 1984, Petitioners filed a letter complaint with the Securities & Exchange Commission(SEC) asking for the cancellation of the word “PHILIPS” from the private respondent’s corporate name in view of the prior registration with the Bureau of Patents of the trademark “PHILIPS” and the logo “PHILIPS SHIELD EMBLEM” in the name of petitioner PEBV, and the previous registration of Petitioners Philips Electrical and Philips Industrial with the SEC.

ISSUE:

Whether Standard Philips Corporation violate trademark law.

HELD:

As early as Western Equipment and Supply Co. v. Reyes, 51 Phil. 115(1927), the Court declared that a corporation’s right to use its corporate and trade name is a property right, a right in rem, which it may assert and protect against the world in the same manner as it may protect its tangible property, real or personal, against trespass or conversion. It is regarded, to a certain extent, as a property right and one which cannot be impaired or defeated by subsequent appropriation by another corporation in the same field.

What is lost sight of, however, is that PHILIPS is a trademark or trade name which was registered as far back as 1922. Petitioners, therefore, have the exclusive right to its use which must be free from any infringement by similarity. A corporation has an exclusive right to the use of its name, which may be protected by injunction upon a principle similar to that upon which persons are protected in the use of trademarks and tradenames (18C.J.S. 574). Such principle proceeds upon the theory that is a fraud on the corporation which has acquired a right to that name and perhaps carried on its business thereunder, that another should attempt to use the same name, or the same name with a slight variation in such a way as to induce persons to deal with it in the belief that they are dealing with the corporation which has given a reputation to the name. (6 Fletcher pp. 39-40, citing Borden Ice Cream co. v. Borden’s Condensed Milk Co. 210 F 510). Notably, too, Private Respondent’s name actually contains only a single word, that is “STANDARD”, different from that of petitioners inasmuch as the inclusion of the term “ Corporation” or “Corp.”. merely serves the purpose of distinguishing the corporation from partnerships and other business organizations.

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PROSOURCE INTERNATIONAL, INC. vs. HORPHAG RESEARCH MANAGEMENT

G.R. No. 180073 November 25, 2009.

FACTS:

Respondent Horphag Research Management SA is a corporation duly organized and existing under the laws of Switzerland and the owner of trademark PYCNOGENOL, a food supplement sold and distributed by Zuellig Pharma Corporation. Respondent later discovered that petitioner Prosource International, Inc. was also distributing a similar food supplement using the mark PCO-GENOLS since 1996. This prompted respondent to demand that petitioner cease and desist from using the aforesaid mark.

Without notifying respondent, petitioner discontinued the use of, and withdrew from the market, the products under the name PCO-GENOLS as of

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June 19, 2000. It, likewise, changed its mark from PCO-GENOLS to PCO-PLUS. 9

On August 22, 2000, respondent filed a Complaint for Infringement of Trademark with Prayer for Preliminary Injunction against petitioner, praying that the latter cease and desist from using the brand PCO-GENOLS for being confusingly similar with respondent's trademark PYCNOGENOL. It, likewise, prayed for actual and nominal damages, as well as attorney's fees. 11

In its Answer, petitioner contended that respondent could not file the infringement case considering that the latter is not the registered owner of the trademark PYCNOGENOL, but one Horphag Research Limited. It, likewise, claimed that the two marks were not confusingly similar. Finally, it denied liability, since it discontinued the use of the mark prior to the institution of the infringement case. Petitioner thus prayed for the dismissal of the complaint. By way of counterclaim, petitioner prayed that respondent be directed to pay exemplary damages and attorney's fees.

On January 16, 2006, the RTC decided in favor of respondent. The trial court concluded that the marks, when read, sound similar and thus confusingly similar especially since they both refer to food supplements. The court added that petitioner's liability was not negated by its act of pulling out of the market the products bearing the questioned mark since the fact remains that from 1996 until June 2000, petitioner had infringed respondent's product by using the trademark PCO-GENOLS.

On appeal to the CA, petitioner failed to obtain a favorable decision. The appellate court explained that under the Dominancy or the Holistic Test, PCO-GENOLS is deceptively similar to PYCNOGENOL.

ISSUE:

Whether there is infringement as to the used PCO-GENOLS of vis-à-vis registered (trademark) name PYCNOGENOL. Whether the petitioner would still be liable even he already withdraw/stop using PCO-GENOLS upon receiving letter from respondent.

HELD:

Petitioner's use of the questioned mark started in 1996 and ended in June 2000. The instant case should thus be decided in light of the provisions of Republic Act (R.A.) No. 166 for the acts committed until December 31, 1997, and R.A. No. 8293 19 for those committed from January 1, 1998 until June 19, 2000.

A trademark is any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof, adopted and used by a manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt by others. Inarguably, a trademark deserves protection.

In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A, and 20 thereof, the following constitute the elements of trademark infringement:

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(a) A trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine Patent Office

(b) It is used by another person in connection with the sale, offering for sale, or advertising of any goods, business or services or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or identity of such business; or such trademark is reproduced, counterfeited, copied or colorably imitated by another person and such reproduction, counterfeit, copy or colorable imitation is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services as to likely cause confusion or mistake or to deceive purchasers

(c) The trademark is used for identical or similar goods and

(d) Such act is done without the consent of the trademark registrant or assignee.

On the other hand, the elements of infringement under R.A. No. 8293 are as follows:

(1) The trademark being infringed is registered in the Intellectual Property Office; however, in infringement of trade name, the same need not be registered;

(2) The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the infringer;

(3) The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of any goods, business or services; or the infringing mark or trade name is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services;

(4) The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive purchasers or others as to the goods or services themselves or as to the source or origin of such goods or services or the identity of such business; and

(5) It is without the consent of the trademark or trade name owner or the assignee thereof.

In the foregoing enumeration, it is the element of "likelihood of confusion" that is the gravamen of trademark infringement. But "likelihood of confusion" is a relative concept. The particular, and sometimes peculiar, circumstances of each case are determinative of its existence. Thus, in trademark infringement cases, precedents must be evaluated in the light of each particular case.

In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the Dominancy Test and the Holistic or Totality Test. The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion and deception, thus

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constituting infringement. If the competing trademark contains the main, essential and dominant features of another, and confusion or deception is likely to result, infringement takes place. Duplication or imitation is not necessary; nor is it necessary that the infringing label should suggest an effort to imitate. The question is whether the use of the marks involved is likely to cause confusion or mistake in the mind of the public or to deceive purchasers. Courts will consider more the aural and visual impressions created by the marks in the public mind, giving little weight to factors like prices, quality, sales outlets, and market segments.

In contrast, the Holistic Test entails a consideration of the entirety of the marks as applied to the products, including the labels and packaging, in determining confusing similarity. The discerning eye of the observer must focus not only on the predominant words but also on the other features appearing on both labels in order that the observer may draw his conclusion whether one is confusingly similar to the other.

The trial and appellate courts applied the Dominancy Test in determining whether there was a confusing similarity between the marks PYCNOGENOL and PCO-GENOL. Applying the test, the trial court found, and the CA affirmed, that:

Both the words PYCNOGENOL and PCO-GENOLS have the same suffix "GENOL" which on evidence, appears to be merely descriptive and furnish no indication of the origin of the article and hence, open for trademark registration by the plaintiff thru combination with another word or phrase such as PYCNOGENOL, Exhibits "A" to "A-3". Furthermore, although the letters "Y" between P and C, "N" between O and C and "S" after L are missing in the [petitioner's] mark PCO-GENOLS, nevertheless, when the two words are pronounced, the sound effects are confusingly similar not to mention that they are both described by their manufacturers as a food supplement and thus, identified as such by their public consumers. And although there were dissimilarities in the trademark due to the type of letters used as well as the size, color and design employed on their individual packages/bottles, still the close relationship of the competing products' name in sounds as they were pronounced, clearly indicates that purchasers could be misled into believing that they are the same and/or originates from a common source and manufacturer.

We find no cogent reason to depart from such conclusion.

Finally, we reiterate that the issue of trademark infringement is factual, with both the trial and appellate courts finding the allegations of infringement to be meritorious. As we have consistently held, factual determinations of the trial court, concurred in by the CA, are final and binding on this Court. Hence, petitioner is liable for trademark infringement.

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WESTERN EQUIPMENT AND SUPPLY COMPANY vs. FIDEL A. REYESG.R. No. L-27897 December 2, 1927

FACTS:

Western Equipment and Supply Company is a foreign corporation, organized under the laws of the State of Nevada, United States of America; that the Western Electric Company, Inc., is likewise a foreign corporation organized under the laws of the State of New York, United States of America; and that the plaintiff W. Z. Smith and Felix C. Reyes, are both of lawful age and residents of the City of Manila, Philippine Islands. Defendant Fidel A. Reyes is the duly appointed and qualified Director of the Bureau of Commerce and Industry and as such Director is charge with the duty of issuing and/or denying the issuance of certificates of incorporation to persons filing articles of incorporation with the Bureau of Commerce and Industry. On May 4, 1925, the plaintiff, the Western Equipment and Supply Company, through its duly authorized agent, the plaintiff, Felix C. Reyes, applied to the defendant

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Director of the Bureau of Commerce and Industry for the issuance of a license to engage in business in the Philippine Islands and on May 20, 1926, said defendant issued in favor of said plaintiff a provisional license for that purpose which was permanent on August 23, 1926. Western Electric Company, Inc., has ever been licensed to engage in business in the Philippine Islands, and has never engaged in business therein. That the electrical and telephone apparatus and supplies manufactured by the plaintiff, Western Electric Company, Inc., have been sold in foreign and interstate commerce for the past fifty years, and have acquired high trade reputation throughout the world; that at the present time the greater part of all telephone equipment used in Manila, and elsewhere in the Philippine Islands, was manufactured by the said plaintiff, Western Electric Company, Inc., and sold by it for exportation to the Philippine Islands; that such equipment, manufactured by the said Western Electric Company, Inc., and bearing its trade-mark "Western Electric" or its corporate name is generally sold and used throughout the world. On October 15, 1926, the defendants Henry Herman, Peter O'Brien, Manuel B. Diaz, Felipe Mapoy and Artemio Zamora signed and filed articles of incorporation with the defendant, Fidel A. Reyes, as Director of the Bureau of Commerce and Industry, with the intention of organizing a domestic corporation under the Philippine Corporation Law to be known as the "Western Electric Company, Inc.," for the purpose, among other things or manufacturing, buying, selling and dealing generally in electrical and telephone apparatus and supplies. Fidel A. Reyes, Director of the Bureau of Commerce and Industry, announced his intention of overrule said protest and will, unless judicially restrained there from, issue to the other defendants herein a certificate of incorporation, constituting said defendants a Philippine body politic and corporate under the name of "Western Electric Company, Inc."

ISSUE:

Whether the private respondents are guilty of unfair competition

HELD:

Yes. In order that competition in business should be unfair in the sense necessary to justify the granting of an injunction to restrain such competition it must appear that there has been, or is likely to be, a diversion of trade from the business of the complainant to that of the wrongdoer, or methods generally recognized as unfair; . . . In most, if not all, of the cases in which relief has hitherto been granted against unfair competition the means and methods adopted by the wrongdoer in order to divert the coveted trade from his rival have been such as were calculated to deceive and mislead the public into thinking that the goods or business of the wrongdoer are the goods or business of the rival. Diversion of trade is really the fundamental thing here, and if diversion of trade be accomplished by any means which according to accepted legal canons are unfair, the aggrieved party is entitled to relief. The plaintiff, Western Electric Company, Inc., has been in existence as a corporation for over fifty years, during which time it has established a reputation all over the world including the Philippine Islands, for the kind and quality of its manufactured articles, and it is very apparent that the whole purpose and intent of Herman and his associates in seeking to incorporate another corporation under the identical name of Western Electric Company, Inc., and for the same identical purpose as that of the plaintiff, is to trespass upon and profit by its good name and business reputation. The very fact that Herman and his associates have sought the use of that particular name for

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that identical purpose is conclusive evidence of the fraudulent intent with which it is done.

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